Bill Text: FL S1566 | 2012 | Regular Session | Introduced


Bill Title: Property Insurance

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2012-03-09 - Died in Banking and Insurance [S1566 Detail]

Download: Florida-2012-S1566-Introduced.html
       Florida Senate - 2012                                    SB 1566
       
       
       
       By Senator Fasano
       
       
       
       
       11-01382B-12                                          20121566__
    1                        A bill to be entitled                      
    2         An act relating to property insurance; amending s.
    3         627.351, F.S.; revising the membership of the Market
    4         Accountability Advisory Committee of the board of
    5         governors of Citizens Property Insurance Corporation;
    6         extending the corporation’s annual rate increase cap
    7         to sinkhole coverage; amending s. 627.405, F.S.;
    8         requiring an insurer to accept a private structural
    9         appraisal under certain circumstances; amending s.
   10         627.7011, F.S.; requiring an insurer to pay
   11         replacement cost coverage without reservation or
   12         depreciation for dwelling losses that result from a
   13         state of emergency; amending s. 627.7073, F.S.;
   14         revising provisions relating to filing and recording
   15         certain reports relating to sinkhole damage and repair
   16         with the county clerk of the court; providing an
   17         effective date.
   18  
   19  Be It Enacted by the Legislature of the State of Florida:
   20  
   21         Section 1. Paragraphs (c) and (n) of subsection (6) of
   22  section 627.351, Florida Statutes, are amended to read:
   23         627.351 Insurance risk apportionment plans.—
   24         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
   25         (c) The corporation’s plan of operation:
   26         1. Must provide for the adoption of residential property
   27  and casualty insurance policy forms and commercial residential
   28  and nonresidential property insurance forms, which must be
   29  approved by the office before use. The corporation shall adopt
   30  the following policy forms:
   31         a. Standard personal lines policy forms that are
   32  comprehensive multiperil policies providing full coverage of a
   33  residential property equivalent to the coverage provided in the
   34  private insurance market under an HO-3, HO-4, or HO-6 policy.
   35         b. Basic personal lines policy forms that are policies
   36  similar to an HO-8 policy or a dwelling fire policy that provide
   37  coverage meeting the requirements of the secondary mortgage
   38  market, but which is more limited than the coverage under a
   39  standard policy.
   40         c. Commercial lines residential and nonresidential policy
   41  forms that are generally similar to the basic perils of full
   42  coverage obtainable for commercial residential structures and
   43  commercial nonresidential structures in the admitted voluntary
   44  market.
   45         d. Personal lines and commercial lines residential property
   46  insurance forms that cover the peril of wind only. The forms
   47  apply are applicable only to residential properties located in
   48  areas eligible for coverage under the coastal account referred
   49  to in sub-subparagraph (b)2.a.
   50         e. Commercial lines nonresidential property insurance forms
   51  that cover the peril of wind only. The forms are applicable only
   52  to nonresidential properties located in areas eligible for
   53  coverage under the coastal account referred to in sub
   54  subparagraph (b)2.a.
   55         f. The corporation may adopt variations of the policy forms
   56  listed in sub-subparagraphs a.-e. which contain more restrictive
   57  coverage.
   58         2. Must provide that the corporation adopt a program in
   59  which the corporation and authorized insurers enter into quota
   60  share primary insurance agreements for hurricane coverage, as
   61  defined in s. 627.4025(2)(a), for eligible risks, and adopt
   62  property insurance forms for eligible risks which cover the
   63  peril of wind only.
   64         a. As used in this subsection, the term:
   65         (I) “Quota share primary insurance” means an arrangement in
   66  which the primary hurricane coverage of an eligible risk is
   67  provided in specified percentages by the corporation and an
   68  authorized insurer. The corporation and authorized insurer are
   69  each solely responsible for a specified percentage of hurricane
   70  coverage of an eligible risk as set forth in a quota share
   71  primary insurance agreement between the corporation and an
   72  authorized insurer and the insurance contract. The
   73  responsibility of the corporation or authorized insurer to pay
   74  its specified percentage of hurricane losses of an eligible
   75  risk, as set forth in the agreement, may not be altered by the
   76  inability of the other party to pay its specified percentage of
   77  losses. Eligible risks that are provided hurricane coverage
   78  through a quota share primary insurance arrangement must be
   79  provided policy forms that set forth the obligations of the
   80  corporation and authorized insurer under the arrangement,
   81  clearly specify the percentages of quota share primary insurance
   82  provided by the corporation and authorized insurer, and
   83  conspicuously and clearly state that the authorized insurer and
   84  the corporation may not be held responsible beyond their
   85  specified percentage of coverage of hurricane losses.
