| 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 |
legislative findings to provide a finding that
the lack of |
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affordable property insurance threatens the
public health, |
| 6 |
safety, and welfare and threatens the economic
health of |
| 7 |
the state; authorizing the corporation to offer
multiperil |
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coverage, wind-only coverage, or both types of
coverage in |
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the high-risk account; providing legislative
intent that |
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such coverage not affect the creditworthiness of
or |
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security for outstanding financing obligations of
the |
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high-risk account, the personal lines account, or
the |
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commercial lines account; authorizing a
policyholder to |
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choose coverage from the corporation regardless
of the |
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availability of other coverage under certain |
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circumstances; deleting certain limitations on
eligibility |
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for a policy issued by the corporation; revising |
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requirements for the corporation in determining
whether an |
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individual risk is eligible for coverage;
deleting |
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provisions providing that a policyholder is no
longer |
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eligible for coverage if an authorized insurer
offers |
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coverage at an approved rate; prohibiting
issuance of new |
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certificates of authority to certain insurers;
providing |
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for expiration of existing certificates of
authority of |
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certain insurers; prohibiting the Office of
Insurance |
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Regulation and the Financial Services Commission
from |
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renewing or reissuing existing certificates of
authority |
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of certain insurers; requiring rate filings of
certain |
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insurers to include certain parent company
profits |
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information; providing effective dates. |
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|
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Be It Enacted by the Legislature of the State of
Florida: |
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|
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Section 1. Paragraphs
(a), (b), and (c) of subsection (6) |
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of section 627.351, Florida Statutes, as amended
by section 21 |
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of chapter 2007-1, Laws of Florida, are amended
to read: |
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627.351 Insurance
risk apportionment plans.-- |
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(6) CITIZENS
PROPERTY INSURANCE CORPORATION.-- |
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(a)1. The
Legislature finds that private insurers are |
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unwilling or unable to provide
affordable property insurance |
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coverage in this state to the
extent sought and needed. The |
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absence of affordable property
insurance threatens the public |
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health, safety, and welfare
and likewise threatens the economic |
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health of the state. The
Legislature finds therefore that it is |
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a compelling public interest
and public purpose to assist in |
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ensuring that property in the
state is insured and that it is |
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insured at affordable rates so
as to facilitate the remediation, |
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reconstruction, and
replacement of damaged or destroyed property |
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in order to reduce or avoid
the negative effects otherwise |
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resulting to the public
health, safety, and welfare; to the |
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economy of the state; and to
the revenues of the state and local |
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governments which are needed
to provide for the public welfare. |
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It is necessary, therefore, to
provide affordable property |
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insurance to applicants who
are in good faith entitled to |
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procure insurance through the
voluntary market but are unable to |
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do so. The Legislature intends
by this subsection that |
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affordable property insurance
be provided and that it continue, |
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as long as necessary, through
an entity that is not devoted to |
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private profitmaking pursuits
and that is organized to achieve |
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efficiencies and economies,
while providing service to |
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policyholder, applicants, and
agents which equals or exceeds the |
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quality generally provided in
the voluntary market, all toward |
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the achievement of the
foregoing public purposes. To that end, |
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such entity shall strive to
increase the availability of |
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affordable property insurance
in this state and shall offer the |
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lowest rates possible
consistent with sound business practices. |
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Because it is essential for
the corporation to have the maximum |
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financial resources to pay
claims following a catastrophic |
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hurricane, it is the intent of
the Legislature that the income |
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of the corporation be exempt
from federal income taxation and |
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that interest on the debt
obligations issued by the corporation |
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be exempt from federal
income taxation. The Legislature
finds |
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that actual and threatened
catastrophic losses to property in |
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this state from hurricanes
have caused insurers to be unwilling |
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or unable to provide property
insurance coverage to the extent |
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sought and needed. It is in
the public interest and a public |
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purpose to assist in assuring
that property in the state is |
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insured so as to facilitate
the remediation, reconstruction, and |
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replacement of damaged or
destroyed property in order to reduce |
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or avoid the negative effects
otherwise resulting to the public |
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health, safety, and welfare;
to the economy of the state; and to |
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the revenues of the state and
local governments needed to |
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provide for the public
welfare. It is necessary, therefore, to |
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provide property insurance to
applicants who are in good faith |
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entitled to procure insurance
through the voluntary market but |
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are unable to do so. The
Legislature intends by this subsection |
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that property insurance be
provided and that it continues, as |
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long as necessary, through an
entity organized to achieve |
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efficiencies and economies,
while providing service to |
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policyholders, applicants, and
agents that is no less than the |
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quality generally provided in
the voluntary market, all toward |
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the achievement of the
foregoing public purposes. Because it is |
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essential for the corporation
to have the maximum financial |
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resources to pay claims
following a catastrophic hurricane, it |
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is the intent of the
Legislature that the income of the |
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corporation be exempt from
federal income taxation and that |
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interest on the debt
obligations issued by the corporation be |
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exempt from federal income
taxation. |
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2. The
Residential Property and Casualty Joint |
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Underwriting Association originally created by
