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CS/HB 1267

1
A bill to be entitled
2An act relating to property insurance; amending s.
3627.351, F.S.; revising legislative findings to provide a
4finding that the lack of affordable property insurance
5threatens the public health, safety, and welfare and
6threatens the economic health of the state; revising
7provisions for determining eligibility for coverage under
8the corporation; reinstating certain rate filings by the
9corporation; prohibiting issuance of new certificates of
10authority to certain insurers; requiring rate filings of
11certain insurers to include certain parent company profits
12information; providing effective dates.
13
14Be It Enacted by the Legislature of the State of Florida:
15
16     Section 1.  Paragraphs (a), (c), and (m) of subsection (6)
17of section 627.351, Florida Statutes, as amended by section 21
18of 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
22ensure the existence of an orderly market for property insurance
23for citizens of this state and businesses in this state. The
24Legislature finds that private insurers are unwilling or unable
25to provide affordable property insurance coverage in this state
26to the extent sought and needed. The absence of affordable
27property insurance threatens the public health, safety, and
28welfare and likewise threatens the economic health of the state.
29The state therefore has a compelling public interest and a
30public purpose to assist in ensuring that property in the state
31is insured and that property is insured at affordable rates so
32as to facilitate the remediation, reconstruction, and
33replacement of damaged or destroyed property in order to reduce
34or avoid the negative effects otherwise resulting to the public
35health, safety, and welfare, to the economy of the state, and to
36the revenues of the state and local governments which are needed
37to provide for the public welfare. It is necessary, therefore,
38to provide affordable property insurance to applicants who are
39in good faith entitled to procure insurance through the
40voluntary market but are unable to do so. The Legislature
41intends by this subsection that affordable property insurance be
42provided and that such insurance continue to be provided, as
43long as necessary, through Citizens Property Insurance
44Corporation, a government entity that is an integral part of the
45state and that is not a private insurance company. To that end,
46Citizens Property Insurance Company shall strive to increase the
47availability of affordable property insurance in this state,
48while achieving efficiencies and economies and while providing
49service to policyholders, applicants, and agents which is no
50less than the quality generally provided in the voluntary
51market, for the achievement of the foregoing public purposes.
52Because it is essential for this government entity to have the
53maximum financial resources to pay claims following a
54catastrophic hurricane, it is the intent of the Legislature that
55Citizens Property Insurance Corporation continue to be an
56integral part of the state and that the income of the
57corporation be exempt from federal income taxation and that
58interest on the debt obligations issued by the corporation be
59exempt from federal income taxation. The Legislature finds that
60actual and threatened catastrophic losses to property in this
61state from hurricanes have caused insurers to be unwilling or
62unable to provide property insurance coverage to the extent
63sought and needed. It is in the public interest and a public
64purpose to assist in assuring that property in the state is
65insured so as to facilitate the remediation, reconstruction, and
66replacement of damaged or destroyed property in order to reduce
67or avoid the negative effects otherwise resulting to the public
68health, safety, and welfare; to the economy of the state; and to
69the revenues of the state and local governments needed to
70provide for the public welfare. It is necessary, therefore, to
71provide property insurance to applicants who are in good faith
72entitled to procure insurance through the voluntary market but
73are unable to do so. The Legislature intends by this subsection
74that property insurance be provided and that it continues, as
75long as necessary, through an entity organized to achieve
76efficiencies and economies, while providing service to
77policyholders, applicants, and agents that is no less than the
78quality generally provided in the voluntary market, all toward
79the achievement of the foregoing public purposes. Because it is
80essential for the corporation to have the maximum financial
81resources to pay claims following a catastrophic hurricane, it
82is the intent of the Legislature that the income of the
83corporation be exempt from federal income taxation and that
84interest on the debt obligations issued by the corporation be
85exempt from federal income taxation.
