| 1 | A bill to be entitled |
| 2 | An act relating to property insurance; amending s. |
| 3 | 627.351, F.S.; revising legislative findings to provide a |
| 4 | finding that the lack of affordable property insurance |
| 5 | threatens the public health, safety, and welfare and |
| 6 | threatens the economic health of the state; revising |
| 7 | provisions for determining eligibility for coverage under |
| 8 | the corporation; reinstating certain rate filings by the |
| 9 | corporation; prohibiting issuance of new certificates of |
| 10 | authority to certain insurers; requiring rate filings of |
| 11 | certain insurers to include certain parent company profits |
| 12 | information; providing effective dates. |
| 13 |
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| 14 | Be It Enacted by the Legislature of the State of Florida: |
| 15 |
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| 16 | Section 1. Paragraphs (a), (c), and (m) of subsection (6) |
| 17 | of section 627.351, Florida Statutes, as amended by section 21 |
| 18 | of chapter 2007-1, Laws of Florida, are amended to read: |
| 19 | 627.351 Insurance risk apportionment plans.-- |
| 20 | (6) CITIZENS PROPERTY INSURANCE CORPORATION.-- |
| 21 | (a)1. It is the public purpose of this subsection to |
| 22 | ensure the existence of an orderly market for property insurance |
| 23 | for citizens of this state and businesses in this state. The |
| 24 | Legislature finds that private insurers are unwilling or unable |
| 25 | to provide affordable property insurance coverage in this state |
| 26 | to the extent sought and needed. The absence of affordable |
| 27 | property insurance threatens the public health, safety, and |
| 28 | welfare and likewise threatens the economic health of the state. |
| 29 | The state therefore has a compelling public interest and a |
| 30 | public purpose to assist in ensuring that property in the state |
| 31 | is insured and that property is insured at affordable rates so |
| 32 | as to facilitate the remediation, reconstruction, and |
| 33 | replacement of damaged or destroyed property in order to reduce |
| 34 | or avoid the negative effects otherwise resulting to the public |
| 35 | health, safety, and welfare, to the economy of the state, and to |
| 36 | the revenues of the state and local governments which are needed |
| 37 | to provide for the public welfare. It is necessary, therefore, |
| 38 | to provide affordable property insurance to applicants who are |
| 39 | in good faith entitled to procure insurance through the |
| 40 | voluntary market but are unable to do so. The Legislature |
| 41 | intends by this subsection that affordable property insurance be |
| 42 | provided and that such insurance continue to be provided, as |
| 43 | long as necessary, through Citizens Property Insurance |
| 44 | Corporation, a government entity that is an integral part of the |
| 45 | state and that is not a private insurance company. To that end, |
| 46 | Citizens Property Insurance Company shall strive to increase the |
| 47 | availability of affordable property insurance in this state, |
| 48 | while achieving efficiencies and economies and while providing |
| 49 | service to policyholders, applicants, and agents which is no |
| 50 | less than the quality generally provided in the voluntary |
| 51 | market, for the achievement of the foregoing public purposes. |
| 52 | Because it is essential for this government entity to have the |
| 53 | maximum financial resources to pay claims following a |
| 54 | catastrophic hurricane, it is the intent of the Legislature that |
| 55 | Citizens Property Insurance Corporation continue to be an |
| 56 | integral part of the state and that the income of the |
| 57 | corporation be exempt from federal income taxation and that |
| 58 | interest on the debt obligations issued by the corporation be |
| 59 | exempt from federal income taxation. The Legislature finds that |
| 60 | actual and threatened catastrophic losses to property in this |
| 61 | state from hurricanes have caused insurers to be unwilling or |
| 62 | unable to provide property insurance coverage to the extent |
| 63 | sought and needed. It is in the public interest and a public |
| 64 | purpose to assist in assuring that property in the state is |
| 65 | insured so as to facilitate the remediation, reconstruction, and |
| 66 | replacement of damaged or destroyed property in order to reduce |
| 67 | or avoid the negative effects otherwise resulting to the public |
| 68 | health, safety, and welfare; to the economy of the state; and to |
| 69 | the revenues of the state and local governments needed to |
| 70 | provide for the public welfare. It is necessary, therefore, to |
| 71 | provide property insurance to applicants who are in good faith |
| 72 | entitled to procure insurance through the voluntary market but |
| 73 | are unable to do so. The Legislature intends by this subsection |
| 74 | that property insurance be provided and that it continues, as |
| 75 | long as necessary, through an entity organized to achieve |
| 76 | efficiencies and economies, while providing service to |
| 77 | policyholders, applicants, and agents that is no less than the |
| 78 | quality generally provided in the voluntary market, all toward |
| 79 | the achievement of the foregoing public purposes. Because it is |
| 80 | essential for the corporation to have the maximum financial |
| 81 | resources to pay claims following a catastrophic hurricane, it |
| 82 | is the intent of the Legislature that the income of the |
| 83 | corporation be exempt from federal income taxation and that |
| 84 | interest on the debt obligations issued by the corporation be |
| 85 | exempt from federal income taxation. |