this statute |
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shall be known, as of July 1, 2002, as the
Citizens Property |
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Insurance Corporation. The corporation shall
provide insurance |
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for residential and commercial property, for
applicants who are |
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in good faith entitled, but are unable, to
procure insurance |
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through the voluntary market. The corporation
shall operate |
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pursuant to a plan of operation approved by order
of the |
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Financial Services Commission. The plan is
subject to continuous |
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review by the commission. The commission may, by
order, withdraw |
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approval of all or part of a plan if the
commission determines |
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that conditions have changed since approval was
granted and that |
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the purposes of the plan require changes in the
plan. The |
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corporation shall continue to operate pursuant to
the plan of |
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operation approved by the Office of Insurance
Regulation until |
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October 1, 2006. For the purposes of this
subsection, |
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residential coverage includes both personal lines
residential |
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coverage, which consists of the type of coverage
provided by |
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homeowner's, mobile home owner's, dwelling,
tenant's, |
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condominium unit owner's, and similar policies,
and commercial |
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lines residential coverage, which consists of the
type of |
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coverage provided by condominium association,
apartment |
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building, and similar policies. |
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3. For
the purposes of this subsection, the term |
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"homestead property" means: |
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a. Property
that has been granted a homestead exemption |
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under chapter 196; |
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b. Property
for which the owner has a current, written |
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lease with a renter for a term of at least 7
months and for |
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which the dwelling is insured by the corporation
for $200,000 or |
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less; |
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c. An
owner-occupied mobile home or manufactured home, as |
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defined in s. 320.01, which is permanently
affixed to real |
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property, is owned by a Florida resident, and has
been granted a |
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homestead exemption under chapter 196 or, if the
owner does not |
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own the real property, the owner certifies that
the mobile home |
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or manufactured home is his or her principal
place of residence; |
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d. Tenant's
coverage; |
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e. Commercial
lines residential property; or |
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f. Any
county, district, or municipal hospital; a hospital |
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licensed by any not-for-profit corporation
qualified under s. |
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501(c)(3) of the United States Internal Revenue
Code; or a |
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continuing care retirement community that is
certified under |
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chapter 651 and that receives an exemption from
ad valorem taxes |
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under chapter 196. |
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4. For
the purposes of this subsection, the term |
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"nonhomestead property" means property
that is not homestead |
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property. |
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5. Effective
July 1, 2008, a personal lines residential |
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structure that has a dwelling replacement cost of
$1 million or |
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more, or a single condominium unit that has a
combined dwelling |
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and content replacement cost of $1 million or
more is not |
| 151 |
eligible for coverage by the corporation. Such
dwellings insured |
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by the corporation on June 30, 2008, may continue
to be covered |
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by the corporation until the end of the policy
term. However, |
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such dwellings that are insured by the
corporation and become |
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ineligible for coverage due to the provisions of
this |
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subparagraph may reapply and obtain coverage in
the high-risk |
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account and be considered "nonhomestead
property" if the |
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property owner provides the corporation with a
sworn affidavit |
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from one or more insurance agents, on a form
provided by the |
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corporation, stating that the agents have made
their best |
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efforts to obtain coverage and that the property
has been |
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rejected for coverage by at least one authorized
insurer and at |
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least three surplus lines insurers. If such
conditions are met, |
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the dwelling may be insured by the corporation
for up to 3 |
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years, after which time the dwelling is
ineligible for coverage. |
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The office shall approve the method used by the
corporation for |
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valuing the dwelling replacement cost for the
purposes of this |
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subparagraph. If a policyholder is insured by the
corporation |
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prior to being determined to be ineligible
pursuant to this |
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subparagraph and such policyholder files a
lawsuit challenging |
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the determination, the policyholder may remain
insured by the |
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corporation until the conclusion of the
litigation. |
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6. For
properties constructed on or after January 1, 2009, |
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the corporation may not insure any property
located within 2,500 |
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feet landward of the coastal construction control
line created |
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pursuant to s. 161.053 unless the property meets
the |
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requirements of the code-plus building standards
developed by |
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the Florida Building Commission. |
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7. It is
the intent of the Legislature that policyholders, |
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applicants, and agents of the corporation receive
service and |
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treatment of the highest possible level but never
less than that |
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generally provided in the voluntary market. It
also is intended |
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that the corporation be held to service standards
no less than |
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those applied to insurers in the voluntary market
by the office |
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with respect to responsiveness, timeliness,
customer courtesy, |
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and overall dealings with policyholders,
applicants, or agents |
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of the corporation. |
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(b)1. All
insurers authorized to write one or more subject |
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lines of business in this state are subject to
assessment by the |
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corporation and, for the purposes of this
subsection, are |
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referred to collectively as "assessable
insurers." Insurers |
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writing one or more subject lines of business in
this state |
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pursuant to part VIII of chapter 626 are not
assessable |
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insurers, but insureds who procure one or more
subject lines of |
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business in this state pursuant to part VIII of
chapter 626 are |
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subject to assessment by the corporation and are
referred to |
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collectively as "assessable insureds."