86     2.  The Residential Property and Casualty Joint
87Underwriting Association originally created by this statute
88shall be known, as of July 1, 2002, as the Citizens Property
89Insurance Corporation. The corporation shall provide insurance
90for residential and commercial property, for applicants who are
91in good faith entitled, but are unable, to procure insurance
92through the voluntary market. The corporation shall operate
93pursuant to a plan of operation approved by order of the
94Financial Services Commission. The plan is subject to continuous
95review by the commission. The commission may, by order, withdraw
96approval of all or part of a plan if the commission determines
97that conditions have changed since approval was granted and that
98the purposes of the plan require changes in the plan. The
99corporation shall continue to operate pursuant to the plan of
100operation approved by the Office of Insurance Regulation until
101October 1, 2006. For the purposes of this subsection,
102residential coverage includes both personal lines residential
103coverage, which consists of the type of coverage provided by
104homeowner's, mobile home owner's, dwelling, tenant's,
105condominium unit owner's, and similar policies, and commercial
106lines residential coverage, which consists of the type of
107coverage provided by condominium association, apartment
108building, 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
112under chapter 196;
113     b.  Property for which the owner has a current, written
114lease with a renter for a term of at least 7 months and for
115which the dwelling is insured by the corporation for $200,000 or
116less;
117     c.  An owner-occupied mobile home or manufactured home, as
118defined in s. 320.01, which is permanently affixed to real
119property, is owned by a Florida resident, and has been granted a
120homestead exemption under chapter 196 or, if the owner does not
121own the real property, the owner certifies that the mobile home
122or 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
126licensed by any not-for-profit corporation qualified under s.
127501(c)(3) of the United States Internal Revenue Code; or a
128continuing care retirement community that is certified under
129chapter 651 and that receives an exemption from ad valorem taxes
130under chapter 196.
131     4.  For the purposes of this subsection, the term
132"nonhomestead property" means property that is not homestead
133property.
134     5.  Effective July 1, 2008, a personal lines residential
135structure that has a dwelling replacement cost of $1 million or
136more, or a single condominium unit that has a combined dwelling
137and content replacement cost of $1 million or more is not
138eligible for coverage by the corporation. Such dwellings insured
139by the corporation on June 30, 2008, may continue to be covered
140by the corporation until the end of the policy term. However,
141such dwellings that are insured by the corporation and become
142ineligible for coverage due to the provisions of this
143subparagraph may reapply and obtain coverage in the high-risk
144account and be considered "nonhomestead property" if the
145property owner provides the corporation with a sworn affidavit
146from one or more insurance agents, on a form provided by the
147corporation, stating that the agents have made their best
148efforts to obtain coverage and that the property has been
149rejected for coverage by at least one authorized insurer and at
150least three surplus lines insurers. If such conditions are met,
151the dwelling may be insured by the corporation for up to 3
152years, after which time the dwelling is ineligible for coverage.
153The office shall approve the method used by the corporation for
154valuing the dwelling replacement cost for the purposes of this
155subparagraph. If a policyholder is insured by the corporation
156prior to being determined to be ineligible pursuant to this
157subparagraph and such policyholder files a lawsuit challenging
158the determination, the policyholder may remain insured by the
159corporation until the conclusion of the litigation.
160     6.  For properties constructed on or after January 1, 2009,
161the corporation may not insure any property located within 2,500
162feet landward of the coastal construction control line created
163pursuant to s. 161.053 unless the property meets the
164requirements of the code-plus building standards developed by
165the Florida Building Commission.
166     7.  It is the intent of the Legislature that policyholders,
167applicants, and agents of the corporation receive service and
168treatment of the highest possible level but never less than that
169generally provided in the voluntary market. It also is intended
170that the corporation be held to service standards no less than
171those applied to insurers in the voluntary market by the office
172with respect to responsiveness, timeliness, customer courtesy,
173and overall dealings with policyholders, applicants, or agents
174of the corporation.
175     (c)  The plan of operation of the corporation:
176     1.  Must provide for adoption of residential property and
177casualty insurance policy forms and commercial residential and
178nonresidential property insurance forms, which forms must be
179approved by the office prior to use. The corporation shall adopt
180the following policy forms:
181     a.  Standard personal lines policy forms that are
182comprehensive multiperil policies providing full coverage of a
183residential property equivalent to the coverage provided in the
184private insurance market under an HO-3, HO-4, or HO-6 policy.