| 86 | 2. The Residential Property and Casualty Joint |
| 87 | Underwriting Association originally created by this statute |
| 88 | shall be known, as of July 1, 2002, as the Citizens Property |
| 89 | Insurance Corporation. The corporation shall provide insurance |
| 90 | for residential and commercial property, for applicants who are |
| 91 | in good faith entitled, but are unable, to procure insurance |
| 92 | through the voluntary market. The corporation shall operate |
| 93 | pursuant to a plan of operation approved by order of the |
| 94 | Financial Services Commission. The plan is subject to continuous |
| 95 | review by the commission. The commission may, by order, withdraw |
| 96 | approval of all or part of a plan if the commission determines |
| 97 | that conditions have changed since approval was granted and that |
| 98 | the purposes of the plan require changes in the plan. The |
| 99 | corporation shall continue to operate pursuant to the plan of |
| 100 | operation approved by the Office of Insurance Regulation until |
| 101 | October 1, 2006. For the purposes of this subsection, |
| 102 | residential coverage includes both personal lines residential |
| 103 | coverage, which consists of the type of coverage provided by |
| 104 | homeowner's, mobile home owner's, dwelling, tenant's, |
| 105 | condominium unit owner's, and similar policies, and commercial |
| 106 | lines residential coverage, which consists of the type of |
| 107 | coverage provided by condominium association, apartment |
| 108 | building, and similar policies. |
| 109 | 3. For the purposes of this subsection, the term |
| 110 | "homestead property" means: |
| 111 | a. Property that has been granted a homestead exemption |
| 112 | under chapter 196; |
| 113 | b. Property for which the owner has a current, written |
| 114 | lease with a renter for a term of at least 7 months and for |
| 115 | which the dwelling is insured by the corporation for $200,000 or |
| 116 | less; |
| 117 | c. An owner-occupied mobile home or manufactured home, as |
| 118 | defined in s. 320.01, which is permanently affixed to real |
| 119 | property, is owned by a Florida resident, and has been granted a |
| 120 | homestead exemption under chapter 196 or, if the owner does not |
| 121 | own the real property, the owner certifies that the mobile home |
| 122 | or manufactured home is his or her principal place of residence; |
| 123 | d. Tenant's coverage; |
| 124 | e. Commercial lines residential property; or |
| 125 | f. Any county, district, or municipal hospital; a hospital |
| 126 | licensed by any not-for-profit corporation qualified under s. |
| 127 | 501(c)(3) of the United States Internal Revenue Code; or a |
| 128 | continuing care retirement community that is certified under |
| 129 | chapter 651 and that receives an exemption from ad valorem taxes |
| 130 | under chapter 196. |
| 131 | 4. For the purposes of this subsection, the term |
| 132 | "nonhomestead property" means property that is not homestead |
| 133 | property. |
| 134 | 5. Effective July 1, 2008, a personal lines residential |
| 135 | structure that has a dwelling replacement cost of $1 million or |
| 136 | more, or a single condominium unit that has a combined dwelling |
| 137 | and content replacement cost of $1 million or more is not |
| 138 | eligible for coverage by the corporation. Such dwellings insured |
| 139 | by the corporation on June 30, 2008, may continue to be covered |
| 140 | by the corporation until the end of the policy term. However, |
| 141 | such dwellings that are insured by the corporation and become |
| 142 | ineligible for coverage due to the provisions of this |
| 143 | subparagraph may reapply and obtain coverage in the high-risk |
| 144 | account and be considered "nonhomestead property" if the |
| 145 | property owner provides the corporation with a sworn affidavit |
| 146 | from one or more insurance agents, on a form provided by the |
| 147 | corporation, stating that the agents have made their best |
| 148 | efforts to obtain coverage and that the property has been |
| 149 | rejected for coverage by at least one authorized insurer and at |
| 150 | least three surplus lines insurers. If such conditions are met, |
| 151 | the dwelling may be insured by the corporation for up to 3 |
| 152 | years, after which time the dwelling is ineligible for coverage. |
| 153 | The office shall approve the method used by the corporation for |
| 154 | valuing the dwelling replacement cost for the purposes of this |
| 155 | subparagraph. If a policyholder is insured by the corporation |
| 156 | prior to being determined to be ineligible pursuant to this |
| 157 | subparagraph and such policyholder files a lawsuit challenging |
| 158 | the determination, the policyholder may remain insured by the |
| 159 | corporation until the conclusion of the litigation. |
| 160 | 6. For properties constructed on or after January 1, 2009, |
| 161 | the corporation may not insure any property located within 2,500 |
| 162 | feet landward of the coastal construction control line created |
| 163 | pursuant to s. 161.053 unless the property meets the |
| 164 | requirements of the code-plus building standards developed by |
| 165 | the Florida Building Commission. |
| 166 | 7. It is the intent of the Legislature that policyholders, |
| 167 | applicants, and agents of the corporation receive service and |
| 168 | treatment of the highest possible level but never less than that |
| 169 | generally provided in the voluntary market. It also is intended |
| 170 | that the corporation be held to service standards no less than |
| 171 | those applied to insurers in the voluntary market by the office |
| 172 | with respect to responsiveness, timeliness, customer courtesy, |