An authorized insurer's |
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assessment liability shall begin on the first day
of the |
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calendar year following the year in which the
insurer was issued |
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a certificate of authority to transact insurance
for subject |
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lines of business in this state and shall
terminate 1 year after |
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the end of the first calendar year during which
the insurer no |
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longer holds a certificate of authority to
transact insurance |
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for subject lines of business in this state. |
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2.a. All
revenues, assets, liabilities, losses, and |
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expenses of the corporation shall be divided into
three separate |
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accounts as follows: |
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(I) A
personal lines account for personal residential |
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policies issued by the corporation or issued by
the Residential |
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Property and Casualty Joint Underwriting
Association and renewed |
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by the corporation that provide comprehensive,
multiperil |
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coverage on risks that are not located in areas
eligible for |
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coverage in the Florida Windstorm Underwriting
Association as |
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those areas were defined on January 1, 2002, and
for such |
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policies that do not provide coverage for the
peril of wind on |
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risks that are located in such areas; |
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(II) A
commercial lines account for commercial residential |
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and commercial nonresidential policies issued by
the corporation |
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or issued by the Residential Property and
Casualty Joint |
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Underwriting Association and renewed by the
corporation that |
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provide coverage for basic property perils on
risks that are not |
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located in areas eligible for coverage in the
Florida Windstorm |
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Underwriting Association as those areas were
defined on January |
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1, 2002, and for such policies that do not
provide coverage for |
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the peril of wind on risks that are located in
such areas; and |
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(III) A
high-risk account for personal residential |
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policies and commercial residential and
commercial |
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nonresidential property policies issued by the
corporation or |
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transferred to the corporation that provide
coverage for the |
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peril of wind on risks that are located in areas
eligible for |
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coverage in the Florida Windstorm Underwriting
Association as |
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those areas were defined on January 1, 2002. Beginning
July 1, |
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2007, the corporation may
offer multiperil coverage, wind-only |
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coverage, or both types of
coverage in the high-risk account. In |
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issuing multiperil coverage,
the corporation may use its |
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approved policy forms and
rates for personal lines accounts |
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through December 31, 2007. It
is the intent of the Legislature |
| 238 |
that the offer of multiperil
coverage in the high-risk account |
| 239 |
be made and implemented in a
manner that does not adversely |
| 240 |
affect the creditworthiness of
or security for currently |
| 241 |
outstanding financing
obligations or credit facilities of the |
| 242 |
high-risk account, the
personal lines account, or the commercial |
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lines account.
Subject to the approval of a business plan by the |
| 244 |
Financial Services Commission and Legislative
Budget Commission |
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as provided in this sub-sub-subparagraph, but no
earlier than |
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March 31, 2007, the corporation may offer
policies that provide |
