Bill Text: FL S7018 | 2013 | Regular Session | Introduced


Bill Title: Property Insurance

Spectrum: Committee Bill

Status: (N/A - Dead) 2013-03-08 - Submit as committee bill by Banking and Insurance (SB 1770) [S7018 Detail]

Download: Florida-2013-S7018-Introduced.html
       Florida Senate - 2013         (PROPOSED COMMITTEE BILL) SPB 7018
       
       
       
       FOR CONSIDERATION By the Committee on Banking and Insurance
       
       
       
       
       597-01765B-13                                         20137018__
    1                        A bill to be entitled                      
    2         An act relating to property insurance; creating s.
    3         215.5551, F.S.; creating the Florida Catastrophe Risk
    4         Capital Access Facility to increase the access of
    5         small domestic insurers to risk-capital markets;
    6         providing intent; establishing the facility in the
    7         State Board of Administration; providing the purposes
    8         of the facility; requiring the facility to be funded
    9         entirely by participating insurers after initial
   10         apportionment; providing limitations; providing for a
   11         board of directors; providing immunity from liability;
   12         providing for an annual report; amending s. 624.155,
   13         F.S.; providing that Citizens Property Insurance
   14         Corporation is an insurer subject to civil actions as
   15         an agent of the state covered by sovereign immunity;
   16         amending s. 626.752, F.S., relating to the exchange of
   17         business between an agent and insurer; providing an
   18         exemption from the requirements of that section to the
   19         corporation under certain circumstances; amending s.
   20         627.062, F.S.; requiring the Office of Insurance
   21         Regulation to calculate and publish insurance
   22         inflation factors for use in residential property
   23         insurance filings; prohibiting the office from
   24         disapproving a rate as excessive due to the insurer’s
   25         purchase of reinsurance for certain purposes; deleting
   26         obsolete provisions; conforming cross-references;
   27         amending s. 627.0628, F.S.; requiring the Florida
   28         Commission on Hurricane Loss Projection Methodology to
   29         consider methods for improving the accuracy of wind
   30         mitigation discounts; amending s. 627.0629, F.S.;
   31         requiring insurers to provide notice of mitigation
   32         discounts in a residential property insurance rate
   33         filing; revising the criteria for when the office may
   34         hold a public hearing regarding a rate filing;
   35         amending s. 627.171, F.S.; allowing a consent to an
   36         excess rate to apply to subsequent policy renewals;
   37         limiting the allowable amount of excess rates to
   38         territories where there is no competition; amending s.
   39         627.351, F.S.; reducing the value of residential
   40         structures that can be covered by the corporation;
   41         revising the corporation’s eligibility criteria for
   42         structures located seaward of the coastal construction
   43         control line; providing for risk-sharing agreements
   44         between the corporation and other insurers and
   45         specifying the requirements and limitations of such
   46         agreements; deleting provisions allowing a
   47         policyholder removed from the corporation to remain
   48         eligible for coverage regardless of an offer of
   49         coverage from an authorized insurer; revising
   50         corporation criteria for appointing agents; requiring
   51         disclosure of potential corporation surcharges and
   52         policyholder obligations to try and obtain private
   53         market coverage; revising provisions relating to the
   54         Auditor General’s review of the corporation; requiring
   55         the board to contract with an independent auditing
   56         firm to conduct performance audits; authorizing the
   57         corporation to adopt programs that encourage insurers
   58         to remove policies from the corporation through a loan
   59         secured by a surplus note; revising the corporation’s
   60         rate standards; requiring that corporation rates be
   61         competitive with approved rates charged in the
   62         admitted market and include a catastrophe risk load
   63         factor; limiting rate increases for specified personal
   64         and commercial lines residential policies and allowing
   65         an additional rate increase; requiring the corporation
   66         to annually certify its rates; requiring the board of
   67         directors to provide recommendations to the
   68         Legislature on ways of providing rate relief to those
   69         who demonstrate a financial need; deleting obsolete
   70         provisions; creating s. 627.3518, F.S.; establishing a
   71         clearinghouse within the corporation for identifying
   72         and diverting insurance coverage to private insurers;
   73         providing definitions; providing requirements and
   74         duties of the corporation, insurers, and agents;
   75         providing for an alternative to submitting risks to
   76         the corporation; amending s. 627.405, F.S.;
   77         authorizing policyholders to assign benefits subject
   78         to conditions in the policy; amending s. 627.410,
   79         F.S.; conforming provisions to changes made by the