185     b.  Basic personal lines policy forms that are policies
186similar to an HO-8 policy or a dwelling fire policy that provide
187coverage meeting the requirements of the secondary mortgage
188market, but which coverage is more limited than the coverage
189under a standard policy.
190     c.  Commercial lines residential and nonresidential policy
191forms that are generally similar to the basic perils of full
192coverage obtainable for commercial residential structures and
193commercial nonresidential structures in the admitted voluntary
194market.
195     d.  Personal lines and commercial lines residential
196property insurance forms that cover the peril of wind only. The
197forms are applicable only to residential properties located in
198areas eligible for coverage under the high-risk account referred
199to in sub-subparagraph (b)2.a.
200     e.  Commercial lines nonresidential property insurance
201forms that cover the peril of wind only. The forms are
202applicable only to nonresidential properties located in areas
203eligible for coverage under the high-risk account referred to in
204sub-subparagraph (b)2.a.
205     f.  The corporation may adopt variations of the policy
206forms listed in sub-subparagraphs a.-e. that contain more
207restrictive coverage.
208     2.a.  Must provide that the corporation adopt a program in
209which the corporation and authorized insurers enter into quota
210share primary insurance agreements for hurricane coverage, as
211defined in s. 627.4025(2)(a), for eligible risks, and adopt
212property insurance forms for eligible risks which cover the
213peril of wind only. As used in this subsection, the term:
214     (I)  "Quota share primary insurance" means an arrangement
215in which the primary hurricane coverage of an eligible risk is
216provided in specified percentages by the corporation and an
217authorized insurer. The corporation and authorized insurer are
218each solely responsible for a specified percentage of hurricane
219coverage of an eligible risk as set forth in a quota share
220primary insurance agreement between the corporation and an
221authorized insurer and the insurance contract. The
222responsibility of the corporation or authorized insurer to pay
223its specified percentage of hurricane losses of an eligible
224risk, as set forth in the quota share primary insurance
225agreement, may not be altered by the inability of the other
226party to the agreement to pay its specified percentage of
227hurricane losses. Eligible risks that are provided hurricane
228coverage through a quota share primary insurance arrangement
229must be provided policy forms that set forth the obligations of
230the corporation and authorized insurer under the arrangement,
231clearly specify the percentages of quota share primary insurance
232provided by the corporation and authorized insurer, and
233conspicuously and clearly state that neither the authorized
234insurer nor the corporation may be held responsible beyond its
235specified percentage of coverage of hurricane losses.
236     (II)  "Eligible risks" means personal lines residential and
237commercial lines residential risks that meet the underwriting
238criteria of the corporation and are located in areas that were
239eligible for coverage by the Florida Windstorm Underwriting
240Association on January 1, 2002.
241     b.  The corporation may enter into quota share primary
242insurance agreements with authorized insurers at corporation
243coverage levels of 90 percent and 50 percent.
244     c.  If the corporation determines that additional coverage
245levels are necessary to maximize participation in quota share
246primary insurance agreements by authorized insurers, the
247corporation may establish additional coverage levels. However,
248the corporation's quota share primary insurance coverage level
249may not exceed 90 percent.
250     d.  Any quota share primary insurance agreement entered
251into between an authorized insurer and the corporation must
252provide for a uniform specified percentage of coverage of
253hurricane losses, by county or territory as set forth by the
254corporation board, for all eligible risks of the authorized
255insurer covered under the quota share primary insurance
256agreement.
257     e.  Any quota share primary insurance agreement entered
258into between an authorized insurer and the corporation is
259subject to review and approval by the office. However, such
260agreement shall be authorized only as to insurance contracts
261entered into between an authorized insurer and an insured who is
262already insured by the corporation for wind coverage.