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multiperil coverage and the corporation shall
continue to offer |
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policies that provide coverage only for the peril
of wind for |
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risks located in areas eligible for coverage in
the high-risk |
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account. In issuing multiperil coverage, the
corporation may use |
| 251 |
its approved policy forms and rates for the
personal lines |
| 252 |
account. An applicant or insured who is eligible
to purchase a |
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multiperil policy from the corporation may
purchase a multiperil |
| 254 |
policy from an authorized insurer without
prejudice to the |
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applicant's or insured's eligibility to
prospectively purchase a |
| 256 |
policy that provides coverage only for the peril
of wind from |
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the corporation. An applicant or insured who is
eligible for a |
| 258 |
corporation policy that provides coverage only
for the peril of |
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wind may elect to purchase or retain such policy
and also |
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purchase or retain coverage excluding wind from
an authorized |
| 261 |
insurer without prejudice to the applicant's or
insured's |
| 262 |
eligibility to prospectively purchase a policy
that provides |
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multiperil coverage from the corporation. It is
the goal of the |
| 264 |
Legislature that there would be an overall
average savings of 10 |
| 265 |
percent or more for a policyholder who currently
has a wind-only |
| 266 |
policy with the corporation, and an ex-wind
policy with a |
| 267 |
voluntary insurer or the corporation, and who
then obtains a |
| 268 |
multiperil policy from the corporation. It is the
intent of the |
| 269 |
Legislature that the offer of multiperil coverage
in the high- |
| 270 |
risk account be made and implemented in a manner
that does not |
| 271 |
adversely affect the tax-exempt status of the
corporation or |
| 272 |
creditworthiness of or security for currently
outstanding |
| 273 |
financing obligations or credit facilities of the
high-risk |
| 274 |
account, the personal lines account, or the
commercial lines |
| 275 |
account. By March 1, 2007, the corporation shall
prepare and |
| 276 |
submit for approval by the Financial Services
Commission and |
| 277 |
Legislative Budget Commission a report detailing
the |
| 278 |
corporation's business plan for issuing
multiperil coverage in |
| 279 |
the high-risk account. The business plan shall be
approved or |
| 280 |
disapproved within 30 days after receipt, as
submitted or |
| 281 |
modified and resubmitted by the corporation. The
business plan |
| 282 |
must include: the impact of such multiperil
coverage on the |
| 283 |
corporation's financial resources, the impact of
such multiperil |
| 284 |
coverage on the corporation's tax-exempt status,
the manner in |
| 285 |
which the corporation plans to implement the
processing of |
| 286 |
applications and policy forms for new and
existing |
| 287 |
policyholders, the impact of such multiperil
coverage on the |
| 288 |
corporation's ability to deliver customer service
at the high |
| 289 |
level required by this subsection, the ability of
the |
| 290 |
corporation to process claims, the ability of the
corporation to |
| 291 |
quote and issue policies, the impact of such
multiperil coverage |
| 292 |
on the corporation's agents, the impact of such
multiperil |
| 293 |
coverage on the corporation's existing
policyholders, and the |
| 294 |
impact of such multiperil coverage on rates and
premium. The |
| 295 |
high-risk account must also include quota share
primary |
| 296 |
insurance under subparagraph (c)2. The area
eligible for |
| 297 |
coverage under the high-risk account also
includes the area |
| 298 |
within Port Canaveral, which is bordered on the
south by the |
| 299 |
City of Cape Canaveral, bordered on the west by
the Banana |
| 300 |
River, and bordered on the north by Federal
Government property. |
| 301 |
b. The
three separate accounts must be maintained as long |
| 302 |
as financing obligations entered into by the
Florida Windstorm |
| 303 |
Underwriting Association or Residential Property
and Casualty |
| 304 |
Joint Underwriting Association are outstanding,
in accordance |
| 305 |
with the terms of the corresponding financing
documents. When |
| 306 |
the financing obligations are no longer
outstanding, in |
| 307 |
accordance with the terms of the corresponding
financing |
| 308 |
documents, the corporation may use a single
account for all |
| 309 |
revenues, assets, liabilities, losses, and
expenses of the |
| 310 |
corporation. Consistent with the requirement of
this |
| 311 |
subparagraph and prudent investment policies that
minimize the |
| 312 |
cost of carrying debt, the board shall exercise
its best efforts |
| 313 |
to retire existing debt or to obtain approval of
necessary |
| 314 |
parties to amend the terms of existing debt, so
as to structure |
| 315 |
the most efficient plan to consolidate the three
separate |
| 316 |