| 173 | and overall dealings with policyholders, applicants, or agents |
| 174 | of the corporation. |
| 175 | (c) The plan of operation of the corporation: |
| 176 | 1. Must provide for adoption of residential property and |
| 177 | casualty insurance policy forms and commercial residential and |
| 178 | nonresidential property insurance forms, which forms must be |
| 179 | approved by the office prior to use. The corporation shall adopt |
| 180 | the following policy forms: |
| 181 | a. Standard personal lines policy forms that are |
| 182 | comprehensive multiperil policies providing full coverage of a |
| 183 | residential property equivalent to the coverage provided in the |
| 184 | private insurance market under an HO-3, HO-4, or HO-6 policy. |
| 185 | b. Basic personal lines policy forms that are policies |
| 186 | similar to an HO-8 policy or a dwelling fire policy that provide |
| 187 | coverage meeting the requirements of the secondary mortgage |
| 188 | market, but which coverage is more limited than the coverage |
| 189 | under a standard policy. |
| 190 | c. Commercial lines residential and nonresidential policy |
| 191 | forms that are generally similar to the basic perils of full |
| 192 | coverage obtainable for commercial residential structures and |
| 193 | commercial nonresidential structures in the admitted voluntary |
| 194 | market. |
| 195 | d. Personal lines and commercial lines residential |
| 196 | property insurance forms that cover the peril of wind only. The |
| 197 | forms are applicable only to residential properties located in |
| 198 | areas eligible for coverage under the high-risk account referred |
| 199 | to in sub-subparagraph (b)2.a. |
| 200 | e. Commercial lines nonresidential property insurance |
| 201 | forms that cover the peril of wind only. The forms are |
| 202 | applicable only to nonresidential properties located in areas |
| 203 | eligible for coverage under the high-risk account referred to in |
| 204 | sub-subparagraph (b)2.a. |
| 205 | f. The corporation may adopt variations of the policy |
| 206 | forms listed in sub-subparagraphs a.-e. that contain more |
| 207 | restrictive coverage. |
| 208 | 2.a. Must provide that the corporation adopt a program in |
| 209 | which the corporation and authorized insurers enter into quota |
| 210 | share primary insurance agreements for hurricane coverage, as |
| 211 | defined in s. 627.4025(2)(a), for eligible risks, and adopt |
| 212 | property insurance forms for eligible risks which cover the |
| 213 | peril of wind only. As used in this subsection, the term: |
| 214 | (I) "Quota share primary insurance" means an arrangement |
| 215 | in which the primary hurricane coverage of an eligible risk is |
| 216 | provided in specified percentages by the corporation and an |
| 217 | authorized insurer. The corporation and authorized insurer are |
| 218 | each solely responsible for a specified percentage of hurricane |
| 219 | coverage of an eligible risk as set forth in a quota share |
| 220 | primary insurance agreement between the corporation and an |
| 221 | authorized insurer and the insurance contract. The |
| 222 | responsibility of the corporation or authorized insurer to pay |
| 223 | its specified percentage of hurricane losses of an eligible |
| 224 | risk, as set forth in the quota share primary insurance |
| 225 | agreement, may not be altered by the inability of the other |
| 226 | party to the agreement to pay its specified percentage of |
| 227 | hurricane losses. Eligible risks that are provided hurricane |
| 228 | coverage through a quota share primary insurance arrangement |
| 229 | must be provided policy forms that set forth the obligations of |
| 230 | the corporation and authorized insurer under the arrangement, |
| 231 | clearly specify the percentages of quota share primary insurance |
| 232 | provided by the corporation and authorized insurer, and |
| 233 | conspicuously and clearly state that neither the authorized |
| 234 | insurer nor the corporation may be held responsible beyond its |
| 235 | specified percentage of coverage of hurricane losses. |
| 236 | (II) "Eligible risks" means personal lines residential and |
| 237 | commercial lines residential risks that meet the underwriting |
| 238 | criteria of the corporation and are located in areas that were |
| 239 | eligible for coverage by the Florida Windstorm Underwriting |
| 240 | Association on January 1, 2002. |
| 241 | b. The corporation may enter into quota share primary |
| 242 | insurance agreements with authorized insurers at corporation |
| 243 | coverage levels of 90 percent and 50 percent. |
| 244 | c. If the corporation determines that additional coverage |
| 245 | levels are necessary to maximize participation in quota share |
| 246 | primary insurance agreements by authorized insurers, the |
| 247 | corporation may establish additional coverage levels. However, |
| 248 | the corporation's quota share primary insurance coverage level |
| 249 | may not exceed 90 percent. |
| 250 | d. Any quota share primary insurance agreement entered |
| 251 | into between an authorized insurer and the corporation must |
| 252 | provide for a uniform specified percentage of coverage of |
| 253 | hurricane losses, by county or territory as set forth by the |
| 254 | corporation board, for all eligible risks of the authorized |
| 255 | insurer covered under the quota share primary insurance |
| 256 | agreement. |
| 257 | e. Any quota share primary insurance agreement entered |
| 258 | into between an authorized insurer and the corporation is |
| 259 | subject to review and approval by the office. However, such |
| 260 | agreement shall be authorized only as to insurance contracts |
| 261 | entered into between an authorized insurer and an insured who is |