263     f.  For all eligible risks covered under quota share
264primary insurance agreements, the exposure and coverage levels
265for both the corporation and authorized insurers shall be
266reported by the corporation to the Florida Hurricane Catastrophe
267Fund. For all policies of eligible risks covered under quota
268share primary insurance agreements, the corporation and the
269authorized insurer shall maintain complete and accurate records
270for the purpose of exposure and loss reimbursement audits as
271required by Florida Hurricane Catastrophe Fund rules. The
272corporation and the authorized insurer shall each maintain
273duplicate copies of policy declaration pages and supporting
274claims documents.
275     g.  The corporation board shall establish in its plan of
276operation standards for quota share agreements which ensure that
277there is no discriminatory application among insurers as to the
278terms of quota share agreements, pricing of quota share
279agreements, incentive provisions if any, and consideration paid
280for servicing policies or adjusting claims.
281     h.  The quota share primary insurance agreement between the
282corporation and an authorized insurer must set forth the
283specific terms under which coverage is provided, including, but
284not limited to, the sale and servicing of policies issued under
285the agreement by the insurance agent of the authorized insurer
286producing the business, the reporting of information concerning
287eligible risks, the payment of premium to the corporation, and
288arrangements for the adjustment and payment of hurricane claims
289incurred on eligible risks by the claims adjuster and personnel
290of the authorized insurer. Entering into a quota sharing
291insurance agreement between the corporation and an authorized
292insurer shall be voluntary and at the discretion of the
293authorized insurer.
294     3.  May provide that the corporation may employ or
295otherwise contract with individuals or other entities to provide
296administrative or professional services that may be appropriate
297to effectuate the plan. The corporation shall have the power to
298borrow funds, by issuing bonds or by incurring other
299indebtedness, and shall have other powers reasonably necessary
300to effectuate the requirements of this subsection, including,
301without limitation, the power to issue bonds and incur other
302indebtedness in order to refinance outstanding bonds or other
303indebtedness. The corporation may, but is not required to, seek
304judicial validation of its bonds or other indebtedness under
305chapter 75. The corporation may issue bonds or incur other
306indebtedness, or have bonds issued on its behalf by a unit of
307local government pursuant to subparagraph (g)2., in the absence
308of a hurricane or other weather-related event, upon a
309determination by the corporation, subject to approval by the
310office, that such action would enable it to efficiently meet the
311financial obligations of the corporation and that such
312financings are reasonably necessary to effectuate the
313requirements of this subsection. The corporation is authorized
314to take all actions needed to facilitate tax-free status for any
315such bonds or indebtedness, including formation of trusts or
316other affiliated entities. The corporation shall have the
317authority to pledge assessments, projected recoveries from the
318Florida Hurricane Catastrophe Fund, other reinsurance
319recoverables, market equalization and other surcharges, and
320other funds available to the corporation as security for bonds
321or other indebtedness. In recognition of s. 10, Art. I of the
322State Constitution, prohibiting the impairment of obligations of
323contracts, it is the intent of the Legislature that no action be
324taken whose purpose is to impair any bond indenture or financing
325agreement or any revenue source committed by contract to such
326bond or other indebtedness.
327     4.a.  Must require that the corporation operate subject to
328the supervision and approval of a board of governors consisting
329of eight individuals who are residents of this state, from
330different geographical areas of this state. The Governor, the
331Chief Financial Officer, the President of the Senate, and the
332Speaker of the House of Representatives shall each appoint two
333members of the board. At least one of the two members appointed
334by each appointing officer must have demonstrated expertise in
335insurance. The Chief Financial Officer shall designate one of
336the appointees as chair. All board members serve at the pleasure
337of the appointing officer. All members of the board of governors
338are subject to removal at will by the officers who appointed
339them. All board members, including the chair, must be appointed
340to serve for 3-year terms beginning annually on a date
341designated by the plan. Any board vacancy shall be filled for
342the unexpired term by the appointing officer. The Chief
343Financial Officer shall appoint a technical advisory group to
344provide information and advice to the board of governors in
345connection with the board's duties under this subsection. The
346executive director and senior managers of the corporation shall
347be engaged by the board and serve at the pleasure of the board.
348Any executive director appointed on or after July 1, 2006, is
349subject to confirmation by the Senate. The executive director is
350responsible for employing other staff as the corporation may
351require, subject to review and concurrence by the board.