   86         (II) “Eligible risks” means personal lines residential and
   87  commercial lines residential risks that meet the underwriting
   88  criteria of the corporation and are located in areas that were
   89  eligible for coverage by the Florida Windstorm Underwriting
   90  Association on January 1, 2002.
   91         b. The corporation may enter into quota share primary
   92  insurance agreements with authorized insurers at corporation
   93  coverage levels of 90 percent and 50 percent.
   94         c. If the corporation determines that additional coverage
   95  levels are necessary to maximize participation in quota share
   96  primary insurance agreements by authorized insurers, the
   97  corporation may establish additional coverage levels. However,
   98  the corporation’s quota share primary insurance coverage level
   99  may not exceed 90 percent.
  100         d. Any quota share primary insurance agreement entered into
  101  between an authorized insurer and the corporation must provide
  102  for a uniform specified percentage of coverage of hurricane
  103  losses, by county or territory as determined set forth by the
  104  corporation board, for all eligible risks of the authorized
  105  insurer covered under the agreement.
  106         e. Any quota share primary insurance agreement entered into
  107  between an authorized insurer and the corporation is subject to
  108  review and approval by the office. However, such agreement shall
  109  be authorized only as to insurance contracts entered into
  110  between an authorized insurer and an insured who is already
  111  insured by the corporation for wind coverage.
  112         f. For all eligible risks covered under quota share primary
  113  insurance agreements, the exposure and coverage levels for both
  114  the corporation and authorized insurers shall be reported by the
  115  corporation to the Florida Hurricane Catastrophe Fund. For all
  116  policies of eligible risks covered under such agreements, the
  117  corporation and the authorized insurer must maintain complete
  118  and accurate records for the purpose of exposure and loss
  119  reimbursement audits as required by fund rules. The corporation
  120  and the authorized insurer shall each maintain duplicate copies
  121  of policy declaration pages and supporting claims documents.
  122         g. The corporation board shall establish in its plan of
  123  operation standards for quota share agreements which ensure that
  124  there is no discriminatory application among insurers as to the
  125  terms of the agreements, pricing of the agreements, incentive
  126  provisions if any, and consideration paid for servicing policies
  127  or adjusting claims.
  128         h. The quota share primary insurance agreement between the
  129  corporation and an authorized insurer must set forth the
  130  specific terms under which coverage is provided, including, but
  131  not limited to, the sale and servicing of policies issued under
  132  the agreement by the insurance agent of the authorized insurer
  133  producing the business, the reporting of information concerning
  134  eligible risks, the payment of premium to the corporation, and
  135  arrangements for the adjustment and payment of hurricane claims
  136  incurred on eligible risks by the claims adjuster and personnel
  137  of the authorized insurer. Entering into a quota sharing
  138  insurance agreement between the corporation and an authorized
  139  insurer is voluntary and at the discretion of the authorized
  140  insurer.
  141         3.a. May provide that the corporation may employ or
  142  otherwise contract with individuals or other entities to provide
  143  administrative or professional services that may be appropriate
  144  to effectuate the plan.
  145         a. The corporation may borrow funds by issuing bonds or by
  146  incurring other indebtedness, and shall have other powers
  147  reasonably necessary to effectuate the requirements of this
  148  subsection, including, without limitation, the power to issue
  149  bonds and incur other indebtedness in order to refinance
  150  outstanding bonds or other indebtedness. The corporation may
  151  seek judicial validation of its bonds or other indebtedness
  152  under chapter 75. The corporation may issue bonds or incur other
  153  indebtedness, or have bonds issued on its behalf by a unit of
  154  local government pursuant to subparagraph (q)2. in the absence
  155  of a hurricane or other weather-related event, upon a
  156  determination by the corporation, subject to approval by the
  157  office, that such action would enable it to efficiently meet the
  158  financial obligations of the corporation and that such
  159  financings are reasonably necessary to effectuate the
  160  requirements of this subsection. The corporation may take all
  161  actions needed to facilitate tax-free status for such bonds or
  162  indebtedness, including formation of trusts or other affiliated
  163  entities. The corporation may pledge assessments, projected
  164  recoveries from the Florida Hurricane Catastrophe Fund, other
  165  reinsurance recoverables, market equalization and other
  166  surcharges, and other funds available to the corporation as
  167  security for bonds or other indebtedness. In recognition of s.
  168  10, Art. I of the State Constitution, prohibiting the impairment
  169  of obligations of contracts, it is the intent of the Legislature
  170  that no action be taken whose purpose is to impair any bond
  171  indenture or financing agreement or any revenue source committed
  172  by contract to such bond or other indebtedness.