   80         act; creating s. 627.4102, F.S.; providing for an
   81         informational filing of certain forms that are exempt
   82         from the Office of Insurance Regulation’s approval
   83         process; requiring an informational filing to include
   84         a notarized certification from the insurer and
   85         providing a statement that must be included in the
   86         certification; requiring a Notice of Change in Policy
   87         Terms form to be filed with a changed renewal policy;
   88         providing effective dates.
   89  
   90  Be It Enacted by the Legislature of the State of Florida:
   91  
   92         Section 1. Section 215.5551, Florida Statutes, is created
   93  to read:
   94         215.5551Florida Catastrophe Risk Capital Access Facility.
   95         (1) The Legislature finds that the global market for
   96  catastrophe risk has expanded dramatically, resulting in the
   97  availability of billions of dollars in additional risk capital
   98  for insurers and new and innovative alternative risk-transfer
   99  mechanisms. The Legislature also finds that having access to
  100  additional risk capital and risk-transfer mechanisms provides
  101  insurers providing coverage in this state with an opportunity to
  102  expand their capacity to write additional business and diversify
  103  their catastrophe risk. The Legislature further finds that
  104  despite an expansion in the amount of available global risk
  105  capital, small insurers, particularly smaller domestic insurers,
  106  writing property insurance in this state face substantial
  107  challenges accessing these global markets when the relatively
  108  small amount of risk finance required by any one company is not
  109  economically viable. Therefore, it is the intent of the
  110  Legislature to create a mechanism to facilitate the access of
  111  small domestic insurers to global risk capital markets and risk
  112  transfer mechanisms.
  113         (2) Effective July 1, 2013, the Florida Catastrophe Risk
  114  Capital Access Facility is created within the State Board of
  115  Administration. The facility is not defined nor may it function
  116  as an insurer, reinsurer, or other risk-bearing entity under
  117  state law.
  118         (3) The facility shall:
  119         (a) Aggregate the demand for risk finance from global
  120  capital markets among smaller volume domestic property insurance
  121  companies writing business in this state.
  122         (b) Design and execute risk-transfer tools such as
  123  insurance-linked securities and other securitization models for
  124  participating insurers, and use special purpose vehicles or
  125  protected cells, onshore or offshore, as appropriate, to
  126  increase access to risk capital.
  127         (c) Identify and coordinate appropriate risk-transfer
  128  products and opportunities, initially targeting layers of
  129  coverage below, alongside, and above the portion of the
  130  reinsurance market covered by the Florida Hurricane Catastrophe
  131  Fund.
  132         (d) Establish and maintain regular and ongoing contact with
  133  global risk capital market participants, institutions, and
  134  investors, in order to identify opportunities that satisfy and
  135  coordinate insurer demand for additional risk capital.
  136         (4) After an initial apportionment for startup purposes,
  137  the facility shall be funded entirely by participating insurers
  138  on a pro rata basis.
  139         (5) In conducting its affairs, the facility may not:
  140         (a) Take a position in, or provide financial support for,
  141  risk-transfer transactions;
  142         (b) Be a guarantor of premium or make any other financial
  143  guarantees to participating insurers;
  144         (c) Create contractual obligations on the part of the
  145  state; or
  146         (d) Levy taxes or assessments.
  147         (6) The facility shall be governed by a board of directors
  148  composed of seven members, one from the Department of Financial
  149  Services; one from the State Board of Administration; one from
  150  the Office of Insurance Regulation; three industry members
  151  representing Florida property insurance writers, the reinsurance
  152  community, and the financial securities industry; and one member
  153  appointed by a majority of the board. The board may employ or
  154  contract with such staff and professionals as the board deems
  155  necessary to accomplish its purpose.
  156         (7) There shall be no liability on the part of, and no
  157  cause of action of any nature may arise against, the facility or
  158  its agents or employees, the board of directors, or the
  159  department or office or their representatives for any action
  160  taken by them in the performance of their powers and duties
  161  under this section.
  162         (8) The facility shall submit a report to the Financial
  163  Services Commission by January 1 of each year describing
  164  facility activities and transactions undertaken by participating
  165  insurers.
  166         Section 2. Subsection (1) of section 624.155, Florida
  167  Statutes, is amended and subsection (10) is added to that
  168  section, to read:
  169         624.155 Civil remedy.—
  170         (1) Any person may bring a civil action against an insurer,
  171  including Citizens Property Insurance Corporation, if when such
  172  person is damaged:
  173         (a) By a violation of any of the following provisions by
  174  the insurer:
  175         1. Section 626.9541(1)(i), (o), or (x);
  176         2. Section 626.9551;
  177         3. Section 626.9705;