| 262 | already insured by the corporation for wind coverage. |
| 263 | f. For all eligible risks covered under quota share |
| 264 | primary insurance agreements, the exposure and coverage levels |
| 265 | for both the corporation and authorized insurers shall be |
| 266 | reported by the corporation to the Florida Hurricane Catastrophe |
| 267 | Fund. For all policies of eligible risks covered under quota |
| 268 | share primary insurance agreements, the corporation and the |
| 269 | authorized insurer shall maintain complete and accurate records |
| 270 | for the purpose of exposure and loss reimbursement audits as |
| 271 | required by Florida Hurricane Catastrophe Fund rules. The |
| 272 | corporation and the authorized insurer shall each maintain |
| 273 | duplicate copies of policy declaration pages and supporting |
| 274 | claims documents. |
| 275 | g. The corporation board shall establish in its plan of |
| 276 | operation standards for quota share agreements which ensure that |
| 277 | there is no discriminatory application among insurers as to the |
| 278 | terms of quota share agreements, pricing of quota share |
| 279 | agreements, incentive provisions if any, and consideration paid |
| 280 | for servicing policies or adjusting claims. |
| 281 | h. The quota share primary insurance agreement between the |
| 282 | corporation and an authorized insurer must set forth the |
| 283 | specific terms under which coverage is provided, including, but |
| 284 | not limited to, the sale and servicing of policies issued under |
| 285 | the agreement by the insurance agent of the authorized insurer |
| 286 | producing the business, the reporting of information concerning |
| 287 | eligible risks, the payment of premium to the corporation, and |
| 288 | arrangements for the adjustment and payment of hurricane claims |
| 289 | incurred on eligible risks by the claims adjuster and personnel |
| 290 | of the authorized insurer. Entering into a quota sharing |
| 291 | insurance agreement between the corporation and an authorized |
| 292 | insurer shall be voluntary and at the discretion of the |
| 293 | authorized insurer. |
| 294 | 3. May provide that the corporation may employ or |
| 295 | otherwise contract with individuals or other entities to provide |
| 296 | administrative or professional services that may be appropriate |
| 297 | to effectuate the plan. The corporation shall have the power to |
| 298 | borrow funds, by issuing bonds or by incurring other |
| 299 | indebtedness, and shall have other powers reasonably necessary |
| 300 | to effectuate the requirements of this subsection, including, |
| 301 | without limitation, the power to issue bonds and incur other |
| 302 | indebtedness in order to refinance outstanding bonds or other |
| 303 | indebtedness. The corporation may, but is not required to, seek |
| 304 | judicial validation of its bonds or other indebtedness under |
| 305 | chapter 75. The corporation may issue bonds or incur other |
| 306 | indebtedness, or have bonds issued on its behalf by a unit of |
| 307 | local government pursuant to subparagraph (g)2., in the absence |
| 308 | of a hurricane or other weather-related event, upon a |
| 309 | determination by the corporation, subject to approval by the |
| 310 | office, that such action would enable it to efficiently meet the |
| 311 | financial obligations of the corporation and that such |
| 312 | financings are reasonably necessary to effectuate the |
| 313 | requirements of this subsection. The corporation is authorized |
| 314 | to take all actions needed to facilitate tax-free status for any |
| 315 | such bonds or indebtedness, including formation of trusts or |
| 316 | other affiliated entities. The corporation shall have the |
| 317 | authority to pledge assessments, projected recoveries from the |
| 318 | Florida Hurricane Catastrophe Fund, other reinsurance |
| 319 | recoverables, market equalization and other surcharges, and |
| 320 | other funds available to the corporation as security for bonds |
| 321 | or other indebtedness. In recognition of s. 10, Art. I of the |
| 322 | State Constitution, prohibiting the impairment of obligations of |
| 323 | contracts, it is the intent of the Legislature that no action be |
| 324 | taken whose purpose is to impair any bond indenture or financing |
| 325 | agreement or any revenue source committed by contract to such |
| 326 | bond or other indebtedness. |
| 327 | 4.a. Must require that the corporation operate subject to |
| 328 | the supervision and approval of a board of governors consisting |
| 329 | of eight individuals who are residents of this state, from |
| 330 | different geographical areas of this state. The Governor, the |
| 331 | Chief Financial Officer, the President of the Senate, and the |
| 332 | Speaker of the House of Representatives shall each appoint two |
| 333 | members of the board. At least one of the two members appointed |
| 334 | by each appointing officer must have demonstrated expertise in |
| 335 | insurance. The Chief Financial Officer shall designate one of |
| 336 | the appointees as chair. All board members serve at the pleasure |
| 337 | of the appointing officer. All members of the board of governors |
| 338 | are subject to removal at will by the officers who appointed |
| 339 | them. All board members, including the chair, must be appointed |
| 340 | to serve for 3-year terms beginning annually on a date |
| 341 | designated by the plan. Any board vacancy shall be filled for |
| 342 | the unexpired term by the appointing officer. The Chief |
| 343 | Financial Officer shall appoint a technical advisory group to |
| 344 | provide information and advice to the board of governors in |