  173         b. To ensure that the corporation is operating in an
  174  efficient and economic manner while providing quality service to
  175  policyholders, applicants, and agents, the board shall
  176  commission an independent third-party consultant having
  177  expertise in insurance company management or insurance company
  178  management consulting to prepare a report and make
  179  recommendations on the relative costs and benefits of
  180  outsourcing various policy issuance and service functions to
  181  private servicing carriers or entities performing similar
  182  functions in the private market for a fee, rather than
  183  performing such functions in-house. In making such
  184  recommendations, the consultant shall consider how other
  185  residual markets, both in this state and around the country,
  186  outsource appropriate functions or use servicing carriers to
  187  better match expenses with revenues that fluctuate based on a
  188  widely varying policy count. The report must be completed by
  189  July 1, 2012. Upon receiving the report, the board shall develop
  190  a plan to implement the report and submit the plan for review,
  191  modification, and approval to the Financial Services Commission.
  192  Upon the commission’s approval of the plan, the board shall
  193  begin implementing the plan by January 1, 2013.
  194         4. Must require that the corporation operate subject to the
  195  supervision and approval of a board of governors consisting of
  196  eight individuals who are residents of but this state, from
  197  different geographical areas of this state.
  198         a. The Governor, the Chief Financial Officer, the President
  199  of the Senate, and the Speaker of the House of Representatives
  200  shall each appoint two members of the board. At least one of the
  201  two members appointed by each appointing officer must have
  202  demonstrated expertise in insurance and is deemed to be within
  203  the scope of the exemption provided in s. 112.313(7)(b). The
  204  Chief Financial Officer shall designate one of the appointees as
  205  chair. All board members serve at the pleasure of the appointing
  206  officer. All members of the board are subject to removal at will
  207  by the officers who appointed them. All board members, including
  208  the chair, must be appointed to serve for 3-year terms beginning
  209  annually on a date designated by the plan. However, for the
  210  first term beginning on or after July 1, 2009, each appointing
  211  officer shall appoint one member of the board for a 2-year term
  212  and one member for a 3-year term. A board vacancy shall be
  213  filled for the unexpired term by the appointing officer. The
  214  Chief Financial Officer shall appoint a technical advisory group
  215  to provide information and advice to the board in connection
  216  with the board’s duties under this subsection. The executive
  217  director and senior managers of the corporation shall be engaged
  218  by the board and serve at the pleasure of the board. Any
  219  executive director appointed on or after July 1, 2006, is
  220  subject to confirmation by the Senate. The executive director is
  221  responsible for employing other staff as the corporation may
  222  require, subject to review and concurrence by the board.
  223         b. The board shall create a Market Accountability Advisory
  224  Committee to assist the corporation in developing awareness of
  225  its rates and its customer and agent service levels in
  226  relationship to the voluntary market insurers writing similar
  227  coverage.
  228         (I) The members of the advisory committee consist of the
  229  following 16 11 persons, one of whom must be elected chair by
  230  the members of the committee: four representatives, one
  231  appointed by the Florida Association of Insurance Agents, one by
  232  the Florida Association of Insurance and Financial Advisors, one
  233  by the Professional Insurance Agents of Florida, and one by the
  234  Latin American Association of Insurance Agencies; three
  235  representatives appointed by the insurers with the three highest
  236  voluntary market share of residential property insurance
  237  business in the state; one representative from the Office of
  238  Insurance Regulation; two consumers one consumer appointed by
  239  the board who are is insured by the corporation at the time of
  240  appointment to the committee; two representatives of nonprofit
  241  organizations representing consumers on property insurance
  242  issues; one public adjuster; one representative appointed by the
  243  Florida Association of Realtors; and one representative
  244  appointed by the Florida Bankers Association; and one
  245  representative appointed by the Florida Justice Association. All
  246  members shall be appointed to 3-year terms and may serve for
  247  consecutive terms.
  248         (II) The committee shall report to the corporation at each
  249  board meeting on insurance market issues, which may include
  250  rates and rate competition with the voluntary market; service,
  251  including policy issuance, claims processing, and general
  252  responsiveness to policyholders, applicants, and agents; and
  253  matters relating to depopulation.
  254         5. Must provide a procedure for determining the eligibility
  255  of a risk for coverage, as follows:
  256         a. Subject to s. 627.3517, with respect to personal lines
  257  residential risks, if the risk is offered coverage from an
  258  authorized insurer at the insurer’s approved rate under a
  259  standard policy including wind coverage or, if consistent with
  260  the insurer’s underwriting rules as filed with the office, a
  261  basic policy including wind coverage, for a new application to
  262  the corporation for coverage, the risk is not eligible for any
  263  policy issued by the corporation unless the premium for coverage
  264  from the authorized insurer is more than 15 percent greater than
  265  the premium for comparable coverage from the corporation. If the
  266  risk is not able to obtain such offer, the risk is eligible for
  267  a standard policy including wind coverage or a basic policy
  268  including wind coverage issued by the corporation; however, if
  269  the risk could not be insured under a standard policy including
  270  wind coverage regardless of market conditions, the risk is
  271  eligible for a basic policy including wind coverage unless
  272  rejected under subparagraph 8. However, a policyholder of the
  273  corporation or a policyholder removed from the corporation
  274  through an assumption agreement until the end of the assumption
  275  period remains eligible for coverage from the corporation
  276  regardless of any offer of coverage from an authorized insurer
  277  or surplus lines insurer. The corporation shall determine the
  278  type of policy to be provided on the basis of objective
  279  standards specified in the underwriting manual and based on
  280  generally accepted underwriting practices.
