Florida Senate - 2024                                     SB 604
       
       
        
       By Senator Rodriguez
       
       
       
       
       
       40-00577B-24                                           2024604__
    1                        A bill to be entitled                      
    2         An act relating to the Citizens Property Insurance
    3         Corporation; amending s. 627.351, F.S.; revising
    4         eligibility for coverage by the corporation in certain
    5         counties to include personal lines residential
    6         structures that have a dwelling replacement cost of
    7         less than a specified amount; requiring the
    8         corporation to annually implement a rate increase up
    9         to a specified percentage for any single policy issued
   10         by the corporation, excluding increases associated
   11         with coverage changes and surcharges; adding policies
   12         for specified structures to the list of policies that
   13         do not require the purchase of flood insurance for
   14         their maintenance; making a technical change;
   15         providing an effective date.
   16          
   17  Be It Enacted by the Legislature of the State of Florida:
   18  
   19         Section 1. Paragraphs (a), (n), and (aa) of subsection (6)
   20  of section 627.351, Florida Statutes, are amended to read:
   21         627.351 Insurance risk apportionment plans.—
   22         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
   23         (a) The public purpose of this subsection is to ensure that
   24  there is an orderly market for property insurance for residents
   25  and businesses of this state.
   26         1. The Legislature finds that private insurers are
   27  unwilling or unable to provide affordable property insurance
   28  coverage in this state to the extent sought and needed. The
   29  absence of affordable property insurance threatens the public
   30  health, safety, and welfare and likewise threatens the economic
   31  health of the state. The state therefore has a compelling public
   32  interest and a public purpose to assist in assuring that
   33  property in the state is insured and that it is insured at
   34  affordable rates so as to facilitate the remediation,
   35  reconstruction, and replacement of damaged or destroyed property
   36  in order to reduce or avoid the negative effects otherwise
   37  resulting to the public health, safety, and welfare, to the
   38  economy of the state, and to the revenues of the state and local
   39  governments which are needed to provide for the public welfare.
   40  It is necessary, therefore, to provide affordable property
   41  insurance to applicants who are in good faith entitled to
   42  procure insurance through the voluntary market but are unable to
   43  do so. The Legislature intends, therefore, that affordable
   44  property insurance be provided and that it continue to be
   45  provided, as long as necessary, through Citizens Property
   46  Insurance Corporation, a government entity that is an integral
   47  part of the state, and that is not a private insurance company.
   48  To that end, the corporation shall strive to increase the
   49  availability of affordable property insurance in this state,
   50  while achieving efficiencies and economies, and while providing
   51  service to policyholders, applicants, and agents which is no
   52  less than the quality generally provided in the voluntary
   53  market, for the achievement of the foregoing public purposes.
   54  Because it is essential for this government entity to have the
   55  maximum financial resources to pay claims following a
   56  catastrophic hurricane, it is the intent of the Legislature that
   57  the corporation continue to be an integral part of the state and
   58  that the income of the corporation be exempt from federal income
   59  taxation and that interest on the debt obligations issued by the
   60  corporation be exempt from federal income taxation.
   61         2. The Residential Property and Casualty Joint Underwriting
   62  Association originally created by this statute shall be known as
   63  the Citizens Property Insurance Corporation. The corporation
   64  shall provide insurance for residential and commercial property,
   65  for applicants who are entitled, but, in good faith, are unable
   66  to procure insurance through the voluntary market. The
   67  corporation shall operate pursuant to a plan of operation
   68  approved by order of the Financial Services Commission. The plan
   69  is subject to continuous review by the commission. The
   70  commission may, by order, withdraw approval of all or part of a
   71  plan if the commission determines that conditions have changed
   72  since approval was granted and that the purposes of the plan
   73  require changes in the plan. For the purposes of this
   74  subsection, residential coverage includes both personal lines
   75  residential coverage, which consists of the type of coverage
   76  provided by homeowner, mobile home owner, dwelling, tenant,
   77  condominium unit owner, and similar policies; and commercial
   78  lines residential coverage, which consists of the type of
   79  coverage provided by condominium association, apartment
   80  building, and similar policies.
   81         3. With respect to coverage for personal lines residential
   82  structures:
   83         a. Effective January 1, 2014, a structure that has a
   84  dwelling replacement cost of $1 million or more, or a single
   85  condominium unit that has a combined dwelling and contents
   86  replacement cost of $1 million or more, is not eligible for
   87  coverage by the corporation. Such dwellings insured by the
   88  corporation on December 31, 2013, may continue to be covered by
   89  the corporation until the end of the policy term. The office
   90  shall approve the method used by the corporation for valuing the
   91  dwelling replacement cost for the purposes of this subparagraph.
   92  If a policyholder is insured by the corporation before being
   93  determined to be ineligible pursuant to this subparagraph and