accounts into a single account. By February 1,
2007, the board |
| 317 |
shall submit a report to the Financial Services
Commission, the |
| 318 |
President of the Senate, and the Speaker of the
House of |
| 319 |
Representatives which includes an analysis of
consolidating the |
| 320 |
accounts, the actions the board has taken to
minimize the cost |
| 321 |
of carrying debt, and its recommendations for
executing the most |
| 322 |
efficient plan. |
| 323 |
c. Creditors
of the Residential Property and Casualty |
| 324 |
Joint Underwriting Association shall have a claim
against, and |
| 325 |
recourse to, the accounts referred to in
sub-sub-subparagraphs |
| 326 |
a.(I) and (II) and shall have no claim against,
or recourse to, |
| 327 |
the account referred to in sub-sub-subparagraph
a.(III). |
| 328 |
Creditors of the Florida Windstorm Underwriting
Association |
| 329 |
shall have a claim against, and recourse to, the
account |
| 330 |
referred to in sub-sub-subparagraph a.(III) and
shall have no |
| 331 |
claim against, or recourse to, the accounts
referred to in sub- |
| 332 |
sub-subparagraphs a.(I) and (II). |
| 333 |
d. Revenues,
assets, liabilities, losses, and expenses not |
| 334 |
attributable to particular accounts shall be
prorated among the |
| 335 |
accounts. |
| 336 |
e. The
Legislature finds that the revenues of the |
| 337 |
corporation are revenues that are necessary to
meet the |
| 338 |
requirements set forth in documents authorizing
the issuance of |
| 339 |
bonds under this subsection. |
| 340 |
f. No
part of the income of the corporation may inure to |
| 341 |
the benefit of any private person. |
| 342 |
3. With
respect to a deficit in an account: |
| 343 |
a. When
the deficit incurred in a particular calendar year |
| 344 |
is not greater than 10 percent of the aggregate
statewide direct |
| 345 |
written premium for the subject lines of business
for the prior |
| 346 |
calendar year, the entire deficit shall be
recovered through |
| 347 |
regular assessments of assessable insurers under
paragraph (p) |
| 348 |
and assessable insureds. |
| 349 |
b. When
the deficit incurred in a particular calendar year |
| 350 |
exceeds 10 percent of the aggregate statewide
direct written |
| 351 |
premium for the subject lines of business for the
prior calendar |
| 352 |
year, the corporation shall levy regular
assessments on |
| 353 |
assessable insurers under paragraph (p) and on
assessable |
| 354 |
insureds in an amount equal to the greater of 10
percent of the |
| 355 |
deficit or 10 percent of the aggregate statewide
direct written |
| 356 |
premium for the subject lines of business for the
prior calendar |
| 357 |
year. Any remaining deficit shall be recovered
through emergency |
| 358 |
assessments under sub-subparagraph d. |
| 359 |
c. Each
assessable insurer's share of the amount being |
| 360 |
assessed under sub-subparagraph a. or
sub-subparagraph b. shall |
| 361 |
be in the proportion that the assessable
insurer's direct |
| 362 |
written premium for the subject lines of business
for the year |
| 363 |
preceding the assessment bears to the aggregate
statewide direct |
| 364 |
written premium for the subject lines of business
for that year. |
| 365 |
The assessment percentage applicable to each
assessable insured |
| 366 |
is the ratio of the amount being assessed under
sub-subparagraph |
| 367 |
a. or sub-subparagraph b. to the aggregate
statewide direct |
| 368 |
written premium for the subject lines of business
for the prior |
| 369 |
year. Assessments levied by the corporation on
assessable |
| 370 |
insurers under sub-subparagraphs a. and b. shall
be paid as |
| 371 |
required by the corporation's plan of operation
and paragraph |
| 372 |
(p). Notwithstanding any other provision of this
subsection, the |
| 373 |
aggregate amount of a regular assessment for a
deficit incurred |
| 374 |
in a particular calendar year shall be reduced by
the estimated |
| 375 |
amount to be received by the corporation from the
Citizens |
| 376 |
policyholder surcharge under subparagraph (c)11.
and the amount |
| 377 |
collected or estimated to be collected from the
assessment on |
| 378 |
Citizens policyholders pursuant to
sub-subparagraph i. |
| 379 |
Assessments levied by the corporation on
assessable insureds |
| 380 |
under sub-subparagraphs a. and b. shall be
collected by the |
| 381 |
surplus lines agent at the time the surplus lines
agent collects |
| 382 |
the surplus lines tax required by s. 626.932 and
shall be paid |
| 383 |
to the Florida Surplus Lines Service Office at
the time the |
| 384 |
surplus lines agent pays the surplus lines tax to
the Florida |
| 385 |
Surplus Lines Service Office. Upon receipt of
regular |
| 386 |
assessments from surplus lines agents, the
Florida Surplus Lines |
| 387 |
Service Office shall transfer the assessments
directly to the |
| 388 |
corporation as determined by the corporation. |
| 389 |
d. Upon
a determination by the board of governors that a |
| 390 |
deficit in an account exceeds the amount that
will be recovered |
| 391 |
through regular assessments under
sub-subparagraph a. or sub- |
| 392 |
subparagraph b., the board shall levy, after
verification by the |
| 393 |
office, emergency assessments, for as many years
as necessary to |
| 394 |
cover the deficits, to be collected by assessable
insurers and |
| 395 |
