Bill Text: FL S1714 | 2011 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Citizens Property Insurance Corporation
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-05-07 - Indefinitely postponed and withdrawn from consideration [S1714 Detail]
Download: Florida-2011-S1714-Introduced.html
Bill Title: Citizens Property Insurance Corporation
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2011-05-07 - Indefinitely postponed and withdrawn from consideration [S1714 Detail]
Download: Florida-2011-S1714-Introduced.html
Florida Senate - 2011 SB 1714 By Senator Hays 20-01454B-11 20111714__ 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 intent; providing that certain residential 5 structures are not eligible for coverage by the 6 corporation after a certain date; requiring policies 7 issued by the corporation to include a provision that 8 prohibits policyholders from engaging the services of 9 a public adjuster; specifying the percentage amount of 10 emergency assessments; revising provisions relating to 11 policyholder surcharges; prohibiting the corporation 12 from levying certain assessments with respect to a 13 year’s deficit until the corporation has first levied 14 a specified surcharge; deleting obsolete provisions 15 relating to the corporation’s plan of operation; 16 requiring the corporation to commission a consultant 17 to prepare a report on outsourcing various functions 18 and submit such report to the Financial Services 19 Commission by a certain date; revising provisions 20 relating to wind coverage; prohibiting the corporation 21 from accepting applications for commercial 22 nonresidential risks; requiring the policyholders to 23 sign a statement acknowledging that they may be 24 assessed surcharges to cover corporate deficits; 25 providing that policies do not include coverage for 26 screen enclosures and limiting coverage for damage 27 from sinkholes after a certain date; requiring members 28 of the board of governors to abstain from voting on 29 issues on which they have a personal interest; 30 requiring such members to disclose the nature of their 31 interest as a public record; providing that the 32 corporation operates as a residual market mechanism; 33 revising provisions relating to corporation rates; 34 clarifying that the corporation is immune from certain 35 liabilities; deleting a requirement for an annual 36 report to the Legislature on losses attributable to 37 wind-only coverages; requiring owners of properties in 38 Special Flood Hazard Areas to maintain a separate 39 flood insurance policy after a certain date; providing 40 exceptions; amending ss. 627.3511 and 627.712, F.S.; 41 conforming cross-references; providing an effective 42 date. 43 44 Be It Enacted by the Legislature of the State of Florida: 45 46 Section 1. Paragraphs (a), (b), (c), (d), (n), (o), (s), 47 (w), (y), (aa), and (ee) of subsection (6) of section 627.351, 48 Florida Statutes, are amended to read: 49 627.351 Insurance risk apportionment plans.— 50 (6) CITIZENS PROPERTY INSURANCE CORPORATION.— 51 (a)1.It isThe public purpose of this subsection is to 52 ensure that there isthe existence ofan orderly market for 53 property insurance for residentsFloridiansandFlorida54 businesses of this state. 55 1. The Legislature finds that actual and threatened 56 catastrophic losses to property from hurricanes in this state 57 have caused insurers to be unwilling or unable to provide 58 property insurance coverage to the extent sought and needed. The 59 Legislature declares that it is in the public interest and 60 serves a public purpose that property in this state be 61 adequately insured in order to facilitate the remediation, 62 reconstruction, and replacement of damaged or destroyed 63 property. Such efforts are necessary in order to avoid or reduce 64 negative effects to the public health, safety, and welfare; the 65 economy of the state; and the revenues of state and local 66 governments. It is necessary, therefore, to provide property 67 insurance to applicants who are entitled to procure insurance 68 through the voluntary market but who, in good faith, are unable 69 to do so.The Legislature finds that private insurers are70unwilling or unable to provide affordable property insurance71coverage in this state to the extent sought and needed. The72absence of affordable property insurance threatens the public73health, safety, and welfare and likewise threatens the economic74health of the state. The state therefore has a compelling public75interest and a public purpose to assist in assuring that76property in the state is insured and that it is insured at77affordable rates so as to facilitate the remediation,78reconstruction, and replacement of damaged or destroyed property79in order to reduce or avoid the negative effects otherwise80resulting to the public health, safety, and welfare, to the81economy of the state, and to the revenues of the state and local82governments which are needed to provide for the public welfare.83It is necessary, therefore, to provide affordable property84insurance to applicants who are in good faith entitled to85procure insurance through the voluntary market but are unable to86do so.The Legislature intends, therefore,by this subsection87 thataffordableproperty insurance be provided and that it 88 continue to be provided, as long as necessary, through Citizens 89 Property Insurance Corporation, a government entity that is an 90 integral part of the state, and that is not a private insurance 91 company.To that end, Citizens Property Insurance Corporation92shall strive to increase the availability of affordable property93insurance in this state, while achieving efficiencies and94economies, and while providing service to policyholders,95applicants, and agents which is no less than the quality96generally provided in the voluntary market, for the achievement97of the foregoing public purposes. Because it is essential for98this government entity to have the maximum financial resources99to pay claims following a catastrophic hurricane, it is the100intent of the Legislature that Citizens Property Insurance101Corporation continue to be an integral part of the state and102that the income of the corporation be exempt from federal income103taxation and that interest on the debt obligations issued by the104corporation be exempt from federal income taxation.105 a. It is also the intent of the Legislature that 106 policyholders, applicants, and agents of the corporation receive 107 service and treatment of the highest possible level and never 108 less than that generally provided in the voluntary market. The 109 corporation must be held to service standards no less than those 110 applied to insurers in the voluntary market by the office with 111 respect to responsiveness, timeliness, customer courtesy, and 112 overall dealings with policyholders, applicants, or agents of 113 the corporation. It is also the intent of the Legislature that 114 the corporation operate efficiently and economically. 115 b. Because it is essential that the corporation have the 116 maximum financial resources necessary to pay claims following a 117 catastrophic hurricane, the Legislature also intends that the 118 income of the corporation and interest on the debt obligations 119 issued by the corporation be exempt from federal income 120 taxation. 121 2. The Residential Property and Casualty Joint Underwriting 122 Association originally created by this statute shall be known,123as of July 1, 2002,as the Citizens Property Insurance 124 Corporation. The corporation shall provide insurance for 125 residential and commercial property, for applicants who arein126good faithentitled, but, in good faith, are unable,to procure 127 insurance through the voluntary market.The corporation shall128operate pursuant to a plan of operation approved by order of the129Financial Services Commission. The plan is subject to continuous130review by the commission. The commission may, by order, withdraw131approval of all or part of a plan if the commission determines132that conditions have changed since approval was granted and that133the purposes of the plan require changes in the plan. The134corporation shall continue to operate pursuant to the plan of135operation approved by the Office of Insurance Regulation until136October 1, 2006.For the purposes of this subsection, 137 residential coverage includes both personal lines residential 138 coverage, which consists of the type of coverage provided by 139 homeowner’s, mobile home owner’s, dwelling, tenant’s, 140 condominium unit owner’s, and similar policies;,and commercial 141 lines residential coverage, which consists of the type of 142 coverage provided by condominium association, apartment 143 building, and similar policies. 144 3. With respect to coverage for personal lines residential 145 structures: 146 a. Effective January 1, 2009, apersonal lines residential147 structure that has a dwelling replacement cost of $2 million or 148 more, or a single condominium unit that has a combined dwelling 149 and contentscontentreplacement cost of $2 million or more is 150 not eligible for coverage by the corporation. Such dwellings 151 insured by the corporation on December 31, 2008, may continue to 152 be covered by the corporation until the end of the policy term. 153 However, such dwellingsthat are insured by the corporation and154become ineligible for coverage due to the provisions of this155subparagraphmay reapply and obtain coverage if the property 156 owner provides the corporation with a sworn affidavit from one 157 or more insurance agents, on a form provided by the corporation, 158 stating that the agents have made their best efforts to obtain 159 coverage and that the property has been rejected for coverage by 160 at least one authorized insurer and at least three surplus lines 161 insurers. If such conditions are met, the dwelling may be 162 insured by the corporation for up to 3 years, after which time 163 the dwelling is ineligible for coverage.The office shall164approve the method used by the corporation for valuing the165dwelling replacement cost for the purposes of this subparagraph.166If a policyholder is insured by the corporation prior to being167determined to be ineligible pursuant to this subparagraph and168such policyholder files a lawsuit challenging the determination,169the policyholder may remain insured by the corporation until the170conclusion of the litigation.171 b. Effective January 1, 2012, a structure that has a 172 dwelling replacement cost of $1 million or more, or a single 173 condominium unit that has a combined dwelling and contents 174 replacement cost of $1 million or more is not eligible for 175 coverage by the corporation. Such dwellings insured by the 176 corporation on December 31, 2011, may continue to be covered by 177 the corporation only until the end of the policy term. 178 c. Effective January 1, 2014, a structure insured in the 179 personal lines account of the corporation that has a dwelling 180 replacement cost of $750,000 or more, or a single condominium 181 unit that has a combined dwelling and contents replacement cost 182 of $750,000 or more is not eligible for