| 345 | connection with the board's duties under this subsection. The |
| 346 | executive director and senior managers of the corporation shall |
| 347 | be engaged by the board and serve at the pleasure of the board. |
| 348 | Any executive director appointed on or after July 1, 2006, is |
| 349 | subject to confirmation by the Senate. The executive director is |
| 350 | responsible for employing other staff as the corporation may |
| 351 | require, subject to review and concurrence by the board. |
| 352 | b. The board shall create a Market Accountability Advisory |
| 353 | Committee to assist the corporation in developing awareness of |
| 354 | its rates and its customer and agent service levels in |
| 355 | relationship to the voluntary market insurers writing similar |
| 356 | coverage. The members of the advisory committee shall consist of |
| 357 | the following 11 persons, one of whom must be elected chair by |
| 358 | the members of the committee: four representatives, one |
| 359 | appointed by the Florida Association of Insurance Agents, one by |
| 360 | the Florida Association of Insurance and Financial Advisors, one |
| 361 | by the Professional Insurance Agents of Florida, and one by the |
| 362 | Latin American Association of Insurance Agencies; three |
| 363 | representatives appointed by the insurers with the three highest |
| 364 | voluntary market share of residential property insurance |
| 365 | business in the state; one representative from the Office of |
| 366 | Insurance Regulation; one consumer appointed by the board who is |
| 367 | insured by the corporation at the time of appointment to the |
| 368 | committee; one representative appointed by the Florida |
| 369 | Association of Realtors; and one representative appointed by the |
| 370 | Florida Bankers Association. All members must serve for 3-year |
| 371 | terms and may serve for consecutive terms. The committee shall |
| 372 | report to the corporation at each board meeting on insurance |
| 373 | market issues which may include rates and rate competition with |
| 374 | the voluntary market; service, including policy issuance, claims |
| 375 | processing, and general responsiveness to policyholders, |
| 376 | applicants, and agents; and matters relating to depopulation. |
| 377 | 5. Must provide a procedure for determining the |
| 378 | eligibility of a risk for coverage, as follows: |
| 379 | a. Subject to the provisions of s. 627.3517, with respect |
| 380 | to personal lines residential risks, if the risk is offered |
| 381 | coverage from an authorized insurer at the insurer's approved |
| 382 | rate under either a standard policy including wind coverage or, |
| 383 | if consistent with the insurer's underwriting rules as filed |
| 384 | with the office, a basic policy including wind coverage, for a |
| 385 | new application to the corporation for coverage, the risk is not |
| 386 | eligible for any policy issued by the corporation unless the |
| 387 | premium for coverage from the authorized insurer is more than 15 |
| 388 | 25 percent greater than the premium for comparable coverage from |
| 389 | the corporation. If the risk is not able to obtain any such |
| 390 | offer, the risk is eligible for either a standard policy |
| 391 | including wind coverage or a basic policy including wind |
| 392 | coverage issued by the corporation; however, if the risk could |
| 393 | not be insured under a standard policy including wind coverage |
| 394 | regardless of market conditions, the risk shall be eligible for |
| 395 | a basic policy including wind coverage unless rejected under |
| 396 | subparagraph 8. However, with regard to a policyholder of the |
| 397 | corporation, the policyholder remains eligible for coverage from |
| 398 | the corporation regardless of any offer of coverage from an |
| 399 | authorized insurer or surplus lines insurer. The corporation |
| 400 | shall determine the type of policy to be provided on the basis |
| 401 | of objective standards specified in the underwriting manual and |
| 402 | based on generally accepted underwriting practices. |
| 403 | (I) If the risk accepts an offer of coverage through the |
| 404 | market assistance plan or an offer of coverage through a |
| 405 | mechanism established by the corporation before a policy is |
| 406 | issued to the risk by the corporation or during the first 30 |
| 407 | days of coverage by the corporation, and the producing agent who |
| 408 | submitted the application to the plan or to the corporation is |
| 409 | not currently appointed by the insurer, the insurer shall: |
| 410 | (A) Pay to the producing agent of record of the policy, |
| 411 | for the first year, an amount that is the greater of the |
| 412 | insurer's usual and customary commission for the type of policy |
| 413 | written or a fee equal to the usual and customary commission of |
| 414 | the corporation; or |
| 415 | (B) Offer to allow the producing agent of record of the |
| 416 | policy to continue servicing the policy for a period of not less |
| 417 | than 1 year and offer to pay the agent the greater of the |
| 418 | insurer's or the corporation's usual and customary commission |
| 419 | for the type of policy written. |
| 420 |
|
| 421 | If the producing agent is unwilling or unable to accept |
| 422 | appointment, the new insurer shall pay the agent in accordance |
| 423 | with sub-sub-sub-subparagraph (A). |
| 424 | (II) When the corporation enters into a contractual |
| 425 | agreement for a take-out plan, the producing agent of record of |
| 426 | the corporation policy is entitled to retain any unearned |
| 427 | commission on the policy, and the insurer shall: |
| 428 | (A) Pay to the producing agent of record of the |