the corporation and collected from assessable
insureds upon |
| 396 |
issuance or renewal of policies for subject lines
of business, |
| 397 |
excluding National Flood Insurance policies. The
amount of the |
| 398 |
emergency assessment collected in a particular
year shall be a |
| 399 |
uniform percentage of that year's direct written
premium for |
| 400 |
subject lines of business and all accounts of the
corporation, |
| 401 |
excluding National Flood Insurance Program policy
premiums, as |
| 402 |
annually determined by the board and verified by
the office. The |
| 403 |
office shall verify the arithmetic calculations
involved in the |
| 404 |
board's determination within 30 days after
receipt of the |
| 405 |
information on which the determination was based. |
| 406 |
Notwithstanding any other provision of law, the
corporation and |
| 407 |
each assessable insurer that writes subject lines
of business |
| 408 |
shall collect emergency assessments from its
policyholders |
| 409 |
without such obligation being affected by any
credit, |
| 410 |
limitation, exemption, or deferment. Emergency
assessments |
| 411 |
levied by the corporation on assessable insureds
shall be |
| 412 |
collected by the surplus lines agent at the time
the surplus |
| 413 |
lines agent collects the surplus lines tax
required by s. |
| 414 |
626.932 and shall be paid to the Florida Surplus
Lines Service |
| 415 |
Office at the time the surplus lines agent pays
the surplus |
| 416 |
lines tax to the Florida Surplus Lines Service
Office. The |
| 417 |
emergency assessments so collected shall be
transferred directly |
| 418 |
to the corporation on a periodic basis as
determined by the |
| 419 |
corporation and shall be held by the corporation
solely in the |
| 420 |
applicable account. The aggregate amount of
emergency |
| 421 |
assessments levied for an account under this
sub-subparagraph in |
| 422 |
any calendar year may not exceed the greater of
10 percent of |
| 423 |
the amount needed to cover the original deficit,
plus interest, |
| 424 |
fees, commissions, required reserves, and other
costs associated |
| 425 |
with financing of the original deficit, or 10
percent of the |
| 426 |
aggregate statewide direct written premium for
subject lines of |
| 427 |
business and for all accounts of the corporation
for the prior |
| 428 |
year, plus interest, fees, commissions, required
reserves, and |
| 429 |
other costs associated with financing the
original deficit. |
| 430 |
e. The
corporation may pledge the proceeds of assessments, |
| 431 |
projected recoveries from the Florida Hurricane
Catastrophe |
| 432 |
Fund, other insurance and reinsurance
recoverables, policyholder |
| 433 |
surcharges and other surcharges, and other funds
available to |
| 434 |
the corporation as the source of revenue for and
to secure bonds |
| 435 |
issued under paragraph (p), bonds or other
indebtedness issued |
| 436 |
under subparagraph (c)3., or lines of credit or
other financing |
| 437 |
mechanisms issued or created under this
subsection, or to retire |
| 438 |
any other debt incurred as a result of deficits
or events giving |
| 439 |
rise to deficits, or in any other way that the
board determines |
| 440 |
will efficiently recover such deficits. The
purpose of the lines |
| 441 |
of credit or other financing mechanisms is to
provide additional |
| 442 |
resources to assist the corporation in covering
claims and |
| 443 |
expenses attributable to a catastrophe. As used
in this |
| 444 |
subsection, the term "assessments"
includes regular assessments |
| 445 |
under sub-subparagraph a., sub-subparagraph b.,
or subparagraph |
| 446 |
(p)1. and emergency assessments under
sub-subparagraph d. |
| 447 |
Emergency assessments collected under
sub-subparagraph d. are |
| 448 |
not part of an insurer's rates, are not premium,
and are not |
| 449 |
subject to premium tax, fees, or commissions;
however, failure |
| 450 |
to pay the emergency assessment shall be treated
as failure to |
| 451 |
pay premium. The emergency assessments under
sub-subparagraph d. |
| 452 |
shall continue as long as any bonds issued or
other indebtedness |
| 453 |
incurred with respect to a deficit for which the
assessment was |
| 454 |
imposed remain outstanding, unless adequate
provision has been |
| 455 |
made for the payment of such bonds or other
indebtedness |
| 456 |
pursuant to the documents governing such bonds or
other |
| 457 |
indebtedness. |
| 458 |
f. As
used in this subsection, the term "subject lines of |
| 459 |
business" means insurance written by
assessable insurers or |
| 460 |
procured by assessable insureds for all property
and casualty |
| 461 |
lines of business in this state, but not
including workers' |
| 462 |
compensation or medical malpractice. As used in
the sub- |
| 463 |
subparagraph, the term "property and
casualty lines of business" |
| 464 |
includes all lines of business identified on Form
2, Exhibit of |
| 465 |
Premiums and Losses, in the annual statement
required of |
| 466 |
authorized insurers by s. 624.424 and any rule
adopted under |
| 467 |
this section, except for those lines identified
as accident and |
| 468 |
health insurance and except for policies written
under the |
| 469 |
National Flood Insurance Program or the Federal
Crop Insurance |
| 470 |
Program. For purposes of this sub-subparagraph,
the term |