  178         4. Section 626.9706;
  179         5. Section 626.9707; or
  180         6. Section 627.7283.
  181         (b) By the commission of any of the following acts by the
  182  insurer:
  183         1. Not attempting in good faith to settle claims if when,
  184  under all the circumstances, it could and should have done so,
  185  had it acted fairly and honestly toward its insured and with due
  186  regard for her or his interests;
  187         2. Making claims payments to insureds or beneficiaries not
  188  accompanied by a statement setting forth the coverage under
  189  which payments are being made; or
  190         3. Except as to liability coverages, failing to promptly
  191  settle claims, when the obligation to settle a claim has become
  192  reasonably clear, under one portion of the insurance policy
  193  coverage in order to influence settlements under other portions
  194  of the insurance policy coverage.
  195  
  196  Notwithstanding the provisions of this subsection the above to
  197  the contrary, a person pursuing a remedy under this section need
  198  not prove that such act was committed or performed with such
  199  frequency as to indicate a general business practice.
  200         (10) For the purposes of this section, Citizens Property
  201  Insurance Corporation is an agent of the state covered under s.
  202  768.28.
  203         Section 3. Subsection (4) of section 626.752, Florida
  204  Statutes, is amended to read:
  205         626.752 Exchange of business.—
  206         (4) The foregoing limitations and restrictions do shall not
  207  be construed and shall not apply to the placing of surplus lines
  208  business under the provisions of part VIII, or to Citizens
  209  Property Insurance Corporation when placing new and renewal
  210  business with authorized insurers in order to reduce the size of
  211  the corporation pursuant to s. 627.3511.
  212         Section 4. Subsection (2) and paragraph (d) of subsection
  213  (3) of section 627.062, Florida Statutes, are amended to read:
  214         627.062 Rate standards.—
  215         (2) As to all such classes of insurance:
  216         (a) Insurers or rating organizations shall establish and
  217  use rates, rating schedules, or rating manuals that allow the
  218  insurer a reasonable rate of return on the classes of insurance
  219  written in this state. A copy of rates, rating schedules, rating
  220  manuals, premium credits or discount schedules, and surcharge
  221  schedules, and changes thereto, must be filed with the office in
  222  accordance with under one of the following procedures:
  223         1. If the filing is made at least 90 days before the
  224  proposed effective date and is not implemented during the
  225  office’s review of the filing and any proceeding and judicial
  226  review, such filing is considered a “file and use” filing. In
  227  such case, the office shall finalize its review by issuance of a
  228  notice of intent to approve or a notice of intent to disapprove
  229  within 90 days after receipt of the filing. The notice of intent
  230  to approve and the notice of intent to disapprove constitute
  231  agency action for purposes of the Administrative Procedure Act.
  232  Requests for supporting information, requests for mathematical
  233  or mechanical corrections, or notification to the insurer by the
  234  office of its preliminary findings does not toll the 90-day
  235  period during any such proceedings and subsequent judicial
  236  review. The rate shall be deemed approved if the office does not
  237  issue a notice of intent to approve or a notice of intent to
  238  disapprove within 90 days after receipt of the filing.
  239         2. If the filing is not made in accordance with
  240  subparagraph 1., such filing must be made as soon as
  241  practicable, but within 30 days after the effective date, and is
  242  considered a “use and file” filing. An insurer making a “use and
  243  file” filing is potentially subject to an order by the office to
  244  return to policyholders those portions of rates found to be
  245  excessive to policyholders, as provided in paragraph (i) (h).
  246         3. For all property insurance filings made or submitted
  247  after January 25, 2007, but before May 1, 2012, an insurer
  248  seeking a rate that is greater than the rate most recently
  249  approved by the office shall make a “file and use” filing. For
  250  purposes of this subparagraph, motor vehicle collision and
  251  comprehensive coverages are not considered property coverages.
  252         (b) Upon receiving a rate filing, the office shall review
  253  the filing to determine if a rate is excessive, inadequate, or
  254  unfairly discriminatory. In making that determination, the
  255  office shall, in accordance with generally accepted and
  256  reasonable actuarial techniques, consider the following factors:
  257         1. Past and prospective loss experience within and without
  258  this state.
  259         2. Past and prospective expenses.
  260         3. The degree of competition among insurers for the risk
  261  insured.
  262         4. Investment income reasonably expected by the insurer,
  263  consistent with the insurer’s investment practices, from
  264  investable premiums anticipated from in the filing, plus any
  265  other expected income from currently invested assets
  266  representing the amount expected on unearned premium reserves
  267  and loss reserves. The commission may adopt rules that use using
  268  reasonable techniques of actuarial science and economics to
  269  specify the manner in which insurers calculate investment income