352     b.  The board shall create a Market Accountability Advisory
353Committee to assist the corporation in developing awareness of
354its rates and its customer and agent service levels in
355relationship to the voluntary market insurers writing similar
356coverage. The members of the advisory committee shall consist of
357the following 11 persons, one of whom must be elected chair by
358the members of the committee: four representatives, one
359appointed by the Florida Association of Insurance Agents, one by
360the Florida Association of Insurance and Financial Advisors, one
361by the Professional Insurance Agents of Florida, and one by the
362Latin American Association of Insurance Agencies; three
363representatives appointed by the insurers with the three highest
364voluntary market share of residential property insurance
365business in the state; one representative from the Office of
366Insurance Regulation; one consumer appointed by the board who is
367insured by the corporation at the time of appointment to the
368committee; one representative appointed by the Florida
369Association of Realtors; and one representative appointed by the
370Florida Bankers Association. All members must serve for 3-year
371terms and may serve for consecutive terms. The committee shall
372report to the corporation at each board meeting on insurance
373market issues which may include rates and rate competition with
374the voluntary market; service, including policy issuance, claims
375processing, and general responsiveness to policyholders,
376applicants, and agents; and matters relating to depopulation.
377     5.  Must provide a procedure for determining the
378eligibility of a risk for coverage, as follows:
379     a.  Subject to the provisions of s. 627.3517, with respect
380to personal lines residential risks, if the risk is offered
381coverage from an authorized insurer at the insurer's approved
382rate under either a standard policy including wind coverage or,
383if consistent with the insurer's underwriting rules as filed
384with the office, a basic policy including wind coverage, for a
385new application to the corporation for coverage, the risk is not
386eligible for any policy issued by the corporation unless the
387premium for coverage from the authorized insurer is more than 15
38825 percent greater than the premium for comparable coverage from
389the corporation. If the risk is not able to obtain any such
390offer, the risk is eligible for either a standard policy
391including wind coverage or a basic policy including wind
392coverage issued by the corporation; however, if the risk could
393not be insured under a standard policy including wind coverage
394regardless of market conditions, the risk shall be eligible for
395a basic policy including wind coverage unless rejected under
396subparagraph 8. However, with regard to a policyholder of the
397corporation, the policyholder remains eligible for coverage from
398the corporation regardless of any offer of coverage from an
399authorized insurer or surplus lines insurer. The corporation
400shall determine the type of policy to be provided on the basis
401of objective standards specified in the underwriting manual and
402based on generally accepted underwriting practices.
403     (I)  If the risk accepts an offer of coverage through the
404market assistance plan or an offer of coverage through a
405mechanism established by the corporation before a policy is
406issued to the risk by the corporation or during the first 30
407days of coverage by the corporation, and the producing agent who
408submitted the application to the plan or to the corporation is
409not currently appointed by the insurer, the insurer shall:
410     (A)  Pay to the producing agent of record of the policy,
411for the first year, an amount that is the greater of the
412insurer's usual and customary commission for the type of policy
413written or a fee equal to the usual and customary commission of
414the corporation; or
415     (B)  Offer to allow the producing agent of record of the
416policy to continue servicing the policy for a period of not less
417than 1 year and offer to pay the agent the greater of the
418insurer's or the corporation's usual and customary commission
419for the type of policy written.
420
421If the producing agent is unwilling or unable to accept
422appointment, the new insurer shall pay the agent in accordance
423with sub-sub-sub-subparagraph (A).
424     (II)  When the corporation enters into a contractual
425agreement for a take-out plan, the producing agent of record of
426the corporation policy is entitled to retain any unearned
427commission on the policy, and the insurer shall:
428     (A)  Pay to the producing agent of record of the
429corporation policy, for the first year, an amount that is the
430greater of the insurer's usual and customary commission for the
431type of policy written or a fee equal to the usual and customary
432commission of the corporation; or
433     (B)  Offer to allow the producing agent of record of the
434corporation policy to continue servicing the policy for a period
435of not less than 1 year and offer to pay the agent the greater
436of the insurer's or the corporation's usual and customary
437commission for the type of policy written.