coverage by the 183 corporation. Such dwellings insured by the corporation on 184 December 31, 2013, may continue to be covered by the corporation 185 until the end of the policy term. 186 d. Effective January 1, 2016, a structure insured in the 187 personal lines account of the corporation that has a dwelling 188 replacement cost of $500,000 or more, or a single condominium 189 unit that has a combined dwelling and contents replacement cost 190 of $500,000 or more is not eligible for coverage by the 191 corporation. Such dwellings insured by the corporation on 192 December 31, 2015, may continue to be covered by the corporation 193 until the end of the policy term. 1944. It is the intent of the Legislature that policyholders,195applicants, and agents of the corporation receive service and196treatment of the highest possible level but never less than that197generally provided in the voluntary market. It also is intended198that the corporation be held to service standards no less than199those applied to insurers in the voluntary market by the office200with respect to responsiveness, timeliness, customer courtesy,201and overall dealings with policyholders, applicants, or agents202of the corporation.203 4.5.Effective January 1, 2009, a personal lines 204 residential structure that is located in the “wind-borne debris 205 region,” as defined in s. 1609.2, International Building Code 206 (2006), and that has an insured value on the structure of 207 $750,000 or more is not eligible for coverage by the corporation 208 unless the structure has opening protections as required under 209 the Florida Building Code for a newly constructed residential 210 structure in that area. A residential structure shall be deemed 211 to comply withthe requirements ofthis subparagraph if it has 212 shutters or opening protections on all openings and if such 213 opening protections complied with the Florida Building Code at 214 the time they were installed. 215 5. In recognition of the corporation’s status as a 216 government entity, policies issued by the corporation must 217 include a provision stating that as a condition of coverage with 218 the corporation, policyholders may not engage the services of a 219 public adjuster to represent the policyholder with respect to 220 any claim incurred under a policy issued by the corporation. 221 (b)1. All insurers authorized to write one or more subject 222 lines of business in this state are subject to assessment by the 223 corporation and, for the purposes of this subsection, are 224 referred to collectively as “assessable insurers.” Insurers 225 writing one or more subject lines of business in this state 226 pursuant to part VIII of chapter 626 are not assessable 227 insurers, but insureds who procure one or more subject lines of 228 business in this state pursuant to part VIII of chapter 626 are 229 subject to assessment by the corporation and are referred to 230 collectively as “assessable insureds.” Anauthorizedinsurer’s 231 assessment liability beginsshall beginon the first day of the 232 calendar year following the year in which the insurer was issued 233 a certificate of authority to transact insurance for subject 234 lines of business in this state and terminatesshall terminate1 235 year after the end of the first calendar year during which the 236 insurer no longer holds a certificate of authority to transact 237 insurance for subject lines of business in this state. 238 2.a. All revenues, assets, liabilities, losses, and 239 expenses of the corporation shall be divided into three separate 240 accounts as follows: 241 (I) A personal lines account for personal residential 242 policies issued by the corporation, or issued by the Residential 243 Property and Casualty Joint Underwriting Association and renewed 244 by the corporation, which provides basicthatprovide245comprehensive,multiperil coverage on risks that are not located 246 in areas eligible for coverage byinthe Florida Windstorm 247 Underwriting Association as those areas were defined on January 248 1, 2002, and forsuchpolicies that do not provide coverage for 249 the peril of wind on risks that are located in such areas; 250 (II) A commercial lines account for commercial residential 251 and commercial nonresidential policies issued by the 252 corporation, or issued by the Residential Property and Casualty 253 Joint Underwriting Association and renewed by the corporation, 254 which providesthat providecoverage for basic property perils 255 on risks that are not located in areas eligible for coverage by 256inthe Florida Windstorm Underwriting Association as those areas 257 were defined on January 1, 2002, and forsuchpolicies that do 258 not provide coverage for the peril of wind on risks that are 259 located in such areas; and 260 (III) A high-risk account for personal residential policies 261 and commercial residential and commercial nonresidential 262 property policies issued by the corporation or transferred to 263 the corporation, which providesthat providecoverage for the 264 peril of wind on risks that are located in areas eligible for 265 coverage byinthe Florida Windstorm Underwriting Association as 266 those areas were defined on January 1, 2002. The corporation may 267 offer policies that provide multiperil coverage and the 268 corporation shall continue to offer policies that provide 269 coverage only for the peril of wind for risks located in areas 270 eligible for coverage in the high-risk account. In issuing 271 multiperil coverage, the corporation may use its approved policy 272 forms and rates for the personal lines account. An applicant or 273 insured who is eligible to purchase a multiperil policy from the 274 corporation may purchase a multiperil policy from an authorized 275 insurer without prejudice to the applicant’s or insured’s 276 eligibility to prospectively purchase a policy that provides 277 coverage only for the peril of wind from the corporation. An 278 applicant or insured who is eligible for a corporation policy 279 that provides coverage only for the peril of wind may elect to 280 purchase or retain such policy and also purchase or retain 281 coverage excluding wind from an authorized insurer without 282 prejudice to the applicant’s or insured’s eligibility to 283 prospectively purchase a policy that provides multiperil 284 coverage from the corporation.It is the goal of the Legislature285that there would be an overall average savings of 10 percent or286more for a policyholder who currently has a wind-only policy287with the corporation, and an ex-wind policy with a voluntary288insurer or the corporation, and who then obtains a multiperil289policy from the corporation.It is the intent of the Legislature 290 that the offer of multiperil coverage in the high-risk account 291 be made and implemented in a manner that does not adversely 292 affect the tax-exempt status of the corporation or 293 creditworthiness of or security for currently outstanding 294 financing obligations or credit facilities of the high-risk 295 account, the personal lines account, or the commercial lines 296 account.The high-risk account must also include quota share297primary insurance under subparagraph (c)2.The area eligible for 298 coverage under the high-risk account also includes the area 299 within Port Canaveral, which is bordered on the south by the 300 City of Cape Canaveral, bordered on the west by the Banana 301 River, and bordered on the north by Federal Government property. 302 b. The three separate accounts must be maintained as long 303 as financing obligations entered into by the Florida Windstorm 304 Underwriting Association or Residential Property and Casualty 305 Joint Underwriting Association are outstanding, in accordance 306 with the terms of the corresponding financing documents. IfWhen307 the financing obligations are no longer outstanding,in308accordance with the terms of the corresponding financing309documents,the corporation may use a single account for all 310 revenues, assets, liabilities, losses, and expenses of the 311 corporation. Consistent withthe requirement ofthis 312 subparagraph and prudent investment policies that minimize the 313 cost of carrying debt, the board shall exercise its best efforts 314 to retire existing debt ortoobtain the approval of necessary 315 parties to amend the terms of existing debt, so as to structure 316 the most efficient plan to consolidate the three separate 317 accounts into a single account. 318 c. Creditors of the Residential Property and Casualty Joint 319 Underwriting Association and of the accounts specified in sub 320 sub-subparagraphs a.(I) and (II) may have a claim against, and 321 recourse to, thosetheaccountsreferred to in sub-sub322subparagraphs a.(I) and (II)andshall haveno claim against, or 323 recourse to, the account referred to in sub-sub-subparagraph 324 a.(III). Creditors of the Florida Windstorm Underwriting 325 Associationshallhave a claim against, and recourse to, the 326 account referred to in sub-sub-subparagraph a.(III) andshall327haveno claim against, or recourse to, the accounts referred to 328 in sub-sub-subparagraphs a.(I) and (II). 329 d. Revenues, assets, liabilities, losses, and expenses not 330 attributable to particular accounts shall be prorated among the 331 accounts. 332 e. The Legislature finds that the revenues of the 333 corporation are revenues that are necessary to meet the 334 requirements set forth in documents authorizing the issuance of 335 bonds under this subsection. 336 f. No part of the income of the corporation may inure to 337 the benefit of any private person. 338 3. With respect to a deficit in an account: 339 a. After accounting for theCitizenspolicyholder surcharge 340 imposed under sub-subparagraph i., ifwhenthe remaining 341 projected deficit incurred in a particular calendar year is not 342 greater than 6 percent of the aggregate statewide direct written 343 premium for the subject lines of business for the prior calendar 344 year, the entire deficit shall be recovered through regular 345 assessments of assessable insurers under paragraph (q) and 346 assessable insureds. 347 b. After accounting for the Citizens policyholder surcharge 348 imposed under sub-subparagraph i., when the remaining projected 349 deficit incurred in a particular calendar year exceeds 6 percent 350 of the aggregate statewide direct written premium for the 351 subject lines of business for the prior calendar year, the 352 corporation shall levy regular assessments on assessable 353 insurers under paragraph (q) and on assessable insureds in an 354 amount equal to the greater of 6 percent of the deficit or 6 355 percent of the aggregate statewide direct written premium for 356 the subject lines of business for the prior calendar year. Any 357 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. must 361shallbe 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 applicable assessment percentageapplicable to each366assessable insuredis the ratio of the amount being assessed 367 under sub-subparagraph a. or sub-subparagraph b. to the 368 aggregate statewide direct written premium for the subject lines 369 of business for the prior year. Assessments levied by the 370 corporation on assessable insurers under sub-subparagraphs a. 371 and b. mustshallbe paid as required by the corporation’s plan 372 of operation and paragraph (q),. Assessments levied by the373corporation on assessable insureds under sub-subparagraphs a.374and b. shall becollected by the surplus lines agent at the time 375 the surplus lines agent collects the surplus lines tax required 376 by s. 626.932, andshall bepaid to the Florida Surplus Lines 377 Service Office at the time the surplus lines agent pays the 378 surplus lines tax to thatthe Florida Surplus Lines Service379 office. Upon receipt of regular assessments from surplus lines 380 agents, the Florida Surplus Lines Service Office shall transfer 381 the assessments directly to the corporation as determined by the 382 corporation. 