| 429 | corporation policy, for the first year, an amount that is the |
| 430 | greater of the insurer's usual and customary commission for the |
| 431 | type of policy written or a fee equal to the usual and customary |
| 432 | commission of the corporation; or |
| 433 | (B) Offer to allow the producing agent of record of the |
| 434 | corporation policy to continue servicing the policy for a period |
| 435 | of not less than 1 year and offer to pay the agent the greater |
| 436 | of the insurer's or the corporation's usual and customary |
| 437 | commission for the type of policy written. |
| 438 |
|
| 439 | If the producing agent is unwilling or unable to accept |
| 440 | appointment, the new insurer shall pay the agent in accordance |
| 441 | with sub-sub-sub-subparagraph (A). |
| 442 | b. With respect to commercial lines residential risks, for |
| 443 | a new application to the corporation for coverage, if the risk |
| 444 | is offered coverage under a policy including wind coverage from |
| 445 | an authorized insurer at its approved rate, the risk is not |
| 446 | eligible for any policy issued by the corporation unless the |
| 447 | premium for coverage from the authorized insurer is more than 15 |
| 448 | 25 percent greater than the premium for comparable coverage from |
| 449 | the corporation. If the risk is not able to obtain any such |
| 450 | offer, the risk is eligible for a policy including wind coverage |
| 451 | issued by the corporation. However, with regard to a |
| 452 | policyholder of the corporation, the policyholder remains |
| 453 | eligible for coverage from the corporation regardless of any |
| 454 | offer of coverage from an authorized insurer or surplus lines |
| 455 | insurer. |
| 456 | (I) If the risk accepts an offer of coverage through the |
| 457 | market assistance plan or an offer of coverage through a |
| 458 | mechanism established by the corporation before a policy is |
| 459 | issued to the risk by the corporation or during the first 30 |
| 460 | days of coverage by the corporation, and the producing agent who |
| 461 | submitted the application to the plan or the corporation is not |
| 462 | currently appointed by the insurer, the insurer shall: |
| 463 | (A) Pay to the producing agent of record of the policy, |
| 464 | for the first year, an amount that is the greater of the |
| 465 | insurer's usual and customary commission for the type of policy |
| 466 | written or a fee equal to the usual and customary commission of |
| 467 | the corporation; or |
| 468 | (B) Offer to allow the producing agent of record of the |
| 469 | policy to continue servicing the policy for a period of not less |
| 470 | than 1 year and offer to pay the agent the greater of the |
| 471 | insurer's or the corporation's usual and customary commission |
| 472 | for the type of policy written. |
| 473 |
|
| 474 | If the producing agent is unwilling or unable to accept |
| 475 | appointment, the new insurer shall pay the agent in accordance |
| 476 | with sub-sub-sub-subparagraph (A). |
| 477 | (II) When the corporation enters into a contractual |
| 478 | agreement for a take-out plan, the producing agent of record of |
| 479 | the corporation policy is entitled to retain any unearned |
| 480 | commission on the policy, and the insurer shall: |
| 481 | (A) Pay to the producing agent of record of the |
| 482 | corporation policy, for the first year, an amount that is the |
| 483 | greater of the insurer's usual and customary commission for the |
| 484 | type of policy written or a fee equal to the usual and customary |
| 485 | commission of the corporation; or |
| 486 | (B) Offer to allow the producing agent of record of the |
| 487 | corporation policy to continue servicing the policy for a period |
| 488 | of not less than 1 year and offer to pay the agent the greater |
| 489 | of the insurer's or the corporation's usual and customary |
| 490 | commission for the type of policy written. |
| 491 |
|
| 492 | If the producing agent is unwilling or unable to accept |
| 493 | appointment, the new insurer shall pay the agent in accordance |
| 494 | with sub-sub-sub-subparagraph (A). |
| 495 | 6. Must provide by July 1, 2007, that an application for |
| 496 | coverage for a new policy is subject to a waiting period of 10 |
| 497 | days before coverage is effective, during which time the |
| 498 | corporation shall make such application available for review by |
| 499 | general lines agents and authorized property and casualty |
| 500 | insurers. The board shall approve an exception that allows for |
| 501 | coverage to be effective before the end of the 10-day waiting |
| 502 | period, for coverage issued in conjunction with a real estate |
| 503 | closing. The board may approve such other exceptions as the |
| 504 | board determines are necessary to prevent lapses in coverage. |
| 505 | 7. Must include rules for classifications of risks and |
| 506 | rates therefor. |
| 507 | 8. Must provide that if premium and investment income for |
| 508 | an account attributable to a particular calendar year are in |
| 509 | excess of projected losses and expenses for the account |
| 510 | attributable to that year, such excess shall be held in surplus |
| 511 | in the account. Such surplus shall be available to defray |
| 512 | deficits in that account as to future years and shall be used |
| 513 | for that purpose prior to assessing assessable insurers and |
| 514 | assessable insureds as to any calendar year. |
| 515 | 9. Must provide objective criteria and procedures to be |
| 516 | uniformly applied for all applicants in determining whether an |
| 517 | individual risk is so hazardous as to be uninsurable. In making |
| 518 | this determination and in establishing the criteria and |