   94  such policyholder files a lawsuit challenging the determination,
   95  the policyholder may remain insured by the corporation until the
   96  conclusion of the litigation.
   97         b. Effective January 1, 2015, a structure that has a
   98  dwelling replacement cost of $900,000 or more, or a single
   99  condominium unit that has a combined dwelling and contents
  100  replacement cost of $900,000 or more, is not eligible for
  101  coverage by the corporation. Such dwellings insured by the
  102  corporation on December 31, 2014, may continue to be covered by
  103  the corporation only until the end of the policy term.
  104         c. Effective January 1, 2016, a structure that has a
  105  dwelling replacement cost of $800,000 or more, or a single
  106  condominium unit that has a combined dwelling and contents
  107  replacement cost of $800,000 or more, is not eligible for
  108  coverage by the corporation. Such dwellings insured by the
  109  corporation on December 31, 2015, may continue to be covered by
  110  the corporation until the end of the policy term.
  111         d. Effective January 1, 2017, a structure that has a
  112  dwelling replacement cost of $700,000 or more, or a single
  113  condominium unit that has a combined dwelling and contents
  114  replacement cost of $700,000 or more, is not eligible for
  115  coverage by the corporation. Such dwellings insured by the
  116  corporation on December 31, 2016, may continue to be covered by
  117  the corporation until the end of the policy term.
  118  
  119  The requirements of sub-subparagraphs b.-d. do not apply in
  120  counties where the office determines there is not a reasonable
  121  degree of competition. In such counties a personal lines
  122  residential structure that has a dwelling replacement cost of
  123  less than $1.5 $1 million, or a single condominium unit that has
  124  a combined dwelling and contents replacement cost of less than
  125  $1 million, is eligible for coverage by the corporation.
  126         4. It is the intent of the Legislature that policyholders,
  127  applicants, and agents of the corporation receive service and
  128  treatment of the highest possible level but never less than that
  129  generally provided in the voluntary market. It is also intended
  130  that the corporation be held to service standards no less than
  131  those applied to insurers in the voluntary market by the office
  132  with respect to responsiveness, timeliness, customer courtesy,
  133  and overall dealings with policyholders, applicants, or agents
  134  of the corporation.
  135         5.a. Effective January 1, 2009, a personal lines
  136  residential structure that is located in the “wind-borne debris
  137  region,” as defined in s. 1609.2, International Building Code
  138  (2006), and that has an insured value on the structure of
  139  $750,000 or more is not eligible for coverage by the corporation
  140  unless the structure has opening protections as required under
  141  the Florida Building Code for a newly constructed residential
  142  structure in that area. A residential structure is deemed to
  143  comply with this sub-subparagraph if it has shutters or opening
  144  protections on all openings and if such opening protections
  145  complied with the Florida Building Code at the time they were
  146  installed.
  147         b. Any major structure, as defined in s. 161.54(6)(a), that
  148  is newly constructed, or rebuilt, repaired, restored, or
  149  remodeled to increase the total square footage of finished area
  150  by more than 25 percent, pursuant to a permit applied for after
  151  July 1, 2015, is not eligible for coverage by the corporation if
  152  the structure is seaward of the coastal construction control
  153  line established pursuant to s. 161.053 or is within the Coastal
  154  Barrier Resources System as designated by 16 U.S.C. ss. 3501
  155  3510.
  156         6. With respect to wind-only coverage for commercial lines
  157  residential condominiums, effective July 1, 2014, a condominium
  158  shall be deemed ineligible for coverage if 50 percent or more of
  159  the units are rented more than eight times in a calendar year
  160  for a rental agreement period of less than 30 days.
  161         (n)1. Rates for coverage provided by the corporation must
  162  be actuarially sound pursuant to s. 627.062 and not competitive
  163  with approved rates charged in the admitted voluntary market so
  164  that the corporation functions as a residual market mechanism to
  165  provide insurance only when insurance cannot be procured in the
  166  voluntary market, except as otherwise provided in this
  167  paragraph. The office shall provide the corporation such
  168  information as would be necessary to determine whether rates are
  169  competitive. The corporation shall file its recommended rates
  170  with the office at least annually. The corporation shall provide
  171  any additional information regarding the rates which the office
  172  requires. The office shall consider the recommendations of the
  173  board and issue a final order establishing the rates for the
  174  corporation within 45 days after the recommended rates are
  175  filed. The corporation may not pursue an administrative
  176  challenge or judicial review of the final order of the office.
  177         2. In addition to the rates otherwise determined pursuant
  178  to this paragraph, the corporation shall impose and collect an
  179  amount equal to the premium tax provided in s. 624.509 to
  180  augment the financial resources of the corporation.
  181         3. After the public hurricane loss-projection model under
  182  s. 627.06281 has been found to be accurate and reliable by the
  183  Florida Commission on Hurricane Loss Projection Methodology, the
  184  model shall be considered when establishing the windstorm
  185  portion of the corporation’s rates. The corporation may use the
  186  public model results in combination with the results of private
  187  models to calculate rates for the windstorm portion of the
  188  corporation’s rates. This subparagraph does not require or allow