  281         (I) If the risk accepts an offer of coverage through the
  282  market assistance plan or through a mechanism established by the
  283  corporation before a policy is issued to the risk by the
  284  corporation or during the first 30 days of coverage by the
  285  corporation, and the producing agent of record who submitted the
  286  application to the plan or to the corporation is not currently
  287  appointed by the insurer, the insurer shall:
  288         (A) Pay to the producing agent of record of the policy for
  289  the first year, an amount that is the greater of the insurer’s
  290  usual and customary commission for the type of policy written or
  291  a fee equal to the usual and customary commission of the
  292  corporation; or
  293         (B) Offer to allow the producing agent of record of the
  294  policy to continue servicing the policy for at least 1 year and
  295  offer to pay the agent the greater of the insurer’s or the
  296  corporation’s usual and customary commission for the type of
  297  policy written.
  298  
  299  If the producing agent is unwilling or unable to accept
  300  appointment, the new insurer shall pay the agent in accordance
  301  with sub-sub-sub-subparagraph (A).
  302         (II) If the corporation enters into a contractual agreement
  303  for a take-out plan, the producing agent of record of the
  304  corporation policy is entitled to retain any unearned commission
  305  on the policy, and the insurer shall:
  306         (A) Pay to the producing agent of record, for the first
  307  year, an amount that is the greater of the insurer’s usual and
  308  customary commission for the type of policy written or a fee
  309  equal to the usual and customary commission of the corporation;
  310  or
  311         (B) Offer to allow the producing agent of record to
  312  continue servicing the policy for at least 1 year and offer to
  313  pay the agent the greater of the insurer’s or the corporation’s
  314  usual and customary commission for the type of policy written.
  315  
  316  If the producing agent is unwilling or unable to accept
  317  appointment, the new insurer shall pay the agent in accordance
  318  with sub-sub-sub-subparagraph (A).
  319         b. With respect to commercial lines residential risks, for
  320  a new application to the corporation for coverage, if the risk
  321  is offered coverage under a policy including wind coverage from
  322  an authorized insurer at its approved rate, the risk is not
  323  eligible for a policy issued by the corporation unless the
  324  premium for coverage from the authorized insurer is more than 15
  325  percent greater than the premium for comparable coverage from
  326  the corporation. If the risk is not able to obtain any such
  327  offer, the risk is eligible for a policy including wind coverage
  328  issued by the corporation. However, a policyholder of the
  329  corporation or a policyholder removed from the corporation
  330  through an assumption agreement until the end of the assumption
  331  period remains eligible for coverage from the corporation
  332  regardless of an offer of coverage from an authorized insurer or
  333  surplus lines insurer.
  334         (I) If the risk accepts an offer of coverage through the
  335  market assistance plan or through a mechanism established by the
  336  corporation before a policy is issued to the risk by the
  337  corporation or during the first 30 days of coverage by the
  338  corporation, and the producing agent of record who submitted the
  339  application to the plan or the corporation is not currently
  340  appointed by the insurer, the insurer shall:
  341         (A) Pay to the producing agent of record of the policy, for
  342  the first year, an amount that is the greater of the insurer’s
  343  usual and customary commission for the type of policy written or
  344  a fee equal to the usual and customary commission of the
  345  corporation; or
  346         (B) Offer to allow the producing agent of record of the
  347  policy to continue servicing the policy for at least 1 year and
  348  offer to pay the agent the greater of the insurer’s or the
  349  corporation’s usual and customary commission for the type of
  350  policy written.
  351  
  352  If the producing agent is unwilling or unable to accept
  353  appointment, the new insurer shall pay the agent in accordance
  354  with sub-sub-sub-subparagraph (A).
  355         (II) If the corporation enters into a contractual agreement
  356  for a take-out plan, the producing agent of record of the
  357  corporation policy is entitled to retain any unearned commission
  358  on the policy, and the insurer shall:
  359         (A) Pay to the producing agent of record, for the first
  360  year, an amount that is the greater of the insurer’s usual and
  361  customary commission for the type of policy written or a fee
  362  equal to the usual and customary commission of the corporation;
  363  or
  364         (B) Offer to allow the producing agent of record to
  365  continue servicing the policy for at least 1 year and offer to
  366  pay the agent the greater of the insurer’s or the corporation’s
  367  usual and customary commission for the type of policy written.