| 519 | procedures, the following shall be considered: |
| 520 | a. Whether the likelihood of a loss for the individual |
| 521 | risk is substantially higher than for other risks of the same |
| 522 | class; and |
| 523 | b. Whether the uncertainty associated with the individual |
| 524 | risk is such that an appropriate premium cannot be determined. |
| 525 |
|
| 526 | The acceptance or rejection of a risk by the corporation shall |
| 527 | be construed as the private placement of insurance, and the |
| 528 | provisions of chapter 120 shall not apply. |
| 529 | 10. Must provide that the corporation shall make its best |
| 530 | efforts to procure catastrophe reinsurance at reasonable rates, |
| 531 | to cover its projected 100-year probable maximum loss as |
| 532 | determined by the board of governors. |
| 533 | 11. Must provide that in the event of regular deficit |
| 534 | assessments under sub-subparagraph (b)3.a. or sub-subparagraph |
| 535 | (b)3.b., in the personal lines account, the commercial lines |
| 536 | residential account, or the high-risk account, the corporation |
| 537 | shall levy upon corporation policyholders in its next rate |
| 538 | filing, or by a separate rate filing solely for this purpose, a |
| 539 | Citizens policyholder surcharge arising from a regular |
| 540 | assessment in such account in a percentage equal to the total |
| 541 | amount of such regular assessments divided by the aggregate |
| 542 | statewide direct written premium for subject lines of business |
| 543 | for the prior calendar year. For purposes of calculating the |
| 544 | Citizens policyholder surcharge to be levied under this |
| 545 | subparagraph, the total amount of the regular assessment to |
| 546 | which this surcharge is related shall be determined as set forth |
| 547 | in subparagraph (b)3., without deducting the estimated Citizens |
| 548 | policyholder surcharge. Citizens policyholder surcharges under |
| 549 | this subparagraph are not considered premium and are not subject |
| 550 | to commissions, fees, or premium taxes; however, failure to pay |
| 551 | a market equalization surcharge shall be treated as failure to |
| 552 | pay premium. |
| 553 | 12. The policies issued by the corporation must provide |
| 554 | that, if the corporation or the market assistance plan obtains |
| 555 | an offer from an authorized insurer to cover the risk at its |
| 556 | approved rates, the risk is no longer eligible for renewal |
| 557 | through the corporation, except as otherwise provided in this |
| 558 | subsection. |
| 559 | 13. Corporation policies and applications must include a |
| 560 | notice that the corporation policy could, under this section, be |
| 561 | replaced with a policy issued by an authorized insurer that does |
| 562 | not provide coverage identical to the coverage provided by the |
| 563 | corporation. The notice shall also specify that acceptance of |
| 564 | corporation coverage creates a conclusive presumption that the |
| 565 | applicant or policyholder is aware of this potential. |
| 566 | 14. May establish, subject to approval by the office, |
| 567 | different eligibility requirements and operational procedures |
| 568 | for any line or type of coverage for any specified county or |
| 569 | area if the board determines that such changes to the |
| 570 | eligibility requirements and operational procedures are |
| 571 | justified due to the voluntary market being sufficiently stable |
| 572 | and competitive in such area or for such line or type of |
| 573 | coverage and that consumers who, in good faith, are unable to |
| 574 | obtain insurance through the voluntary market through ordinary |
| 575 | methods would continue to have access to coverage from the |
| 576 | corporation. When coverage is sought in connection with a real |
| 577 | property transfer, such requirements and procedures shall not |
| 578 | provide for an effective date of coverage later than the date of |
| 579 | the closing of the transfer as established by the transferor, |
| 580 | the transferee, and, if applicable, the lender. |
| 581 | 15. Must provide that, with respect to the high-risk |
| 582 | account, any assessable insurer with a surplus as to |
| 583 | policyholders of $25 million or less writing 25 percent or more |
| 584 | of its total countrywide property insurance premiums in this |
| 585 | state may petition the office, within the first 90 days of each |
| 586 | calendar year, to qualify as a limited apportionment company. A |
| 587 | regular assessment levied by the corporation on a limited |
| 588 | apportionment company for a deficit incurred by the corporation |
| 589 | for the high-risk account in 2006 or thereafter may be paid to |
| 590 | the corporation on a monthly basis as the assessments are |
| 591 | collected by the limited apportionment company from its insureds |
| 592 | pursuant to s. 627.3512, but the regular assessment must be paid |
| 593 | in full within 12 months after being levied by the corporation. |
| 594 | A limited apportionment company shall collect from its |
| 595 | policyholders any emergency assessment imposed under sub- |
| 596 | subparagraph (b)3.d. The plan shall provide that, if the office |
| 597 | determines that any regular assessment will result in an |
| 598 | impairment of the surplus of a limited apportionment company, |
| 599 | the office may direct that all or part of such assessment be |
| 600 | deferred as provided in subparagraph (g)4. However, there shall |
| 601 | be no limitation or deferment of an emergency assessment to be |
| 602 | collected from policyholders under sub-subparagraph (b)3.d. |
| 603 | 16. Must provide that the corporation appoint as its |
| 604 | licensed agents only those agents who also hold an appointment |