383 d. Upon a determination by the board of governors that a 384 deficit in an account exceeds the amount that will be recovered 385 through regular assessments under sub-subparagraph a. or sub 386 subparagraph b., plus the amount that is expected to be 387 recovered through surcharges under sub-subparagraph i.,as to388the remaining projected deficitthe boardshall levy, after 389 verification by the office, shall levy emergency assessments,390 for as many years as necessary to cover the deficits, to be 391 collected by assessable insurers and the corporation and 392 collected from assessable insureds upon issuance or renewal of 393 policies for subject lines of business, excluding National Flood 394 Insurance policies. The amount of the emergency assessment 395 collected in a particular year mustshallbe a uniform 396 percentage of that year’s direct written premium for subject 397 lines of businessand all accounts of the corporation, excluding 398 National Flood Insurance Program policy premiums, as annually 399 determined by the board and verified by the office. For all 400 accounts of the corporation, the amount of the emergency 401 assessment levied in a particular year must be a uniform 402 percentage equal to 1 1/2 times the uniform percentage emergency 403 assessment levied on subject lines of business. The office shall 404 verify the arithmetic calculations involved in the board’s 405 determination within 30 days after receipt of the information on 406 which the determination was based. Notwithstanding any other 407 provision of law, the corporation and each assessable insurer 408 that writes subject lines of business shall collect emergency 409 assessments from its policyholders without such obligation being 410 affected by any credit, limitation, exemption, or deferment. 411 Emergency assessments levied by the corporation on assessable 412 insureds shall be collected by the surplus lines agent at the 413 time the surplus lines agent collects the surplus lines tax 414 required by s. 626.932 andshall bepaid to the Florida Surplus 415 Lines Service Office at the time the surplus lines agent pays 416 the surplus lines tax to thatthe Florida Surplus Lines Service417 office. The emergency assessmentssocollected shall be 418 transferred directly to the corporation on a periodic basis as 419 determined by the corporation andshall beheld by the 420 corporation solely in the applicable account. The aggregate 421 amount of emergency assessments levied for an account under this 422 sub-subparagraph in any calendar year may, at the discretion of423the board of governors,be less than butmaynot exceed the 424 greater of 10 percent of the amount needed to cover the deficit, 425 plus interest, fees, commissions, required reserves, and other 426 costs associated with financingofthe original deficit, or 10 427 percent of the aggregate statewide direct written premium for 428 subject lines of business andforall accounts of the 429 corporation for the prior year, plus interest, fees, 430 commissions, required reserves, and other costs associated with 431 financing the deficit. 432 e. The corporation may pledge the proceeds of assessments, 433 projected recoveries from the Florida Hurricane Catastrophe 434 Fund, other insurance and reinsurance recoverables, policyholder 435 surcharges and other surcharges, and other funds available to 436 the corporation as the source of revenue for and to secure bonds 437 issued under paragraph (q), bonds or other indebtedness issued 438 under subparagraph (c)2.3., or lines of credit or other 439 financing mechanisms issued or created under this subsection, or 440 to retire any other debt incurred as a result of deficits or 441 events giving rise to deficits, or in any other way that the 442 board determines will efficiently recover such deficits. The 443 purpose of the lines of credit or other financing mechanisms is 444 to provide additional resources to assist the corporation in 445 covering claims and expenses attributable to a catastrophe. As 446 used in this subsection, the term “assessments” includes regular 447 assessments under sub-subparagraph a., sub-subparagraph b., or 448 subparagraph (q)1. and emergency assessments under sub 449 subparagraph d. Emergency assessments collected under sub 450 subparagraph d. are not part of an insurer’s rates, are not 451 premium, and are not subject to premium tax, fees, or 452 commissions; however, failure to pay the emergency assessment 453 shall be treated as failure to pay premium. The emergency 454 assessments under sub-subparagraph d. shall continue as long as 455 any bonds issued or other indebtedness incurred with respect to 456 a deficit for which the assessment was imposed remain 457 outstanding, unless adequate provision has been made for the 458 payment of such bonds or other indebtedness pursuant to the 459 documents governing such bonds orotherindebtedness. 460 f. As used in this subsection for purposes of any deficit 461 incurred on or after January 25, 2007, the term “subject lines 462 of business” means insurance written by assessable insurers or 463 procured by assessable insureds for all property and casualty 464 lines of business in this state, but not including workers’ 465 compensation or medical malpractice. As used in thisthesub 466 subparagraph, the term “property and casualty lines of business” 467 includes all lines of business identified on Form 2, Exhibit of 468 Premiums and Losses, in the annual statement required of 469 authorized insurers underbys. 624.424 and any rule adopted 470 under this section, except for those lines identified as 471 accident and health insurance and except for policies written 472 under the National Flood Insurance Program or the Federal Crop 473 Insurance Program. For purposes of this sub-subparagraph, the 474 term “workers’ compensation” includes both workers’ compensation 475 insurance and excess workers’ compensation insurance. 476 g. The Florida Surplus Lines Service Office shall determine 477 annually the aggregate statewide written premium in subject 478 lines of business procured by assessable insureds andshall479 report that information to the corporation in a form and at a 480 time the corporation specifies to ensure that the corporation 481 can meet the requirements of this subsection and the 482 corporation’s financing obligations. 483 h. The Florida Surplus Lines Service Office shall verify 484 the proper application by surplus lines agents of assessment 485 percentages for regular assessments and emergency assessments 486 levied under this subparagraph on assessable insureds andshall487 assist the corporation in ensuring the accurate, timely 488 collection and payment of assessments by surplus lines agents as 489 required by the corporation. 490 i. If a deficit is incurred in any account in 20112008or 491 thereafter, the board of governors shall levy aCitizens492 policyholder surcharge against all policyholders of the 493 corporation.for a 12-month period, which494 (I) The surcharge shall be leviedcollected at the time of495issuance or renewal of a policy,as a uniform percentage of the 496 premium for the policy of up to 15 percent of such premium, 497 which funds shall be used to offset the deficit. 498 (II) It is the intent of the Legislature that the 499 policyholder’s liability for the surcharge attach on the date of 500 the order levying the surcharge. The surcharge is payable upon 501 cancellation or termination of the policy, upon renewal of the 502 policy, or upon issuance of a new policy by the corporation 503 within the first 12 months after the date of the levy or the 504 period of time necessary to fully collect the surcharge amount. 505 (III) The corporation may not levy any regular assessments 506 under paragraph (q) pursuant to sub-subparagraph a. or sub 507 subparagraph b. with respect to a particular year’s deficit 508 until the corporation has first levied a surcharge under this 509 sub-subparagraph in the full amount authorized by this sub 510 subparagraph. 511 (IV) The surcharge isCitizens policyholder surcharges512under this sub-subparagraph arenot considered premium and is 513arenot subject to commissions, fees, or premium taxes. However, 514 failure to pay the surchargesuch surchargesshall be treated as 515 failure to pay premium. 516 j. If the amount of any assessments or surcharges collected 517 from corporation policyholders, assessable insurers or their 518 policyholders, or assessable insureds exceeds the amount of the 519 deficits, such excess amounts shall be remitted to and retained 520 by the corporation in a reserve to be used by the corporation, 521 as determined by the board of governors and approved by the 522 office, to pay claims or reduce any past, present, or future 523 plan-year deficits or to reduce outstanding debt. 524 (c) Theplan of operation of thecorporation: 525 1. Must providefor adoption ofresidential property and 526 casualty insurance policy forms and commercial residential and 527 nonresidential property insurance forms, whichformsmust be 528 approved by the office beforeprior touse. The corporation 529 shall adopt and offer only the following policy forms: 530 a. Standard personal lines policy forms that are similar 531comprehensive multiperil policies providing full coverage of a532residential property equivalentto the coverage provided in the 533 private insurance market under an HO-3, HO-4, or HO-6 policy. 534 The corporation shall cease to offer or renew HO-3 policy forms 535 on December 31, 2012. 536 b. Basic personal lines policy forms that are policies 537 similar to an HO-8 policy or a dwelling fire policy that provide 538 coverage meeting the requirements of the secondary mortgage 539 market, but whichcoverageis more limited than the coverage 540 under a standard policy. 541 c. Commercial lines residential and nonresidential policy 542 forms that are generally similar to the basic perils of full 543 coverage obtainable for commercial residential structures and 544 commercial nonresidential structures in the admitted voluntary 545 market. 