  368  
  369  If the producing agent is unwilling or unable to accept
  370  appointment, the new insurer shall pay the agent in accordance
  371  with sub-sub-sub-subparagraph (A).
  372         c. For purposes of determining comparable coverage under
  373  sub-subparagraphs a. and b., the comparison must be based on
  374  those forms and coverages that are reasonably comparable. The
  375  corporation may rely on a determination of comparable coverage
  376  and premium made by the producing agent who submits the
  377  application to the corporation, made in the agent’s capacity as
  378  the corporation’s agent. A comparison may be made solely of the
  379  premium with respect to the main building or structure only on
  380  the following basis: the same coverage A or other building
  381  limits; the same percentage hurricane deductible that applies on
  382  an annual basis or that applies to each hurricane for commercial
  383  residential property; the same percentage of ordinance and law
  384  coverage, if the same limit is offered by both the corporation
  385  and the authorized insurer; the same mitigation credits, to the
  386  extent the same types of credits are offered both by the
  387  corporation and the authorized insurer; the same method for loss
  388  payment, such as replacement cost or actual cash value, if the
  389  same method is offered both by the corporation and the
  390  authorized insurer in accordance with underwriting rules; and
  391  any other form or coverage that is reasonably comparable as
  392  determined by the board. If an application is submitted to the
  393  corporation for wind-only coverage in the coastal account, the
  394  premium for the corporation’s wind-only policy plus the premium
  395  for the ex-wind policy that is offered by an authorized insurer
  396  to the applicant must be compared to the premium for multiperil
  397  coverage offered by an authorized insurer, subject to the
  398  standards for comparison specified in this subparagraph. If the
  399  corporation or the applicant requests from the authorized
  400  insurer a breakdown of the premium of the offer by types of
  401  coverage so that a comparison may be made by the corporation or
  402  its agent and the authorized insurer refuses or is unable to
  403  provide such information, the corporation may treat the offer as
  404  not being an offer of coverage from an authorized insurer at the
  405  insurer’s approved rate.
  406         6. Must include rules for classifications of risks and
  407  rates.
  408         7. Must provide that if premium and investment income for
  409  an account attributable to a particular calendar year are in
  410  excess of projected losses and expenses for the account
  411  attributable to that year, such excess shall be held in surplus
  412  in the account. Such surplus must be available to defray
  413  deficits in that account as to future years and used for that
  414  purpose before assessing assessable insurers and assessable
  415  insureds as to any calendar year.
  416         8. Must provide objective criteria and procedures to be
  417  uniformly applied to all applicants in determining whether an
  418  individual risk is so hazardous as to be uninsurable. In making
  419  this determination and in establishing the criteria and
  420  procedures, the following must be considered:
  421         a. Whether the likelihood of a loss for the individual risk
  422  is substantially higher than for other risks of the same class;
  423  and
  424         b. Whether the uncertainty associated with the individual
  425  risk is such that an appropriate premium cannot be determined.
  426  
  427  The acceptance or rejection of a risk by the corporation shall
  428  be construed as the private placement of insurance, and the
  429  provisions of chapter 120 do not apply.
  430         9. Must provide that the corporation make its best efforts
  431  to procure catastrophe reinsurance at reasonable rates, to cover
  432  its projected 100-year probable maximum loss as determined by
  433  the board of governors.
  434         10. Must issue The policies that issued by the corporation
  435  must provide that if the corporation or the market assistance
  436  plan obtains an offer from an authorized insurer to cover the
  437  risk at its approved rates, the risk is no longer eligible for
  438  renewal through the corporation, except as otherwise provided in
  439  this subsection.
  440         11. Corporation policies and applications Must include a
  441  notice in the corporation policies and applications that the
  442  corporation policy could, under this section, be replaced with a
  443  policy issued by an authorized insurer which does not provide
  444  coverage identical to the coverage provided by the corporation.
  445  The notice must also specify that acceptance of corporation
  446  coverage creates a conclusive presumption that the applicant or
  447  policyholder is aware of this potential.
  448         12. May establish, subject to approval by the office,
  449  different eligibility requirements and operational procedures
  450  for any line or type of coverage for any specified county or
  451  area if the board determines that such changes are justified due
  452  to the voluntary market being sufficiently stable and
  453  competitive in such area or for such line or type of coverage
  454  and that consumers who, in good faith, are unable to obtain
  455  insurance through the voluntary market through ordinary methods
  456  continue to have access to coverage from the corporation. If
  457  coverage is sought in connection with a real property transfer,
  458  the requirements and procedures may not provide an effective
  459  date of coverage later than the date of the closing of the
  460  transfer as established by the transferor, the transferee, and,
  461  if applicable, the lender.