438
439If the producing agent is unwilling or unable to accept
440appointment, the new insurer shall pay the agent in accordance
441with sub-sub-sub-subparagraph (A).
442     b.  With respect to commercial lines residential risks, for
443a new application to the corporation for coverage, if the risk
444is offered coverage under a policy including wind coverage from
445an authorized insurer at its approved rate, the risk is not
446eligible for any policy issued by the corporation unless the
447premium for coverage from the authorized insurer is more than 15
44825 percent greater than the premium for comparable coverage from
449the corporation. If the risk is not able to obtain any such
450offer, the risk is eligible for a policy including wind coverage
451issued by the corporation. However, with regard to a
452policyholder of the corporation, the policyholder remains
453eligible for coverage from the corporation regardless of any
454offer of coverage from an authorized insurer or surplus lines
455insurer.
456     (I)  If the risk accepts an offer of coverage through the
457market assistance plan or an offer of coverage through a
458mechanism established by the corporation before a policy is
459issued to the risk by the corporation or during the first 30
460days of coverage by the corporation, and the producing agent who
461submitted the application to the plan or the corporation is not
462currently appointed by the insurer, the insurer shall:
463     (A)  Pay to the producing agent of record of the policy,
464for the first year, an amount that is the greater of the
465insurer's usual and customary commission for the type of policy
466written or a fee equal to the usual and customary commission of
467the corporation; or
468     (B)  Offer to allow the producing agent of record of the
469policy to continue servicing the policy for a period of not less
470than 1 year and offer to pay the agent the greater of the
471insurer's or the corporation's usual and customary commission
472for the type of policy written.
473
474If the producing agent is unwilling or unable to accept
475appointment, the new insurer shall pay the agent in accordance
476with sub-sub-sub-subparagraph (A).
477     (II)  When the corporation enters into a contractual
478agreement for a take-out plan, the producing agent of record of
479the corporation policy is entitled to retain any unearned
480commission on the policy, and the insurer shall:
481     (A)  Pay to the producing agent of record of the
482corporation policy, for the first year, an amount that is the
483greater of the insurer's usual and customary commission for the
484type of policy written or a fee equal to the usual and customary
485commission of the corporation; or
486     (B)  Offer to allow the producing agent of record of the
487corporation policy to continue servicing the policy for a period
488of not less than 1 year and offer to pay the agent the greater
489of the insurer's or the corporation's usual and customary
490commission for the type of policy written.
491
492If the producing agent is unwilling or unable to accept
493appointment, the new insurer shall pay the agent in accordance
494with sub-sub-sub-subparagraph (A).
495     6.  Must provide by July 1, 2007, that an application for
496coverage for a new policy is subject to a waiting period of 10
497days before coverage is effective, during which time the
498corporation shall make such application available for review by
499general lines agents and authorized property and casualty
500insurers. The board shall approve an exception that allows for
501coverage to be effective before the end of the 10-day waiting
502period, for coverage issued in conjunction with a real estate
503closing. The board may approve such other exceptions as the
504board determines are necessary to prevent lapses in coverage.
505     7.  Must include rules for classifications of risks and
506rates therefor.
507     8.  Must provide that if premium and investment income for
508an account attributable to a particular calendar year are in
509excess of projected losses and expenses for the account
510attributable to that year, such excess shall be held in surplus
511in the account. Such surplus shall be available to defray
512deficits in that account as to future years and shall be used
513for that purpose prior to assessing assessable insurers and
514assessable insureds as to any calendar year.
515     9.  Must provide objective criteria and procedures to be
516uniformly applied for all applicants in determining whether an
517individual risk is so hazardous as to be uninsurable. In making
518this determination and in establishing the criteria and
519procedures, the following shall be considered:
520     a.  Whether the likelihood of a loss for the individual
521risk is substantially higher than for other risks of the same
522class; and
523     b.  Whether the uncertainty associated with the individual
524risk is such that an appropriate premium cannot be determined.