546 d. Personal lines and commercial lines residential property 547 insurance forms that cover the peril of wind only. The forms are 548 applicable only to residential properties located in areas 549 eligible for coverage under the high-risk account referred to in 550 sub-subparagraph (b)2.a. 551 e. Commercial lines nonresidential property insurance forms 552 that cover the peril of wind only. The forms are applicable only 553 to nonresidential properties located in areas eligible for 554 coverage under the high-risk account referred to in sub 555 subparagraph (b)2.a. 556 f. The corporation may adopt variations of the policy forms 557 listed in sub-subparagraphs a.-e. whichthatcontain more 558 restrictive coverage. 5592.a. Must provide that the corporation adopt a program in560which the corporation and authorized insurers enter into quota561share primary insurance agreements for hurricane coverage, as562defined in s.627.4025(2)(a), for eligible risks, and adopt563property insurance forms for eligible risks which cover the564peril of wind only. As used in this subsection, the term:565(I) “Quota share primary insurance” means an arrangement in566which the primary hurricane coverage of an eligible risk is567provided in specified percentages by the corporation and an568authorized insurer. The corporation and authorized insurer are569each solely responsible for a specified percentage of hurricane570coverage of an eligible risk as set forth in a quota share571primary insurance agreement between the corporation and an572authorized insurer and the insurance contract. The573responsibility of the corporation or authorized insurer to pay574its specified percentage of hurricane losses of an eligible575risk, as set forth in the quota share primary insurance576agreement, may not be altered by the inability of the other577party to the agreement to pay its specified percentage of578hurricane losses. Eligible risks that are provided hurricane579coverage through a quota share primary insurance arrangement580must be provided policy forms that set forth the obligations of581the corporation and authorized insurer under the arrangement,582clearly specify the percentages of quota share primary insurance583provided by the corporation and authorized insurer, and584conspicuously and clearly state that neither the authorized585insurer nor the corporation may be held responsible beyond its586specified percentage of coverage of hurricane losses.587(II) “Eligible risks” means personal lines residential and588commercial lines residential risks that meet the underwriting589criteria of the corporation and are located in areas that were590eligible for coverage by the Florida Windstorm Underwriting591Association on January 1, 2002.592b. The corporation may enter into quota share primary593insurance agreements with authorized insurers at corporation594coverage levels of 90 percent and 50 percent.595c. If the corporation determines that additional coverage596levels are necessary to maximize participation in quota share597primary insurance agreements by authorized insurers, the598corporation may establish additional coverage levels. However,599the corporation’s quota share primary insurance coverage level600may not exceed 90 percent.601d. Any quota share primary insurance agreement entered into602between an authorized insurer and the corporation must provide603for a uniform specified percentage of coverage of hurricane604losses, by county or territory as set forth by the corporation605board, for all eligible risks of the authorized insurer covered606under the quota share primary insurance agreement.607e. Any quota share primary insurance agreement entered into608between an authorized insurer and the corporation is subject to609review and approval by the office. However, such agreement shall610be authorized only as to insurance contracts entered into611between an authorized insurer and an insured who is already612insured by the corporation for wind coverage.613f. For all eligible risks covered under quota share primary614insurance agreements, the exposure and coverage levels for both615the corporation and authorized insurers shall be reported by the616corporation to the Florida Hurricane Catastrophe Fund. For all617policies of eligible risks covered under quota share primary618insurance agreements, the corporation and the authorized insurer619shall maintain complete and accurate records for the purpose of620exposure and loss reimbursement audits as required by Florida621Hurricane Catastrophe Fund rules. The corporation and the622authorized insurer shall each maintain duplicate copies of623policy declaration pages and supporting claims documents.624g. The corporation board shall establish in its plan of625operation standards for quota share agreements which ensure that626there is no discriminatory application among insurers as to the627terms of quota share agreements, pricing of quota share628agreements, incentive provisions if any, and consideration paid629for servicing policies or adjusting claims.630h. The quota share primary insurance agreement between the631corporation and an authorized insurer must set forth the632specific terms under which coverage is provided, including, but633not limited to, the sale and servicing of policies issued under634the agreement by the insurance agent of the authorized insurer635producing the business, the reporting of information concerning636eligible risks, the payment of premium to the corporation, and637arrangements for the adjustment and payment of hurricane claims638incurred on eligible risks by the claims adjuster and personnel639of the authorized insurer. Entering into a quota sharing640insurance agreement between the corporation and an authorized641insurer shall be voluntary and at the discretion of the642authorized insurer.643 2.3.Mayprovide that the corporation mayemploy or 644 otherwise contract with individuals or other entities to provide 645 administrative or professional servicesthat may be appropriate646to effectuate the plan. 647 a. The corporation mayshall have the power toborrow 648 funds,by issuing bonds or by incurring other indebtedness, and 649 shall have other powers reasonably necessary to effectuate the 650 requirements of this subsection, including, without limitation, 651 the power to issue bonds and incur other indebtedness in order 652 to refinance outstanding bonds or other indebtedness. The 653 corporation may, but is not required to,seek judicial 654 validation of its bonds or other indebtedness under chapter 75. 655 The corporation may issue bonds or incur other indebtedness, or 656 have bonds issued on its behalf by a unit of local government 657 pursuant to subparagraph (q)2., in the absence of a hurricane or 658 other weather-related event, upon a determination by the 659 corporation, subject to approval by the office, that such action 660 would enable it to efficiently meet the financial obligations of 661 the corporation and that such financings are reasonably 662 necessary to effectuate the requirements of this subsection. The 663 corporation mayis authorized totake all actions needed to 664 facilitate tax-free status foranysuch bonds or indebtedness, 665 including formation of trusts or other affiliated entities. The 666 corporation mayshall have the authority topledge assessments, 667 projected recoveries from the Florida Hurricane Catastrophe 668 Fund, other reinsurance recoverables, market equalization and 669 other surcharges, and other funds available to the corporation 670 as security for bonds or other indebtedness. In recognition of 671 s. 10, Art. I of the State Constitution, prohibiting the 672 impairment of obligations of contracts, it is the intent of the 673 Legislature that no action be taken whose purpose is to impair 674 any bond indenture or financing agreement or any revenue source 675 committed by contract to such bond or other indebtedness. 676 b. To ensure that the corporation is operating in an 677 efficient and economic manner while providing quality service to 678 policyholders, applicants, and agents, the board shall 679 commission an independent third-party consultant having 680 expertise in insurance company management or insurance company 681 management consulting to prepare a report and make 682 recommendations on the relative costs and benefits of 683 outsourcing various policy issuance and service functions to 684 private servicing carriers or entities performing similar 685 functions in the private market for a fee, rather than 686 performing such functions in-house. In making such 687 recommendations, the consultant shall consider how other 688 residual markets, both in this state and around the country, 689 outsource appropriate functions or use servicing carriers to 690 better match expenses with revenues that fluctuate based on a 691 widely varying policy count. The report must be completed by 692 February 1, 2012. Upon receiving the report, the board shall 693 develop a plan to implement the report and submit the plan to 694 the Financial Services Commission. The commission has 30 days 695 after receiving the plan to review and make additions or 696 corrections, if any. Upon the commission’s approval of the plan, 697 the board shall begin implementing the plan by January 1, 2013. 698 3.4.a.Mustrequire that the corporationoperate subject to 699 the supervision and approval of a board of governors consisting 700 of eight individuals who are residents of this state, from 701 different geographical areas of this state. 702 a. The Governor, the Chief Financial Officer, the President 703 of the Senate, and the Speaker of the House of Representatives 704 shall each appoint two members of the board. At least one of the 705 two members appointed by each appointing officer must have 706 demonstrated expertise in insurance, and be within the scope of 707 the exemption provided in s. 112.313(7)(b). The Chief Financial 708 Officer shall designate one of the appointees as chair. All 709 board members serve at the pleasure of the appointing officer. 710 All members of the boardof governorsare subject to removal at 711 will by the officers who appointed them. All board members, 712 including the chair, must be appointed to serve for 3-year terms 713 beginning annually on a date designated by the plan. However, 714 for the first term beginning on or after July 1, 2009, each 715 appointing officer shall appoint one member of the board for a 716 2-year term and one member for a 3-year term. AAnyboard 717 vacancy shall be filled for the unexpired term by the appointing 718 officer. The Chief Financial Officer shall appoint a technical 719 advisory group to provide information and advice to the boardof720governorsin connection with the board’s duties under this 721 subsection. The executive director and senior managers of the 722 corporation shall be engaged by the board and serve at the 723 pleasure of the board. Any executive director appointed on or 724 after July 1, 2006, is subject to confirmation by the Senate. 725 The executive director is responsible for employing other staff 726 as the corporation may require, subject to review and 727 concurrence by the board. 728 b. The board shall create a Market Accountability Advisory 729 Committee to assist the corporation in developing awareness of 730 its rates and its customer and agent service levels in 731 relationship to the voluntary market insurers writing similar 732 coverage, and to provide advice on issues regarding agent 733 appointments and compensation. 