  189  the corporation to adopt rates lower than the rates otherwise
  190  required or allowed by this paragraph.
  191         4. The corporation must make a recommended actuarially
  192  sound rate filing for each personal and commercial line of
  193  business it writes.
  194         5. Notwithstanding the board’s recommended rates and the
  195  office’s final order regarding the corporation’s filed rates
  196  under subparagraph 1., the corporation shall annually implement
  197  a rate increase which, except for sinkhole coverage, does not
  198  exceed the following for any single policy issued by the
  199  corporation, excluding coverage changes and surcharges:
  200         a. Twelve percent for 2023.
  201         b. Thirteen percent for 2024.
  202         c. Fourteen percent for 2025.
  203         d. Fifteen percent for 2026 and all subsequent years.
  204         6. In a county in which the office has determined that
  205  there is not a reasonable degree of competition, the corporation
  206  shall annually implement a rate increase that does not exceed 10
  207  percent for any single policy issued by the corporation,
  208  excluding increases associated with coverage changes and
  209  surcharges.
  210         7. The corporation may also implement an increase to
  211  reflect the effect on the corporation of the cash buildup factor
  212  pursuant to s. 215.555(5)(b).
  213         8.7. The corporation’s implementation of rates as
  214  prescribed in subparagraphs 5. and 9. must 8. shall cease for
  215  any line of business written by the corporation upon the
  216  corporation’s implementation of actuarially sound rates.
  217  Thereafter, the corporation shall annually make a recommended
  218  actuarially sound rate filing that is not competitive with
  219  approved rates in the admitted voluntary market for each
  220  commercial and personal line of business the corporation writes.
  221         9.8. The following new or renewal personal lines policies
  222  written on or after November 1, 2023, are not subject to the
  223  rate increase limitations in subparagraph 5., but may not be
  224  charged more than 50 percent above, nor less than, the prior
  225  year’s established rate for the corporation:
  226         a. Policies that do not cover a primary residence;
  227         b. New policies under which the coverage for the insured
  228  risk, before the date of application with the corporation, was
  229  last provided by an insurer determined by the office to be
  230  unsound or an insurer placed in receivership under chapter 631;
  231  or
  232         c. Subsequent renewals of those policies, including the new
  233  policies in sub-subparagraph b., under which the coverage for
  234  the insured risk, before the date of application with the
  235  corporation, was last provided by an insurer determined by the
  236  office to be unsound or an insurer placed in receivership under
  237  chapter 631.
  238         10.9. As used in this paragraph, the term “primary
  239  residence” means the dwelling that is the policyholder’s primary
  240  home or is a rental property that is the primary home of the
  241  tenant, and which the policyholder or tenant occupies for more
  242  than 9 months of each year.
  243         (aa) Except as otherwise provided in this paragraph, the
  244  corporation shall require the securing and maintaining of flood
  245  insurance as a condition of coverage of a personal lines
  246  residential risk. The insured or applicant must execute a form
  247  approved by the office affirming that flood insurance is not
  248  provided by the corporation and that if flood insurance is not
  249  secured by the applicant or insured from an insurer other than
  250  the corporation and in addition to coverage by the corporation,
  251  the risk will not be eligible for coverage by the corporation.
  252  The corporation may deny coverage of a personal lines
  253  residential risk to an applicant or insured who refuses to
  254  secure and maintain flood insurance. The requirement to purchase
  255  flood insurance shall be implemented as follows:
  256         1. Except as provided in subparagraphs 2. and 3., all
  257  personal lines residential policyholders must have flood
  258  coverage in place for policies effective on or after:
  259         a. January 1, 2024, for a structure that has a dwelling
  260  replacement cost of $600,000 or more.
  261         b. January 1, 2025, for a structure that has a dwelling
  262  replacement cost of $500,000 or more.
  263         c. January 1, 2026, for a structure that has a dwelling
  264  replacement cost of $400,000 or more.
  265         d. January 1, 2027, for all other personal lines
  266  residential property insured by the corporation.
  267         2. All personal lines residential policyholders whose
  268  property insured by the corporation is located within the
  269  special flood hazard area defined by the Federal Emergency
  270  Management Agency must have flood coverage in place:
  271         a. At the time of initial policy issuance for all new
  272  personal lines residential policies issued by the corporation on
  273  or after April 1, 2023.
  274         b. By the time of the policy renewal for all personal lines
  275  residential policies renewing on or after July 1, 2023.
  276         3. Policyholders are not required to purchase flood
  277  insurance as a condition for maintaining any of the following
  278  policies issued by the corporation:
  279         a. Policies that do not provide coverage for the peril of
  280  wind.
  281         b. Policies that provide coverage under a condominium unit
  282  owners form.
  283         c.Policies for structures that are elevated at least 1
  284  foot above the flood zone’s minimum base flood elevation.
  285  
  286  The flood insurance required under this paragraph must meet, at
  287  a minimum, the dwelling coverage available from the National
  288  Flood Insurance Program or the requirements of subparagraphs s.
  289  627.715(1)(a)1., 2., and 3.
  290         Section 2. This act shall take effect July 1, 2024.