525
526The acceptance or rejection of a risk by the corporation shall
527be construed as the private placement of insurance, and the
528provisions of chapter 120 shall not apply.
529     10.  Must provide that the corporation shall make its best
530efforts to procure catastrophe reinsurance at reasonable rates,
531to cover its projected 100-year probable maximum loss as
532determined by the board of governors.
533     11.  Must provide that in the event of regular deficit
534assessments under sub-subparagraph (b)3.a. or sub-subparagraph
535(b)3.b., in the personal lines account, the commercial lines
536residential account, or the high-risk account, the corporation
537shall levy upon corporation policyholders in its next rate
538filing, or by a separate rate filing solely for this purpose, a
539Citizens policyholder surcharge arising from a regular
540assessment in such account in a percentage equal to the total
541amount of such regular assessments divided by the aggregate
542statewide direct written premium for subject lines of business
543for the prior calendar year. For purposes of calculating the
544Citizens policyholder surcharge to be levied under this
545subparagraph, the total amount of the regular assessment to
546which this surcharge is related shall be determined as set forth
547in subparagraph (b)3., without deducting the estimated Citizens
548policyholder surcharge. Citizens policyholder surcharges under
549this subparagraph are not considered premium and are not subject
550to commissions, fees, or premium taxes; however, failure to pay
551a market equalization surcharge shall be treated as failure to
552pay premium.
553     12.  The policies issued by the corporation must provide
554that, if the corporation or the market assistance plan obtains
555an offer from an authorized insurer to cover the risk at its
556approved rates, the risk is no longer eligible for renewal
557through the corporation, except as otherwise provided in this
558subsection.
559     13.  Corporation policies and applications must include a
560notice that the corporation policy could, under this section, be
561replaced with a policy issued by an authorized insurer that does
562not provide coverage identical to the coverage provided by the
563corporation. The notice shall also specify that acceptance of
564corporation coverage creates a conclusive presumption that the
565applicant or policyholder is aware of this potential.
566     14.  May establish, subject to approval by the office,
567different eligibility requirements and operational procedures
568for any line or type of coverage for any specified county or
569area if the board determines that such changes to the
570eligibility requirements and operational procedures are
571justified due to the voluntary market being sufficiently stable
572and competitive in such area or for such line or type of
573coverage and that consumers who, in good faith, are unable to
574obtain insurance through the voluntary market through ordinary
575methods would continue to have access to coverage from the
576corporation. When coverage is sought in connection with a real
577property transfer, such requirements and procedures shall not
578provide for an effective date of coverage later than the date of
579the closing of the transfer as established by the transferor,
580the transferee, and, if applicable, the lender.
581     15.  Must provide that, with respect to the high-risk
582account, any assessable insurer with a surplus as to
583policyholders of $25 million or less writing 25 percent or more
584of its total countrywide property insurance premiums in this
585state may petition the office, within the first 90 days of each
586calendar year, to qualify as a limited apportionment company. A
587regular assessment levied by the corporation on a limited
588apportionment company for a deficit incurred by the corporation
589for the high-risk account in 2006 or thereafter may be paid to
590the corporation on a monthly basis as the assessments are
591collected by the limited apportionment company from its insureds
592pursuant to s. 627.3512, but the regular assessment must be paid
593in full within 12 months after being levied by the corporation.
594A limited apportionment company shall collect from its
595policyholders any emergency assessment imposed under sub-
596subparagraph (b)3.d. The plan shall provide that, if the office
597determines that any regular assessment will result in an
598impairment of the surplus of a limited apportionment company,
599the office may direct that all or part of such assessment be
600deferred as provided in subparagraph (g)4. However, there shall
601be no limitation or deferment of an emergency assessment to be
602collected from policyholders under sub-subparagraph (b)3.d.
603     16.  Must provide that the corporation appoint as its
604licensed agents only those agents who also hold an appointment
605as defined in s. 626.015(3) with an insurer who at the time of
606the agent's initial appointment by the corporation is authorized
607to write and is actually writing personal lines residential
608property coverage, commercial residential property coverage, or
609commercial nonresidential property coverage within the state.