734 (I) The members of the advisory committee shall consist of 735 the following 11 persons, one of whom must be elected chair by 736 the members of the committee: four representatives, one 737 appointed by the Florida Association of Insurance Agents, one by 738 the NationalFloridaAssociation of Insurance and Financial 739 Advisors-FloridaAdvisors, one by the Professional Insurance 740 Agents of Florida, and one by the Latin American Association of 741 Insurance Agencies; three representatives appointed by the 742 insurers with the three highest voluntary market share of 743 residential property insurance business in the state; one 744 representative from the Office of Insurance Regulation; one 745 consumer appointed by the board who is insured by the 746 corporation at the time of appointment to the committee; one 747 representative appointed by the Florida Association of Realtors; 748 and one representative appointed by the Florida Bankers 749 Association. All members shall be appointed tomust serve for3 750 year terms and may serve for consecutive terms. 751 (II) The committee shall report to the corporation at each 752 board meeting on insurance market issues which may include rates 753 and rate competition with the voluntary market; service, 754 including policy issuance, claims processing, and general 755 responsiveness to policyholders, applicants, and agents; and 756 matters relating to depopulation, producer compensation, or 757 agency agreements. 758 4.5.Must provide a procedure for determining the 759 eligibility of a risk for coverage, as follows: 760 a. Subject tothe provisions ofs. 627.3517, with respect 761 to personal lines residential risks, if the risk is offered 762 coverage from an authorized insurer at the insurer’s approved 763 rate undereithera standard policy including wind coverage or, 764 if consistent with the insurer’s underwriting rules as filed 765 with the office, a basic policy including wind coverage, for a 766 new application to the corporation for coverage, the risk is not 767 eligible for any policy issued by the corporationunless the768premium for coverage from the authorized insurer is more than 15769percent greater than the premium for comparable coverage from770the corporation. If the risk is not able to obtainanysuch 771 offer, the risk is eligible foreithera standard policy 772 including wind coverage or a basic policy including wind 773 coverage issued by the corporation; however, if the risk could 774 not be insured under a standard policy including wind coverage 775 regardless of market conditions, the risk isshall beeligible 776 for a basic policy including wind coverage unless rejected under 777 subparagraph 9.8.Notwithstanding these limitations, an 778 application for coverage having an effective date before January 779 1, 2015, is eligible for coverage by the corporation if the 780 premium for coverage from an authorized insurer exceeds the 781 premium from the corporation by more than 25 percent.However,782with regard to a policyholder of the corporation or a783policyholder removed from the corporation through an assumption784agreement until the end of the assumption period, the785policyholder remains eligible for coverage from the corporation786regardless of any offer of coverage from an authorized insurer787or surplus lines insurer.The corporation shall determine the 788 type of policy to be provided on the basis of objective 789 standards specified in the underwriting manual and based on 790 generally accepted underwriting practices. 791 (I) If the risk accepts an offer of coverage through the 792 market assistance plan oran offer of coveragethrough a 793 mechanism established by the corporation before a policy is 794 issued to the risk by the corporation or during the first 30 795 days of coverage by the corporation, and the producing agent who 796 submitted the application to the plan or to the corporation is 797 not currently appointed by the insurer, the insurer shall: 798 (A) Pay to the producing agent of record of the policy, for 799 the first year, an amount that is the greater of the insurer’s 800 usual and customary commission for the type of policy written or 801 a fee equal to the usual and customary commission of the 802 corporation; or 803 (B) Offer to allow the producing agent of record of the 804 policy to continue servicing the policy for at leasta period of805not less than1 year and offer to pay the agent the greater of 806 the insurer’s or the corporation’s usual and customary 807 commission for the type of policy written. 808 809 If the producing agent is unwilling or unable to accept 810 appointment, the new insurer shall pay the agent in accordance 811 with sub-sub-sub-subparagraph (A). 812 (II) IfWhenthe corporation enters into a contractual 813 agreement for a take-out plan, the producing agent of record of 814 the corporation policy is entitled to retain any unearned 815 commission on the policy, and the insurer shall: 816 (A) Pay to the producing agentof record ofthe corporation817policy, for the first year, an amount that is the greater of the 818 insurer’s usual and customary commission for the type of policy 819 written or a fee equal to the usual and customary commission of 820 the corporation; or 821 (B) Offer to allow the producing agentof record of the822corporation policyto continue servicing the policy for at least 823a period of not less than1 year and offer to pay the agent the 824 greater of the insurer’s or the corporation’s usual and 825 customary commission for the type of policy written. 826 827 If the producing agent is unwilling or unable to accept 828 appointment, the new insurer shall pay the agent in accordance 829 with sub-sub-sub-subparagraph (A). 830 b. Subject to s. 627.3517, with respect to commercial lines 831 residential risks,for a new application to the corporation for832coverage,if the risk is offered coverage under a policy 833 including wind coverage from an authorized insurer at its 834 approved rate, the risk is not eligible for aanypolicy issued 835 by the corporationunless the premium for coverage from the836authorized insurer is more than 15 percent greater than the837premium for comparable coverage from the corporation. If the 838 risk is not able to obtain any such offer, the risk is eligible 839 for a policy including wind coverage issued by the corporation. 840 Notwithstanding these limitations, an application for coverage 841 having an effective date before January 1, 2015, is eligible for 842 coverage by the corporation if the premium for coverage from an 843 authorized insurer exceeds the premium from the corporation by 844 more than 25 percent.However, with regard to a policyholder of845the corporation or a policyholder removed from the corporation846through an assumption agreement until the end of the assumption847period, the policyholder remains eligible for coverage from the848corporation regardless of any offer of coverage from an849authorized insurer or surplus lines insurer.850 (I) If the risk accepts an offer of coverage through the 851 market assistance plan oran offer of coveragethrough a 852 mechanism established by the corporation before a policy is 853 issued to the risk by the corporation or during the first 30 854 days of coverage by the corporation, and the producing agent who 855 submitted the application to the plan or the corporation is not 856 currently appointed by the insurer, the insurer shall: 857 (A) Pay to the producing agentof record of the policy, for 858 the first year, an amount that is the greater of the insurer’s 859 usual and customary commission for the type of policy written or 860 a fee equal to the usual and customary commission of the 861 corporation; or 862 (B) Offer to allow the producing agentof record of the863policyto continue servicing the policy for at leasta period of864not less than1 year and offer to pay the agent the greater of 865 the insurer’s or the corporation’s usual and customary 866 commission for the type of policy written. 867 868 If the producing agent is unwilling or unable to accept 869 appointment, the new insurer shall pay the agent in accordance 870 with sub-sub-sub-subparagraph (A). 871 (II) IfWhenthe corporation enters into a contractual 872 agreement for a take-out plan, the producing agent of record of 873 the corporation policy is entitled to retain any unearned 874 commission on the policy, and the insurer shall: 875 (A) Pay to the producing agentof record of the corporation876policy, for the first year, an amount that is the greater of the 877 insurer’s usual and customary commission for the type of policy 878 written or a fee equal to the usual and customary commission of 879 the corporation; or 880 (B) Offer to allow the producing agentof record of the881corporation policyto continue servicing the policy for at least 882a period of not less than1 year and offer to pay the agent the 883 greater of the insurer’s or the corporation’s usual and 884 customary commission for the type of policy written. 885 886 If the producing agent is unwilling or unable to accept 887 appointment, the new insurer shall pay the agent in accordance 888 with sub-sub-sub-subparagraph (A). 889 c. Effective upon this act becoming a law, the corporation 890 shall cease to accept applications for or issue new policies 891 covering commercial nonresidential risks.For purposes of892determining comparable coverage under sub-subparagraphs a. and893b., the comparison shall be based on those forms and coverages894that are reasonably comparable. The corporation may rely on a895determination of comparable coverage and premium made by the896producing agent who submits the application to the corporation,897made in the agent’s capacity as the corporation’s agent. A898comparison may be made solely of the premium with respect to the899main building or structure only on the following basis: the same900coverage A or other building limits; the same percentage901hurricane deductible that applies on an annual basis or that902applies to each hurricane for commercial residential property;903the same percentage of ordinance and law coverage, if the same904limit is offered by both the corporation and the authorized905insurer; the same mitigation credits, to the extent the same906types of credits are offered both by the corporation and the907authorized insurer; the same method for loss payment, such as908replacement cost or actual cash value, if the same method is909offered both by the corporation and the authorized insurer in910accordance with underwriting rules; and any other form or911coverage that is reasonably comparable as determined by the912board. If an application is submitted to the corporation for913wind-only coverage in the high-risk account, the premium for the914corporation’s wind-only policy plus the premium for the ex-wind915policy that is offered by an authorized insurer to the applicant916shall be compared to the premium for multiperil coverage offered917by an authorized insurer, subject to the standards for918comparison specified in this subparagraph. If the corporation or919the applicant requests from the authorized insurer a breakdown920of the premium of the offer by types of coverage so that a921comparison may be made by the corporation or its agent and the922authorized insurer refuses or is unable to provide such923information, the corporation may treat the offer as not being an924offer of coverage from an authorized insurer at the insurer’s925approved rate.926 5.6.Must include rules for classifications of risks and 927 ratestherefor. 