| 605 | as defined in s. 626.015(3) with an insurer who at the time of |
| 606 | the agent's initial appointment by the corporation is authorized |
| 607 | to write and is actually writing personal lines residential |
| 608 | property coverage, commercial residential property coverage, or |
| 609 | commercial nonresidential property coverage within the state. |
| 610 | 17. Must provide, by July 1, 2007, a premium payment plan |
| 611 | option to its policyholders which allows for quarterly and |
| 612 | semiannual payment of premiums. |
| 613 | 18. Must provide, effective June 1, 2007, that the |
| 614 | corporation contract with each insurer providing the non-wind |
| 615 | coverage for risks insured by the corporation in the high-risk |
| 616 | account, requiring that the insurer provide claims adjusting |
| 617 | services for the wind coverage provided by the corporation for |
| 618 | such risks. An insurer is required to enter into this contract |
| 619 | as a condition of providing non-wind coverage for a risk that is |
| 620 | insured by the corporation in the high-risk account unless the |
| 621 | board finds, after a hearing, that the insurer is not capable of |
| 622 | providing adjusting services at an acceptable level of quality |
| 623 | to corporation policyholders. The terms and conditions of such |
| 624 | contracts must be substantially the same as the contracts that |
| 625 | the corporation executed with insurers under the "adjust-your- |
| 626 | own" program in 2006, except as may be mutually agreed to by the |
| 627 | parties and except for such changes that the board determines |
| 628 | are necessary to ensure that claims are adjusted appropriately. |
| 629 | The corporation shall provide a process for neutral arbitration |
| 630 | of any dispute between the corporation and the insurer regarding |
| 631 | the terms of the contract. The corporation shall review and |
| 632 | monitor the performance of insurers under these contracts. |
| 633 | 19. Must limit coverage on mobile homes or manufactured |
| 634 | homes built prior to 1994 to actual cash value of the dwelling |
| 635 | rather than replacement costs of the dwelling. |
| 636 | 20. May provide such limits of coverage as the board |
| 637 | determines, consistent with the requirements of this subsection. |
| 638 | 21. May require commercial property to meet specified |
| 639 | hurricane mitigation construction features as a condition of |
| 640 | eligibility for coverage. |
| 641 | (m)1. Rates for coverage provided by the corporation shall |
| 642 | be actuarially sound and subject to the requirements of s. |
| 643 | 627.062, except as otherwise provided in this paragraph. The |
| 644 | corporation shall file its recommended rates with the office at |
| 645 | least annually. The corporation shall provide any additional |
| 646 | information regarding the rates which the office requires. The |
| 647 | office shall consider the recommendations of the board and issue |
| 648 | a final order establishing the rates for the corporation within |
| 649 | 45 days after the recommended rates are filed. The corporation |
| 650 | may not pursue an administrative challenge or judicial review of |
| 651 | the final order of the office. |
| 652 | 2. In addition to the rates otherwise determined pursuant |
| 653 | to this paragraph, the corporation shall impose and collect an |
| 654 | amount equal to the premium tax provided for in s. 624.509 to |
| 655 | augment the financial resources of the corporation. |
| 656 | 3. After the public hurricane loss-projection model under |
| 657 | s. 627.06281 has been found to be accurate and reliable by the |
| 658 | Florida Commission on Hurricane Loss Projection Methodology, |
| 659 | that model shall serve as the minimum benchmark for determining |
| 660 | the windstorm portion of the corporation's rates. This |
| 661 | subparagraph does not require or allow the corporation to adopt |
| 662 | rates lower than the rates otherwise required or allowed by this |
| 663 | paragraph. |
| 664 | 4. The rate filings for the corporation which were |
| 665 | approved by the office and which took effect January 1, 2007, |
| 666 | are rescinded, except for those rates that were lowered. As soon |
| 667 | as possible, the corporation shall begin using the lower rates |
| 668 | that were in effect on December 31, 2006, and shall provide |
| 669 | refunds to policyholders who have paid higher rates as a result |
| 670 | of that rate filing. The rates in effect on December 31, 2006, |
| 671 | shall remain in effect for the 2007 and 2008 calendar years year |
| 672 | except for any rate change that results in a lower rate. The |
| 673 | next rate change that may increase rates shall take effect |
| 674 | January 1, 2009 2008, pursuant to a new rate filing recommended |
| 675 | by the corporation and established by the office, subject to the |
| 676 | requirements of this paragraph. |
| 677 | Section 2. Effective January 1, 2008, and notwithstanding |
| 678 | any other provision of law: |
| 679 | (1) A new certificate of authority for the transaction of |
| 680 | residential property insurance may not be issued to any insurer |
| 681 | domiciled in this state that is a wholly owned subsidiary of an |
| 682 | insurer authorized to do business in any other state. |
| 683 | (2) The rate filings of any insurer domiciled in this |
| 684 | state that is a wholly owned subsidiary of an insurer authorized |
| 685 | to do business in any other state shall include information |
| 686 | relating to the profits of the parent company of the insurer |
| 687 | domiciled in this state. |
| 688 | Section 3. Except as otherwise expressly provided in this |
| 689 | act, this act shall take effect upon becoming a law. |