  462         13. Must provide that, with respect to the coastal account,
  463  any assessable insurer with a surplus as to policyholders of $25
  464  million or less writing 25 percent or more of its total
  465  countrywide property insurance premiums in this state may
  466  petition the office, within the first 90 days of each calendar
  467  year, to qualify as a limited apportionment company. A regular
  468  assessment levied by the corporation on a limited apportionment
  469  company for a deficit incurred by the corporation for the
  470  coastal account may be paid to the corporation on a monthly
  471  basis as the assessments are collected by the limited
  472  apportionment company from its insureds pursuant to s. 627.3512,
  473  but the regular assessment must be paid in full within 12 months
  474  after being levied by the corporation. A limited apportionment
  475  company shall collect from its policyholders any emergency
  476  assessment imposed under sub-subparagraph (b)3.c. (b)3.d. The
  477  plan must provide that, If the office determines that any
  478  regular assessment will result in an impairment of the surplus
  479  of a limited apportionment company, the office may direct that
  480  all or part of such assessment be deferred as provided in
  481  subparagraph (q)4. However, an emergency assessment to be
  482  collected from policyholders under sub-subparagraph (b)3.c.
  483  (b)3.d. may not be limited or deferred.
  484         14. Must provide that the corporation appoint as its
  485  licensed agents only those agents who also hold an appointment
  486  as defined in s. 626.015(3) with an insurer who at the time of
  487  the agent’s initial appointment by the corporation is authorized
  488  to write and is actually writing personal lines residential
  489  property coverage, commercial residential property coverage, or
  490  commercial nonresidential property coverage within the state.
  491         15. Must provide a premium payment plan option to its
  492  policyholders which, at a minimum, allows for quarterly and
  493  semiannual payment of premiums. A monthly payment plan may, but
  494  is not required to, be offered.
  495         16. Must limit coverage on mobile homes or manufactured
  496  homes built before 1994 to actual cash value of the dwelling
  497  rather than replacement costs of the dwelling.
  498         17. May provide such limits of coverage as the board
  499  determines, consistent with the requirements of this subsection.
  500         18. May require commercial property to meet specified
  501  hurricane mitigation construction features as a condition of
  502  eligibility for coverage.
  503         19. Must provide that new or renewal policies issued by the
  504  corporation on or after January 1, 2012, which cover sinkhole
  505  loss do not include coverage for any loss to appurtenant
  506  structures, driveways, sidewalks, decks, or patios which is that
  507  are directly or indirectly caused by sinkhole activity. The
  508  corporation shall exclude such coverage using a notice of
  509  coverage change, which may be included with the policy renewal,
  510  and not by issuance of a notice of nonrenewal of the excluded
  511  coverage upon renewal of the current policy.
  512         20. As of January 1, 2012, must require that the agent
  513  obtain from an applicant for coverage from the corporation an
  514  acknowledgement signed by the applicant, which includes, at a
  515  minimum, the following statement:
  516  
  517               ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE              
  518                      AND ASSESSMENT LIABILITY:                    
  519  
  520         1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
  521  CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
  522  DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
  523  MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
  524  PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
  525  POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
  526  OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
  527  LEGISLATURE.
  528         2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
  529  ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
  530  INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
  531  FLORIDA LEGISLATURE.
  532         3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
  533  CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
  534  STATE OF FLORIDA.
  535  
  536         a. The corporation shall maintain, in electronic format or
  537  otherwise, a copy of the applicant’s signed acknowledgement and
  538  provide a copy of the statement to the policyholder as part of
  539  the first renewal after the effective date of this subparagraph.
  540         b. The signed acknowledgement form creates a conclusive
  541  presumption that the policyholder understood and accepted his or
  542  her potential surcharge and assessment liability as a
  543  policyholder of the corporation.
  544         (n)1. Rates for coverage provided by the corporation must
  545  be actuarially sound and subject to s. 627.062, except as
  546  otherwise provided in this paragraph. The corporation shall file
  547  its recommended rates with the office at least annually. The
  548  corporation shall provide any additional information regarding
  549  the rates which the office requires. The office shall consider
  550  the recommendations of the board and issue a final order
  551  establishing the rates for the corporation within 45 days after
  552  the recommended rates are filed. The corporation may not pursue
  553  an administrative challenge or judicial review of the final
  554  order of the office.
  555         2. In addition to the rates otherwise determined pursuant
  556  to this paragraph, the corporation shall impose and collect an
  557  amount equal to the premium tax provided in s. 624.509 to
  558  augment the financial resources of the corporation.