928 6.7.Must provide that if premium and investment income for 929 an account attributable to a particular calendar year are in 930 excess of projected losses and expenses for the account 931 attributable to that year, such excess shall be held in surplus 932 in the account. Such surplus mustshallbe available to defray 933 deficits in that account as to future years andshall beused 934 for that purpose beforeprior toassessing assessable insurers 935 and assessable insureds as to any calendar year. 936 7.8.Must provide objective criteria and procedures to be 937 uniformly applied toforall applicants in determining whether 938 an individual risk is so hazardous as to be uninsurable. In 939 making this determination and in establishing the criteria and 940 procedures, the following mustshallbe considered: 941 a. Whether the likelihood of a loss for the individual risk 942 is substantially higher than for other risks of the same class; 943 and 944 b. Whether the uncertainty associated with the individual 945 risk is such that an appropriate premium cannot be determined. 946 947 The acceptance or rejection of a risk by the corporation shall 948 be construed as the private placement of insurance, and the 949 provisions of chapter 120 doshallnot apply. 950 8.9.Must provide that the corporationShall make its best 951 efforts to procure catastrophe reinsurance at reasonable rates, 952 to cover its projected 100-year probable maximum loss as 953 determined by the board of governors. 954 9.10.Must issueThepolicies thatissued by the955corporationmustprovide that, if the corporation or the market 956 assistance plan obtains an offer from an authorized insurer to 957 cover the risk at its approved rates, the risk is no longer 958 eligible for renewal through the corporation, except as 959 otherwise provided in this subsection. 960 10.11.MustCorporationPolicies and applications must961 include a notice in the corporation policies and applications 962 that the corporation policy could, under this section, be 963 replaced with a policy issued by an authorized insurer which 964thatdoes not provide coverage identical to the coverage 965 provided by the corporation. The notice mustshallalso specify 966 that acceptance of corporation coverage creates a conclusive 967 presumption that the applicant or policyholder is aware of this 968 potential. 969 11.12.May establish, subject to approval by the office, 970 different eligibility requirements and operational procedures 971 for any line or type of coverage for any specified county or 972 area if the board determines that such changesto the973eligibility requirements and operational proceduresare 974 justified due to the voluntary market being sufficiently stable 975 and competitive in such area or for such line or type of 976 coverage and that consumers who, in good faith, are unable to 977 obtain insurance through the voluntary market through ordinary 978 methodswouldcontinue to have access to coverage from the 979 corporation. IfWhencoverage is sought in connection with a 980 real property transfer, thesuchrequirements and procedures may 981shallnot provideforan effective date of coverage later than 982 the date of the closing of the transfer as established by the 983 transferor, the transferee, and, if applicable, the lender. 984 12.13.Must provide that, with respect to the high-risk 985 account, any assessable insurer with a surplus as to 986 policyholders of $25 million or less writing 25 percent or more 987 of its total countrywide property insurance premiums in this 988 state may petition the office, within the first 90 days of each 989 calendar year, to qualify as a limited apportionment company. A 990 regular assessment levied by the corporation on a limited 991 apportionment company for a deficit incurred by the corporation 992 for the high-risk accountin 2006 or thereaftermay be paid to 993 the corporation on a monthly basis as the assessments are 994 collected by the limited apportionment company from its insureds 995 pursuant to s. 627.3512, but the regular assessment must be paid 996 in full within 12 months after being levied by the corporation. 997 A limited apportionment company shall collect from its 998 policyholders any emergency assessment imposed under sub 999 subparagraph (b)3.d.The plan shall provide that,If the office 1000 determines that any regular assessment will result in an 1001 impairment of the surplus of a limited apportionment company, 1002 the office may direct that all or part of such assessment be 1003 deferred as provided in subparagraph (q)4. However,there shall1004be no limitation or deferment ofan emergency assessment to be 1005 collected from policyholders under sub-subparagraph (b)3.d. may 1006 not be limited or deferred. 1007 13.14.Effective January 1, 2012, mustprovide that the1008corporationappoint as its licensed agents only those agents who 1009 also hold an appointment as defined in s. 626.015(3) with an 1010 insurer whoat the time of the agent’s initial appointment by1011the corporationis authorized to write and is actually writing 1012 personal lines residential property coverage, commercial 1013 residential property coverage, or commercial nonresidential 1014 property coverage within the state. 1015 14.15.Must provide, by July 1, 2007,a premium payment 1016 plan option to its policyholders which,allowsat a minimum, 1017 allows for quarterly and semiannual payment of premiums. A 1018 monthly payment plan may, but is not required to,be offered. 1019 15.16.Must limit coverage on mobile homes or manufactured 1020 homes built beforeprior to1994 to actual cash value of the 1021 dwelling rather than replacement costs of the dwelling. 1022 16.17.May provide such limits of coverage as the board 1023 determines, consistent with the requirements of this subsection. 1024 17.18.May require commercial property to meet specified 1025 hurricane mitigation construction features as a condition of 1026 eligibility for coverage. 1027 18. As of January 1, 2012, must require that the agent 1028 obtain from an applicant for coverage from the corporation an 1029 acknowledgement signed by the applicant, which includes, at a 1030 minimum, the following statement: 1031 1032 ACKNOWLEDGEMENT OF POTENTIAL SURCHARGE AND ASSESSMENT LIABILITY: 1033 1034 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE 1035 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A 1036 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON, 1037 MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND 1038 PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE 1039 POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT 1040 OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA 1041 LEGISLATURE. 1042 2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY 1043 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER 1044 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE 1045 FLORIDA LEGISLATURE. 1046 3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE 1047 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE 1048 STATE OF FLORIDA. 1049 1050 a. The corporation shall maintain, in electronic format or 1051 otherwise, a copy of the applicant’s signed acknowledgement and 1052 provide a copy of the statement to the policyholder as part of 1053 the first renewal after the effective date of this sub 1054 subparagraph. 1055 b. The signed acknowledgement form creates a conclusive 1056 presumption that the policyholder understood and accepted his or 1057 her potential surcharge and assessment liability as a 1058 policyholder of the corporation. 1059 19. Upon notice and determination by the Department of 1060 Financial Services that an agent appointed by the corporation 1061 has violated s. 626.9541(1)(h), immediately terminate the 1062 agent’s appointment to represent the corporation. 1063 20. Must provide that new or renewal policies issued by the 1064 corporation on or after January 1, 2012, do not include coverage 1065 for attached or detached screen enclosures. The corporation is 1066 not required to issue a notice of nonrenewal to exclude this 1067 coverage upon the renewal of current policies, but shall exclude 1068 such coverage using a notice of coverage change. 1069 21. Must provide that new or renewal policies issued by the 1070 corporation on or after January 1, 2012, which cover the peril 1071 of sinkhole do not include coverage for any loss to appurtenant 1072 structures, driveways, sidewalks, decks, or patios which is 1073 caused directly or indirectly by sinkhole activity. The 1074 corporation is not required to issue a notice of nonrenewal to 1075 exclude this coverage upon the renewal of current policies, but 1076 shall exclude such coverage using a notice of coverage change 1077 which may be included with the policy renewal. 1078 (d)1. All prospective employees for senior management 1079 positions, as defined by the plan of operation, are subject to 1080 background checks as a prerequisite for employment. The office 1081 shall conduct the background checkson such prospective1082employeespursuant to ss. 624.34, 624.404(3), and 628.261. 1083 2. On or before July 1 of each year, employees of the 1084 corporation mustare required tosign and submit a statement 1085 attesting that they do not have a conflict of interest, as 1086 defined in part III of chapter 112. As a condition of 1087 employment, all prospective employees mustare required tosign 1088 and submit to the corporation a conflict-of-interest statement. 1089 3. Senior managers and members of the board of governors 1090 are subject tothe provisions ofpart III of chapter 112, 1091 including, but not limited to, the code of ethics and public 1092 disclosure and reporting of financial interests, pursuant to s. 1093 112.3145. 1094 a. Senior managers and board members are also required to 1095 file such disclosures with the Commission on Ethics and the 1096 Office of Insurance Regulation. The executive director of the 1097 corporation or his or her designee shall notify each existing 1098 and newly appointedand existing appointedmember of the board 1099 of governors and senior managers of their duty to comply with 1100 the reporting requirements of part III of chapter 112. At least 1101 quarterly, the executive director or his or her designee shall 1102 submit to the Commission on Ethics a list of names of the senior 1103 managers and members of the board of governors who are subject 1104 to the public disclosure requirements under s. 112.3145. 