610     17.  Must provide, by July 1, 2007, a premium payment plan
611option to its policyholders which allows for quarterly and
612semiannual payment of premiums.
613     18.  Must provide, effective June 1, 2007, that the
614corporation contract with each insurer providing the non-wind
615coverage for risks insured by the corporation in the high-risk
616account, requiring that the insurer provide claims adjusting
617services for the wind coverage provided by the corporation for
618such risks. An insurer is required to enter into this contract
619as a condition of providing non-wind coverage for a risk that is
620insured by the corporation in the high-risk account unless the
621board finds, after a hearing, that the insurer is not capable of
622providing adjusting services at an acceptable level of quality
623to corporation policyholders. The terms and conditions of such
624contracts must be substantially the same as the contracts that
625the corporation executed with insurers under the "adjust-your-
626own" program in 2006, except as may be mutually agreed to by the
627parties and except for such changes that the board determines
628are necessary to ensure that claims are adjusted appropriately.
629The corporation shall provide a process for neutral arbitration
630of any dispute between the corporation and the insurer regarding
631the terms of the contract. The corporation shall review and
632monitor the performance of insurers under these contracts.
633     19.  Must limit coverage on mobile homes or manufactured
634homes built prior to 1994 to actual cash value of the dwelling
635rather than replacement costs of the dwelling.
636     20.  May provide such limits of coverage as the board
637determines, consistent with the requirements of this subsection.
638     21.  May require commercial property to meet specified
639hurricane mitigation construction features as a condition of
640eligibility for coverage.
641     (m)1.  Rates for coverage provided by the corporation shall
642be actuarially sound and subject to the requirements of s.
643627.062, except as otherwise provided in this paragraph. The
644corporation shall file its recommended rates with the office at
645least annually. The corporation shall provide any additional
646information regarding the rates which the office requires. The
647office shall consider the recommendations of the board and issue
648a final order establishing the rates for the corporation within
64945 days after the recommended rates are filed. The corporation
650may not pursue an administrative challenge or judicial review of
651the final order of the office.
652     2.  In addition to the rates otherwise determined pursuant
653to this paragraph, the corporation shall impose and collect an
654amount equal to the premium tax provided for in s. 624.509 to
655augment the financial resources of the corporation.
656     3.  After the public hurricane loss-projection model under
657s. 627.06281 has been found to be accurate and reliable by the
658Florida Commission on Hurricane Loss Projection Methodology,
659that model shall serve as the minimum benchmark for determining
660the windstorm portion of the corporation's rates. This
661subparagraph does not require or allow the corporation to adopt
662rates lower than the rates otherwise required or allowed by this
663paragraph.
664     4.  The rate filings for the corporation which were
665approved by the office and which took effect January 1, 2007,
666are rescinded, except for those rates that were lowered. As soon
667as possible, the corporation shall begin using the lower rates
668that were in effect on December 31, 2006, and shall provide
669refunds to policyholders who have paid higher rates as a result
670of that rate filing. The rates in effect on December 31, 2006,
671shall remain in effect for the 2007 and 2008 calendar years year
672except for any rate change that results in a lower rate. The
673next rate change that may increase rates shall take effect
674January 1, 2009 2008, pursuant to a new rate filing recommended
675by the corporation and established by the office, subject to the
676requirements of this paragraph.
677     Section 2.  Effective January 1, 2008, and notwithstanding
678any other provision of law:
679     (1)  A new certificate of authority for the transaction of
680residential property insurance may not be issued to any insurer
681domiciled in this state that is a wholly owned subsidiary of an
682insurer authorized to do business in any other state.
683     (2)  The rate filings of any insurer domiciled in this
684state that is a wholly owned subsidiary of an insurer authorized
685to do business in any other state shall include information
686relating to the profits of the parent company of the insurer
687domiciled in this state.
688     Section 3.  Except as otherwise expressly provided in this
689act, this act shall take effect upon becoming a law.


CODING: Words stricken are deletions; words underlined are additions.