  559         3. After the public hurricane loss-projection model under
  560  s. 627.06281 has been found to be accurate and reliable by the
  561  Florida Commission on Hurricane Loss Projection Methodology, the
  562  model shall serve as the minimum benchmark for determining the
  563  windstorm portion of the corporation’s rates. This subparagraph
  564  does not require or allow the corporation to adopt rates lower
  565  than the rates otherwise required or allowed by this paragraph.
  566         4. The rate filings for the corporation which were approved
  567  by the office and took effect January 1, 2007, are rescinded,
  568  except for those rates that were lowered. As soon as possible,
  569  the corporation shall begin using the lower rates that were in
  570  effect on December 31, 2006, and provide refunds to
  571  policyholders who paid higher rates as a result of that rate
  572  filing. The rates in effect on December 31, 2006, remain in
  573  effect for the 2007 and 2008 calendar years except for any rate
  574  change that results in a lower rate. The next rate change that
  575  may increase rates shall take effect pursuant to a new rate
  576  filing recommended by the corporation and established by the
  577  office, subject to this paragraph.
  578         5. Beginning on July 15, 2009, and annually thereafter, The
  579  corporation must annually make a recommended actuarially sound
  580  rate filing for each personal and commercial line of business it
  581  writes, to be effective no earlier than January 1, 2010.
  582         6. Beginning on or after January 1, 2010, and
  583  notwithstanding the board’s recommended rates and the office’s
  584  final order regarding the corporation’s filed rates under
  585  subparagraph 1., the corporation shall annually implement a rate
  586  increase that which, except for sinkhole coverage, does not
  587  exceed 10 percent for any single policy issued by the
  588  corporation, excluding coverage changes and surcharges.
  589         7. The corporation may also implement an increase to
  590  reflect the effect on the corporation of the cash buildup factor
  591  pursuant to s. 215.555(5)(b).
  592         8. The corporation’s implementation of rates as prescribed
  593  in subparagraph 6. shall cease for any line of business written
  594  by the corporation upon the corporation’s implementation of
  595  actuarially sound rates. Thereafter, the corporation shall
  596  annually make a recommended actuarially sound rate filing for
  597  each commercial and personal line of business the corporation
  598  writes.
  599         Section 2. Subsection (4) is added to section 627.405,
  600  Florida Statutes, to read:
  601         627.405 Insurable interest; property.—
  602         (4) For property insurance, all insurers, including the
  603  Citizens Property Insurance Corporation, must accept a private
  604  structural appraisal from a state-licensed appraiser if the
  605  appraisal shows that the replacement costs will be lower than
  606  those projected by the insurer.
  607         Section 3. Paragraph (a) of subsection (3) of section
  608  627.7011, Florida Statutes, is amended to read:
  609         627.7011 Homeowners’ policies; offer of replacement cost
  610  coverage and law and ordinance coverage.—
  611         (3) In the event of a loss for which a dwelling or personal
  612  property is insured on the basis of replacement costs:
  613         (a) For a dwelling, the insurer must initially pay at least
  614  the actual cash value of the insured loss, less any applicable
  615  deductible. The insurer shall pay any remaining amounts
  616  necessary to perform such repairs as work is performed and
  617  expenses are incurred. If a total loss of a dwelling occurs, or
  618  for claims that are based on events that are the subject of a
  619  declaration of a state of emergency by the Governor, the insurer
  620  shall pay the replacement cost coverage without reservation or
  621  holdback of any depreciation in value, pursuant to s. 627.702.
  622         Section 4. Section 627.7073, Florida Statutes, is amended
  623  to read:
  624         627.7073 Sinkhole reports.—
  625         (1) Upon completion of testing as provided in s. 627.7072,
  626  the professional engineer or professional geologist shall issue
  627  three original-signature and sealed reports, including a report
  628  and certification, to the insurer. The insurer shall keep one
  629  original, forward one original by certified mail to and the
  630  policyholder, and file one original, which includes a legal
  631  description of the real property and the name of the property
  632  owner, with the clerk of the court, who shall record the report
  633  as provided in this section. The insurer shall bear the cost of
  634  filing and recording the report.
  635         (a) Sinkhole loss is verified if, based upon tests
  636  performed in accordance with s. 627.7072, a professional
  637  engineer or a professional geologist issues a written report and
  638  certification stating:
  639         1. That structural damage to the covered building has been
  640  identified within a reasonable professional probability.
  641         2. That the cause of the structural damage is sinkhole
  642  activity within a reasonable professional probability.
  643         3. That the analyses conducted were of sufficient scope to
  644  identify sinkhole activity as the cause of damage within a
  645  reasonable professional probability.
  646         4. A description of the tests performed.
  647         5. A recommendation by the professional engineer of methods
  648  for stabilizing the land and building and for making repairs to
  649  the foundation.