| 471 |
"workers' compensation" includes both
workers' compensation |
| 472 |
insurance and excess workers' compensation
insurance. |
| 473 |
g. The
Florida Surplus Lines Service Office shall |
| 474 |
determine annually the aggregate statewide
written premium in |
| 475 |
subject lines of business procured by assessable
insureds and |
| 476 |
shall report that information to the corporation
in a form and |
| 477 |
at a time the corporation specifies to ensure
that the |
| 478 |
corporation can meet the requirements of this
subsection and the |
| 479 |
corporation's financing obligations. |
| 480 |
h. The
Florida Surplus Lines Service Office shall verify |
| 481 |
the proper application by surplus lines agents of
assessment |
| 482 |
percentages for regular assessments and emergency
assessments |
| 483 |
levied under this subparagraph on assessable
insureds and shall |
| 484 |
assist the corporation in ensuring the accurate,
timely |
| 485 |
collection and payment of assessments by surplus
lines agents as |
| 486 |
required by the corporation. |
| 487 |
i. If a
deficit is incurred in any account in 2008 or |
| 488 |
thereafter, the board of governors shall levy an
immediate |
| 489 |
assessment against the premium of each
nonhomestead property |
| 490 |
policyholder in all accounts of the corporation,
as a uniform |
| 491 |
percentage of the premium of the policy of up to
10 percent of |
| 492 |
such premium, which funds shall be used to offset
the deficit. |
| 493 |
If this assessment is insufficient to eliminate
the deficit, the |
| 494 |
board of governors shall levy an additional
assessment against |
| 495 |
all policyholders of the corporation, which shall
be collected |
| 496 |
at the time of issuance or renewal of a policy,
as a uniform |
| 497 |
percentage of the premium for the policy of up to
10 percent of |
| 498 |
such premium, which funds shall be used to
further offset the |
| 499 |
deficit. |
| 500 |
j. The
board of governors shall maintain separate |
| 501 |
accounting records that consolidate data for
nonhomestead |
| 502 |
properties, including, but not limited to, number
of policies, |
| 503 |
insured values, premiums written, and losses. The
board of |
| 504 |
governors shall annually report to the office and
the |
| 505 |
Legislature a summary of such data. |
| 506 |
(c) The
plan of operation of the corporation: |
| 507 |
1. Must
provide for adoption of residential property and |
| 508 |
casualty insurance policy forms and commercial
residential and |
| 509 |
nonresidential property insurance forms, which
forms must be |
| 510 |
approved by the office prior to use. The
corporation shall adopt |
| 511 |
the following policy forms: |
| 512 |
a. Standard
personal lines policy forms that are |
| 513 |
comprehensive multiperil policies providing full
coverage of a |
| 514 |
residential property equivalent to the coverage
provided in the |
| 515 |
private insurance market under an HO-3, HO-4, or
HO-6 policy. |
| 516 |
b. Basic
personal lines policy forms that are policies |
| 517 |
similar to an HO-8 policy or a dwelling fire
policy that provide |
| 518 |
coverage meeting the requirements of the
secondary mortgage |
| 519 |
market, but which coverage is more limited than
the coverage |
| 520 |
under a standard policy. |
| 521 |
c. Commercial
lines residential and nonresidential policy |
| 522 |
forms that are generally similar to the basic
perils of full |
| 523 |
coverage obtainable for commercial residential
structures and |
| 524 |
commercial nonresidential structures in the
admitted voluntary |
| 525 |
market. |
| 526 |
d. Personal
lines and commercial lines residential |
| 527 |
property insurance forms that cover the peril of
wind only. The |
| 528 |
forms are applicable only to residential
properties located in |
| 529 |
areas eligible for coverage under the high-risk
account referred |
| 530 |
to in sub-subparagraph (b)2.a. |
| 531 |
e. Commercial
lines nonresidential property insurance |
| 532 |
forms that cover the peril of wind only. The
forms are |
| 533 |
applicable only to nonresidential properties
located in areas |
| 534 |
eligible for coverage under the high-risk account
referred to in |
| 535 |
sub-subparagraph (b)2.a. |
| 536 |
f. The
corporation may adopt variations of the policy |
| 537 |
forms listed in sub-subparagraphs a.-e. that
contain more |
| 538 |
restrictive coverage. |
| 539 |
2.a. Must
provide that the corporation adopt a program in |
| 540 |
which the corporation and authorized insurers
enter into quota |
| 541 |
share primary insurance agreements for hurricane
coverage, as |
| 542 |
defined in s. 627.4025(2)(a), for eligible risks,
and adopt |
| 543 |
property insurance forms for eligible risks which
cover the |
| 544 |
peril of wind only. As used in this subsection,
the term: |
| 545 |
(I) "Quota
share primary insurance" means an arrangement |
| 546 |
in which the primary hurricane coverage of an
eligible risk is |
| 547 |
provided in specified percentages by the
corporation and an |
| 548 |
authorized insurer. The corporation and
authorized insurer are |
| 549 |
each solely responsible for a specified
percentage of hurricane |
| 550 |
coverage of an eligible risk as set forth in a
quota share |
| 551 |
primary insurance agreement between the
corporation and an |
| 552 |
authorized insurer and the insurance contract.