1105 b. Notwithstanding s. 112.3143(2), a board member may not 1106 vote on any measure that would inure to his or her special 1107 private gain or loss; that he or she knows would inure to the 1108 special private gain or loss of any principal by whom he or she 1109 is retained or to the parent organization or subsidiary of a 1110 corporate principal by which he or she is retained, other than 1111 an agency as defined in s. 112.312; or that he or she knows 1112 would inure to the special private gain or loss of a relative or 1113 business associate of the public officer. Before the vote is 1114 taken, such member must publicly state to the assembly the 1115 nature of his or her interest in the matter from which he or she 1116 is abstaining and, within 15 days after the vote occurs, 1117 disclose the nature of his or her interest as a public record in 1118 a memorandum filed with the person responsible for recording the 1119 minutes of the meeting, who shall incorporate the memorandum in 1120 the minutes. 1121 4. Notwithstanding s. 112.3148 or s. 112.3149, or any other 1122 provision of law, an employee or board member may not knowingly 1123 accept, directly or indirectly, any gift or expenditure from a 1124 person or entity, or an employee or representative of such 1125 person or entity, whichthathas a contractual relationship with 1126 the corporation or who is under consideration for a contract. An 1127 employee or board member who fails to comply with subparagraph 1128 3. or this subparagraph is subject to penalties provided under 1129 ss. 112.317 and 112.3173. 1130 5. Any senior manager of the corporation who is employed on 1131 or after January 1, 2007, regardless of the date of hire, who 1132 subsequently retires or terminates employment is prohibited from 1133 representing another person or entity before the corporation for 1134 2 years after retirement or termination of employment from the 1135 corporation. 1136 6. Any senior manager of the corporation who is employed on 1137 or after January 1, 2007, regardless of the date of hire, who 1138 subsequently retires or terminates employment is prohibited from 1139 having any employment or contractual relationship for 2 years 1140 with an insurer that has entered into a take-out bonus agreement 1141 with the corporation. 1142 (n)1.It is the intent of the Legislature that the rates 1143 for coverage provided by the corporation be actuarially 1144 determined and not be competitive with rates charged in the 1145 admitted voluntary market such that the corporation functions as 1146 a residual market mechanism that provides insurance only if such 1147 insurance cannot be procured in the voluntary market. To achieve 1148 this goal, for any rate filing made by the corporation on or 1149 after July 1, 2011:Rates for coverage provided by the1150corporation shall be actuarially sound and subject to the1151requirements of s.627.062, except as otherwise provided in this1152paragraph. The corporation shall file its recommended rates with1153the office at least annually. The corporation shall provide any1154additional information regarding the rates which the office1155requires. The office shall consider the recommendations of the1156board and issue a final order establishing the rates for the1157corporation within 45 days after the recommended rates are1158filed. The corporation may not pursue an administrative1159challenge or judicial review of the final order of the office.1160 1. The corporation shall file its recommended rates with 1161 the office at least annually. The office shall consider the 1162 recommended rates and issue a final order establishing the rates 1163 within 45 days after the recommended rates are filed. The 1164 corporation may not pursue an administrative challenge or 1165 judicial review of the office’s final order. 1166 2. In developing its rates, the corporation shall use an 1167 appropriate industry expense equalization factor to ensure that 1168 its rates include standard industry ratemaking expense 1169 provisions. The industry expense equalization factor must 1170 include a catastrophe risk load, a provision for taxes, a market 1171 provision for reinsurance costs, and an industry expense 1172 provision for general expenses, acquisition expenses, and 1173 commissions. 1174 3. The corporation shall implement a rate increase each 1175 year for each residential line of business it writes, which may 1176 not exceed 20 percent by territory and 25 percent for any single 1177 policy, excluding coverage changes and surcharges. This 1178 subparagraph expires January 1, 2015, and does not apply to 1179 rates for sinkhole coverage or costs for the purchase of private 1180 reinsurance, if any. 1181 4.2.In addition to the rates otherwise determined pursuant 1182 to this paragraph, the corporation shall impose and collect an 1183 amount equal to the premium tax provided for in s. 624.509 to 1184 augment the financial resources of the corporation. 11853. After the public hurricane loss-projection model under1186s.627.06281has been found to be accurate and reliable by the1187Florida Commission on Hurricane Loss Projection Methodology,1188that model shall serve as the minimum benchmark for determining1189the windstorm portion of the corporation’s rates. This1190subparagraph does not require or allow the corporation to adopt1191rates lower than the rates otherwise required or allowed by this1192paragraph.11934. The rate filings for the corporation which were approved1194by the office and which took effect January 1, 2007, are1195rescinded, except for those rates that were lowered. As soon as1196possible, the corporation shall begin using the lower rates that1197were in effect on December 31, 2006, and shall provide refunds1198to policyholders who have paid higher rates as a result of that1199rate filing. The rates in effect on December 31, 2006, shall1200remain in effect for the 2007 and 2008 calendar years except for1201any rate change that results in a lower rate. The next rate1202change that may increase rates shall take effect pursuant to a1203new rate filing recommended by the corporation and established1204by the office, subject to the requirements of this paragraph.12055. Beginning on July 15, 2009, and each year thereafter,1206the corporation must make a recommended actuarially sound rate1207filing for each personal and commercial line of business it1208writes, to be effective no earlier than January 1, 2010.12096. Beginning on or after January 1, 2010, and1210notwithstanding the board’s recommended rates and the office’s1211final order regarding the corporation’s filed rates under1212subparagraph 1., the corporation shall implement a rate increase1213each year which does not exceed 10 percent for any single policy1214issued by the corporation, excluding coverage changes and1215surcharges.1216 5.7.The corporation may also implement an increase to 1217 reflect the effect on the corporation of the cash buildup factor 1218 pursuant to s. 215.555(5)(b). 1219 6. This paragraph does not require or allow the corporation 1220 to reduce rates. 12218. The corporation’s implementation of rates as prescribed1222in subparagraph 6. shall cease for any line of business written1223by the corporation upon the corporation’s implementation of1224actuarially sound rates. Thereafter, the corporation shall1225annually make a recommended actuarially sound rate filing for1226each commercial and personal line of business the corporation1227writes.1228 (o) If coverage in an account is deactivated pursuant to 1229 paragraph (p), coverage through the corporation shall be 1230 reactivated by order of the office only under one of the 1231 following circumstances: 1232 1. If the market assistance plan receives a minimum of 100 1233 applications for coverage within a 3-month period, or 200 1234 applications for coverage within a 1-year period or less for 1235 residential coverage, unless the market assistance plan provides 1236 a quotation from admitted carriers at their filed rates for at 1237 least 90 percent of such applicants. AAnymarket assistance 1238 plan application that is rejected because an individual risk is 1239 so hazardous as to be uninsurable using the criteria specified 1240 in subparagraph (c)7. may(c)8. shallnot be included in the 1241 minimum percentage calculationprovided herein. IfIn the event1242thatthere is a legal or administrative challenge to a 1243 determination by the office that the conditions of this 1244 subparagraph have been met for eligibility for coverage byin1245 the corporation, ananyeligible risk may obtain coverage during 1246 the pendency of such challenge. 1247 2. In response to a state of emergency declared by the 1248 Governor under s. 252.36, the office may activate coverage by 1249 order duringfor the period ofthe emergency upon a finding by 1250 the office that the emergency significantly affects the 1251 availability of residential property insurance. 1252 (s)1. There isshall beno liability on the part of, and no 1253 cause of actionof any natureshall arise against, any 1254 assessable insurer or its agents or employees, the corporation 1255 or its agents or employees, members of the board of governors or 1256 their respective designees at a board meeting, corporation 1257 committee members, or the office or its representatives, for any 1258 action taken by them in the performance of their duties or 1259 responsibilities under this subsection. 1260 a. As part of the immunity, the corporation, as a 1261 governmental entity serving a public purpose, is not liable for 1262 any claim for bad faith whether or not brought pursuant to s. 1263 624.155, and this subsection or any other provision of law does 1264 not create liability or a cause of action for bad faith or a 1265 claim for extracontractual damages. 1266 b. Such immunity does not apply to: 1267 (I)a.Any of the foregoing persons or entities for any 1268 willful tort; 1269 (II)b.The corporation or its producing agents for breach 1270 of any contract or agreement pertaining to insurance coverage; 1271 (III)c.The corporation with respect to issuance or payment 1272 of debt; 1273 (IV)d.AnAnyassessable insurer with respect to any action 1274 to enforce an assessable insurer’s obligations to the 1275 corporation under this subsection; or 1276 (V)e.The corporation in any pending or future action for 1277 breach of contract or for benefits under a policy issued by the 1278 corporation.;In any such action, the corporation isshall be1279 liable to the policyholders and beneficiaries for attorney’s 1280 fees under s. 627.428. 1281 2. The corporation shall manage its claim employees, 1282 independent adjusters, and others who handle claims to ensure 1283 they carry out the corporation’s duty to its policyholders to 1284 handle claims carefully, timely, diligently, and in good faith, 1285 balanced against the corporation’s duty to the state to manage 1286 its assets responsibly in order to minimize its assessment 1287 potential. 1288 (w) Notwithstanding any other provision of law: 1289 1. The pledge or sale of, the lien upon, and the security 1290 interest in any rights, revenues, or other assets of the 1291 corporation created or purported to be created pursuant to any 1292 financing documents to secure any bonds or other indebtedness of 1293 the corporation shall be and remain valid and enforceable, 1294 notwithstanding the commencement of and during the continuation 1295 of, and after, any rehabilitation, insolvency, liquidation, 1296 bankruptcy, receivership, conservatorship, reorganization, or 1297 similar proceeding against the corporation under the laws of 1298 this state. 