  650         (b) If there is no structural damage or if sinkhole
  651  activity is eliminated as the cause of such damage to the
  652  covered building, the professional engineer or professional
  653  geologist shall issue a written report and certification to the
  654  policyholder and the insurer stating:
  655         1. That there is no structural damage or the cause of such
  656  damage is not sinkhole activity within a reasonable professional
  657  probability.
  658         2. That the analyses and tests conducted were of sufficient
  659  scope to eliminate sinkhole activity as the cause of the
  660  structural damage within a reasonable professional probability.
  661         3. A statement of the cause of the structural damage within
  662  a reasonable professional probability.
  663         4. A description of the tests performed.
  664         (c) The respective findings, opinions, and recommendations
  665  of the insurer’s professional engineer or professional geologist
  666  as to the cause of distress to the property and the findings,
  667  opinions, and recommendations of the insurer’s professional
  668  engineer as to land and building stabilization and foundation
  669  repair set forth by s. 627.7072 shall be presumed correct.
  670         (2) An insurer that has paid a claim for a sinkhole loss
  671  shall file a copy of the report and certification, prepared
  672  pursuant to subsection (1), including the legal description of
  673  the real property and the name of the property owner, the
  674  neutral evaluator’s report, if any, which indicates that
  675  sinkhole activity caused the damage claimed, a copy of the
  676  certification indicating that stabilization has been completed,
  677  if applicable, and the amount of the payment, with the county
  678  clerk of court, who shall record the report and certification.
  679  The insurer shall bear the cost of filing and recording one or
  680  more reports and certifications. There shall be no cause of
  681  action or liability against an insurer for compliance with this
  682  section.
  683         (d)(a) The recording of the report and certification does
  684  not:
  685         1. Constitute a lien, encumbrance, or restriction on the
  686  title to the real property or constitute a defect in the title
  687  to the real property;
  688         2. Create any cause of action or liability against any
  689  grantor of the real property for breach of any warranty of good
  690  title or warranty against encumbrances; or
  691         3. Create any cause of action or liability against any
  692  title insurer that insures the title to the real property.
  693         (2)(b) As a precondition to accepting payment for a
  694  sinkhole loss, the policyholder must file a copy of any sinkhole
  695  report regarding the insured property which was prepared on
  696  behalf or at the request of the policyholder and which includes
  697  a legal description of the property and the property owner. The
  698  policyholder shall bear the cost of filing and recording the
  699  sinkhole report. The recording of the report does not:
  700         (a)1. Constitute a lien, encumbrance, or restriction on the
  701  title to the real property or constitute a defect in the title
  702  to the real property;
  703         (b)2. Create any cause of action or liability against any
  704  grantor of the real property for breach of any warranty of good
  705  title or warranty against encumbrances; or
  706         (c)3. Create any cause of action or liability against a
  707  title insurer that insures the title to the real property.
  708         (c) The seller of real property upon which a sinkhole claim
  709  has been made by the seller and paid by the insurer must
  710  disclose to the buyer of such property, before the closing, that
  711  a claim has been paid and whether or not the full amount of the
  712  proceeds was used to repair the sinkhole damage.
  713         (3) An insurer that has paid a claim for a sinkhole loss
  714  shall, within 30 days after payment, file with the county clerk
  715  of court a copy of the neutral evaluator’s report, if any, which
  716  indicates that sinkhole activity caused the damage claimed; the
  717  certification indicating that stabilization has been completed,
  718  if applicable; the amount of the payment; and a legal
  719  description of the property and the name of the property owner.
  720  The clerk of court shall record the documents and information.
  721  The insurer shall bear the cost of filing and recording. There
  722  shall be no cause of action or liability against an insurer for
  723  compliance with this subsection.
  724         (4)(3) Upon completion of any building stabilization or
  725  foundation repairs for a verified sinkhole loss, the
  726  professional engineer responsible for monitoring the repairs
  727  shall issue a report to the property owner which specifies what
  728  repairs have been performed and certifies within a reasonable
  729  degree of professional probability that such repairs have been
  730  properly performed. The professional engineer issuing the report
  731  shall file a copy of the report and certification, which
  732  includes a legal description of the real property and the name
  733  of the property owner, with the county clerk of the court, who
  734  shall record the report and certification. This subsection does
  735  not create liability for an insurer based on any representation
  736  or certification by a professional engineer related to the
  737  stabilization or foundation repairs for the verified sinkhole
  738  loss.
  739         (5) The seller of real property upon which a sinkhole claim
  740  has been made by the seller and paid by the insurer must
  741  disclose to the buyer of such property, before the closing, that
  742  a claim has been paid and whether the full amount of the
  743  proceeds was used to repair the sinkhole damage.
  744         Section 5. This act shall take effect July 1, 2012.

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