The |
| 553 |
responsibility of the corporation or authorized
insurer to pay |
| 554 |
its specified percentage of hurricane losses of
an eligible |
| 555 |
risk, as set forth in the quota share primary
insurance |
| 556 |
agreement, may not be altered by the inability of
the other |
| 557 |
party to the agreement to pay its specified
percentage of |
| 558 |
hurricane losses. Eligible risks that are
provided hurricane |
| 559 |
coverage through a quota share primary insurance
arrangement |
| 560 |
must be provided policy forms that set forth the
obligations of |
| 561 |
the corporation and authorized insurer under the
arrangement, |
| 562 |
clearly specify the percentages of quota share
primary insurance |
| 563 |
provided by the corporation and authorized
insurer, and |
| 564 |
conspicuously and clearly state that neither the
authorized |
| 565 |
insurer nor the corporation may be held
responsible beyond its |
| 566 |
specified percentage of coverage of hurricane
losses. |
| 567 |
(II) "Eligible
risks" means personal lines residential and |
| 568 |
commercial lines residential risks that meet the
underwriting |
| 569 |
criteria of the corporation and are located in
areas that were |
| 570 |
eligible for coverage by the Florida Windstorm
Underwriting |
| 571 |
Association on January 1, 2002. |
| 572 |
b. The
corporation may enter into quota share primary |
| 573 |
insurance agreements with authorized insurers at
corporation |
| 574 |
coverage levels of 90 percent and 50 percent. |
| 575 |
c. If
the corporation determines that additional coverage |
| 576 |
levels are necessary to maximize participation in
quota share |
| 577 |
primary insurance agreements by authorized
insurers, the |
| 578 |
corporation may establish additional coverage
levels. However, |
| 579 |
the corporation's quota share primary insurance
coverage level |
| 580 |
may not exceed 90 percent. |
| 581 |
d. Any
quota share primary insurance agreement entered |
| 582 |
into between an authorized insurer and the
corporation must |
| 583 |
provide for a uniform specified percentage of
coverage of |
| 584 |
hurricane losses, by county or territory as set
forth by the |
| 585 |
corporation board, for all eligible risks of the
authorized |
| 586 |
insurer covered under the quota share primary
insurance |
| 587 |
agreement. |
| 588 |
e. Any
quota share primary insurance agreement entered |
| 589 |
into between an authorized insurer and the
corporation is |
| 590 |
subject to review and approval by the office.
However, such |
| 591 |
agreement shall be authorized only as to
insurance contracts |
| 592 |
entered into between an authorized insurer and an
insured who is |
| 593 |
already insured by the corporation for wind
coverage. |
| 594 |
f. For
all eligible risks covered under quota share |
| 595 |
primary insurance agreements, the exposure and
coverage levels |
| 596 |
for both the corporation and authorized insurers
shall be |
| 597 |
reported by the corporation to the Florida
Hurricane Catastrophe |
| 598 |
Fund. For all policies of eligible risks covered
under quota |
| 599 |
share primary insurance agreements, the
corporation and the |
| 600 |
authorized insurer shall maintain complete and
accurate records |
| 601 |
for the purpose of exposure and loss
reimbursement audits as |
| 602 |
required by Florida Hurricane Catastrophe Fund
rules. The |
| 603 |
corporation and the authorized insurer shall each
maintain |
| 604 |
duplicate copies of policy declaration pages and
supporting |
| 605 |
claims documents. |
| 606 |
g. The
corporation board shall establish in its plan of |
| 607 |
operation standards for quota share agreements
which ensure that |
| 608 |
there is no discriminatory application among
insurers as to the |
| 609 |
terms of quota share agreements, pricing of quota
share |
| 610 |
agreements, incentive provisions if any, and
consideration paid |
| 611 |
for servicing policies or adjusting claims. |
| 612 |
h. The
quota share primary insurance agreement between the |
| 613 |
corporation and an authorized insurer must set
forth the |
| 614 |
specific terms under which coverage is provided,
including, but |
| 615 |
not limited to, the sale and servicing of
policies issued under |
| 616 |
the agreement by the insurance agent of the
authorized insurer |
| 617 |
producing the business, the reporting of
information concerning |
| 618 |
eligible risks, the payment of premium to the
corporation, and |
| 619 |
arrangements for the adjustment and payment of
hurricane claims |
| 620 |
incurred on eligible risks by the claims adjuster
and personnel |
| 621 |
of the authorized insurer. Entering into a quota
sharing |
| 622 |
insurance agreement between the corporation and
an authorized |
| 623 |
insurer shall be voluntary and at the discretion
of the |
| 62 |