1299 2.NoSuch proceeding does notshallrelieve the 1300 corporation of its obligation, or otherwise affect its ability 1301 to perform its obligation, to continue to collect, or levy and 1302 collect, assessments, market equalization or other surcharges 1303under subparagraph (c)10., or any other rights, revenues, or 1304 other assets of the corporation pledged pursuant to any 1305 financing documents. 1306 3. Each such pledge or sale of, lien upon, and security 1307 interest in, including the priority of such pledge, lien, or 1308 security interest, any such assessments, market equalization or 1309 other surcharges, or other rights, revenues, or other assets 1310 which are collected, or levied and collected, after the 1311 commencement of and during the pendency of, or after, any such 1312 proceeding continuesshallcontinueunaffected by such 1313 proceeding. As used in this subsection, the term “financing 1314 documents” means any agreement or agreements, instrument or 1315 instruments, or other document or documents now existing or 1316 hereafter created evidencing any bonds or other indebtedness of 1317 the corporation or pursuant to which any such bonds or other 1318 indebtedness has been or may be issued and pursuant to which any 1319 rights, revenues, or other assets of the corporation are pledged 1320 or sold to secure the repayment of such bonds or indebtedness, 1321 together with the payment of interest on such bonds or such 1322 indebtedness, or the payment of any other obligation or 1323 financial product, as defined in the plan of operation of the 1324 corporation related to such bonds or indebtedness. 1325 4. Any such pledge or sale of assessments, revenues, 1326 contract rights, or other rights or assets of the corporation 1327 constitutesshall constitutea lien and security interest, or 1328 sale, as the case may be, that is immediately effective and 1329 attaches to such assessments, revenues, or contract rights or 1330 other rights or assets, whether or not imposed or collected at 1331 the time the pledge or sale is made.AnySuch pledge or sale is 1332 effective, valid, binding, and enforceable against the 1333 corporation or other entity making such pledge or sale, and 1334 valid and binding against and superior to any competing claims 1335 or obligations owed to any other person or entity, including 1336 policyholders in this state, asserting rights in any such 1337 assessments, revenues, or contract rights or other rights or 1338 assets to the extent set forth in and in accordance with the 1339 terms of the pledge or sale contained in the applicable 1340 financing documents, whether or not any such person or entity 1341 has notice of such pledge or sale and without the need for any 1342 physical delivery, recordation, filing, or other action. 1343 5. IfAs long asthe corporation has any bonds outstanding, 1344 the corporation may not file a voluntary petition under chapter 1345 9 of the federal Bankruptcy Code or such corresponding chapter 1346 or sections as may be in effect,from time to time,and a public 1347 officer or any organization, entity, or other person may not 1348 authorize the corporation to be or become a debtor under chapter 1349 9 of the federal Bankruptcy Code or such corresponding chapter 1350 or sections as may be in effect, from time to time,during any 1351 such period. 1352 6. If ordered by a courtof competent jurisdiction, the 1353 corporation may assume policies or otherwise provide coverage 1354 for policyholders of an insurer placed in liquidation under 1355 chapter 631, under such forms, rates, terms, and conditions as 1356 the corporation deems appropriate, subject to approval by the 1357 office. 1358 (y) It is the intent of the Legislature that the amendments 1359 to this subsection enacted in 2002 should, over time, reduce the 1360 probable maximum windstorm losses in the residual markets and 1361shouldreduce the potential assessments to be levied on property 1362 insurers and policyholders statewide.In furtherance of this1363intent:13641. The board shall, on or before February 1 of each year,1365provide a report to the President of the Senate and the Speaker1366of the House of Representatives showing the reduction or1367increase in the 100-year probable maximum loss attributable to1368wind-only coverages and the quota share program under this1369subsection combined, as compared to the benchmark 100-year1370probable maximum loss of the Florida Windstorm Underwriting1371Association. For purposes of this paragraph, the benchmark 1001372year probable maximum loss of the Florida Windstorm Underwriting1373Association shall be the calculation dated February 2001 and1374based on November 30, 2000, exposures. In order to ensure1375comparability of data, the board shall use the same methods for1376calculating its probable maximum loss as were used to calculate1377the benchmark probable maximum loss.13782. Beginning December 1, 2010, if the report under1379subparagraph 1. for any year indicates that the 100-year1380probable maximum loss attributable to wind-only coverages and1381the quota share program combined does not reflect a reduction of1382at least 25 percent from the benchmark, the board shall reduce1383the boundaries of the high-risk area eligible for wind-only1384coverages under this subsection in a manner calculated to reduce1385such probable maximum loss to an amount at least 25 percent1386below the benchmark.13873. Beginning February 1, 2015, if the report under1388subparagraph 1. for any year indicates that the 100-year1389probable maximum loss attributable to wind-only coverages and1390the quota share program combined does not reflect a reduction of1391at least 50 percent from the benchmark, the boundaries of the1392high-risk area eligible for wind-only coverages under this1393subsection shall be reduced by the elimination of any area that1394is not seaward of a line 1,000 feet inland from the Intracoastal1395Waterway.1396 (aa) As a condition of eligibility for coverage by the 1397 corporation, an applicant or insured of a property located in 1398 Special Flood Hazard Area, as defined by the National Flood 1399 Insurance Program, must maintain in effect a separate flood 1400 insurance policy having coverage limits for building and 1401 contents at least equal to those provided under the 1402 corporation’s policy, subject to the maximum limits available 1403 under the National Flood Insurance Program policy. This 1404 requirement does not apply to an insured who is a tenant or a 1405 condominium unit owner above the ground floor; a policy issued 1406 by the corporation which excludes wind and hail coverage; a risk 1407 that is not eligible for flood coverage under the National Flood 1408 Insurance Program; or a mobile home that is located more than 2 1409 miles from open water, including the ocean, the gulf, a bay, a 1410 river, or the intracoastal waterway. This paragraph applies to 1411 new policies issued by the corporation on or after January 1, 1412 2012, and to policies renewed by the corporation on or after 1413 January 1, 2013.The corporation shall not require the securing1414of flood insurance as a condition of coverage if the insured or1415applicant executes a form approved by the office affirming that1416flood insurance is not provided by the corporation and that if1417flood insurance is not secured by the applicant or insured in1418addition to coverage by the corporation, the risk will not be1419covered for flood damage. A corporation policyholder electing1420not to secure flood insurance and executing a form as provided1421herein making a claim for water damage against the corporation1422shall have the burden of proving the damage was not caused by1423flooding. Notwithstanding other provisions of this subsection,1424the corporation may deny coverage to an applicant or insured who1425refuses to execute the form described herein.1426(ee) The office may establish a pilot program to offer1427optional sinkhole coverage in one or more counties or other1428territories of the corporation for the purpose of implementing1429s.627.706, as amended by s. 30, chapter 2007-1, Laws of1430Florida. Under the pilot program, the corporation is not1431required to issue a notice of nonrenewal to exclude sinkhole1432coverage upon the renewal of existing policies, but may exclude1433such coverage using a notice of coverage change.1434 Section 2. Subsection (4) of section 627.3511, Florida 1435 Statutes, is amended to read: 1436 627.3511 Depopulation of Citizens Property Insurance 1437 Corporation.— 1438 (4) AGENT BONUS.—IfWhenthe corporation enters into a 1439 contractual agreement for a take-out plan that provides a bonus 1440 to the insurer, the producing agent of record of the corporation 1441 policy is entitled to retain any unearned commission on such 1442 policy, and the insurer shalleither: 1443 (a) Pay to the producing agentof record of the association1444policy, for the first year, an amount that is the greater of the 1445 insurer’s usual and customary commission for the type of policy 1446 written or a fee equal to the usual and customary commission of 1447 the corporation; or 1448 (b) Offer to allow the producing agentof record of the1449corporation policyto continue servicing the policy for at least 1450a period of not less than1 year and offer to pay the agent the 1451 greater of the insurer’s or the corporation’s usual and 1452 customary commission for the type of policy written. 1453 1454 If the producing agent is unwilling or unable to accept 1455 appointment, the new insurer shall pay the agent in accordance 1456 with paragraph (a). The requirementof this subsectionthat the 1457 producing agent of record is entitled to retain the unearned 1458 commission on an association policy does not apply to a policy 1459 for which coverage has been provided in the association for 30 1460 days or lessor for which a cancellation notice has been issued1461pursuant to s.627.351(6)(c)10. during the first 30 days of1462coverage. 1463 Section 3. Subsection (1) of section 627.712, Florida 1464 Statutes, is amended to read: 1465 627.712 Residential windstorm coverage required; 1466 availability of exclusions for windstorm or contents.— 1467 (1) An insurer issuing a residential property insurance 1468 policy must provide windstorm coverage. Except as provided in 1469 paragraph (2)(c), this section does not applywith respectto 1470 risks that are eligible for wind-only coverage from Citizens 1471 Property Insurance Corporation under s. 627.351(6), andwith1472respectto risks that are not eligible for coverage from 1473 Citizens Property Insurance Corporation under s. 627.351(6)(a)3. 1474 or 4.5. A risk ineligible forCitizenscoverage under s. 1475 627.351(6)(a)3. or 4.5.is exempt from the requirements of this 1476 section only if the risk is located within the boundaries of the 1477 high-risk account of the corporation. 1478 Section 4. This act shall take effect upon becoming a law.