  270  attributable to classes of insurance written in this state and
  271  the manner in which investment income is used to calculate
  272  insurance rates. Such rules manner must allow contemplate
  273  allowances for an underwriting profit factor and full
  274  consideration of investment income which produce a reasonable
  275  rate of return; however, investment income from invested surplus
  276  may not be considered.
  277         5. The reasonableness of the judgment reflected in the
  278  filing.
  279         6. Dividends, savings, or unabsorbed premium deposits
  280  allowed or returned to state Florida policyholders, members, or
  281  subscribers.
  282         7. The adequacy of loss reserves.
  283         8. The cost of reinsurance. The office may not disapprove a
  284  rate as excessive solely due solely to the insurer having
  285  obtained catastrophic reinsurance to cover the insurer’s
  286  estimated 250-year probable maximum loss or any lower level of
  287  loss, or due solely to an admitted carrier purchasing private
  288  reinsurance that would insure against potential deficits within
  289  the Florida Hurricane Catastrophe Fund which the most recent
  290  estimate made pursuant to s. 215.555(4)(c)2. predicts would be
  291  funded through revenue bonds issued under s. 215.555(6).
  292         9. Trend factors, including trends in actual losses per
  293  insured unit for the insurer making the filing.
  294         10. Conflagration and catastrophe hazards, if applicable.
  295         11. Projected hurricane losses, if applicable, which must
  296  be estimated using a model or method found to be acceptable or
  297  reliable by the Florida Commission on Hurricane Loss Projection
  298  Methodology, and as further provided in s. 627.0628.
  299         12. A reasonable margin for underwriting profit and
  300  contingencies.
  301         13. The cost of medical services, if applicable.
  302         14. Other relevant factors that affect the frequency or
  303  severity of claims or expenses.
  304         (c) The office shall calculate and publish insurance
  305  inflation factors based on noncatastrophe direct loss costs for
  306  use in residential property insurance filings. The office shall
  307  update the published factors at least annually and make them
  308  available on its website. The calculation of insurance inflation
  309  factors are not subject to rulemaking under chapter 120.
  310         1. An insurer making a residential property insurance rate
  311  filing that proposes a change in noncatastrophe base rates by a
  312  uniform factor equal to or less than the applicable published
  313  insurance inflation factor, may make a rate filing under s.
  314  627.0645 which consists of a rate certification in lieu of a
  315  full rate filing under paragraph (a). The office shall verify
  316  insurer use of the appropriate published inflation factor and,
  317  if the inflation factor is used appropriately, the filed rates
  318  shall be deemed not excessive.
  319         2. An insurer filing under this paragraph may make a
  320  separate filing pursuant to paragraph (l) to adjust its rates
  321  for reinsurance rates, reinsurance financing costs and products,
  322  and cash buildup factor costs. The insurance inflation factors
  323  do not apply to these filings.
  324         3. This paragraph does not apply to filings made by
  325  Citizens Property Insurance Corporation.
  326         (d)(c) In the case of fire insurance rates, consideration
  327  must be given to the availability of water supplies and the
  328  experience of the fire insurance business during a period of not
  329  less than the most recent 5-year or longer period for which such
  330  experience is available.
  331         (e)(d) If conflagration or catastrophe hazards are
  332  considered by an insurer in its rates or rating plan, including
  333  surcharges and discounts, the insurer must shall establish a
  334  reserve for that portion of the premium allocated to such hazard
  335  and maintain the premium in a catastrophe reserve. Removal of
  336  such premiums from the reserve for purposes other than paying
  337  claims associated with a catastrophe or purchasing reinsurance
  338  for catastrophes must be approved by the office. Any ceding
  339  commission received by an insurer purchasing reinsurance for
  340  catastrophes must be placed in the catastrophe reserve.
  341         (f)(e) After consideration of the rate factors provided in
  342  paragraphs (b), (c), and (d), and (e) the office may find a rate
  343  to be excessive, inadequate, or unfairly discriminatory based
  344  upon the following standards:
  345         1. Rates shall be deemed excessive if they are likely to
  346  produce a profit from Florida business which is unreasonably
  347  high in relation to the risk involved in the class of business
  348  or if expenses are unreasonably high in relation to services
  349  rendered.
  350         2. Rates shall be deemed excessive if, among other things,
  351  the rate structure established by a stock insurance company
  352  provides for replenishment of surpluses from premiums, if the
  353  such replenishment is attributable to investment losses.
  354         3. Rates shall be deemed inadequate if they are clearly
  355  insufficient, together with the investment income attributable
  356  to them, they are clearly insufficient to sustain projected
  357  losses and expenses in the class of business to which they
  358  apply.
  359         4. A rating plan, including discounts, credits, or
  360  surcharges, shall be deemed unfairly discriminatory if it fails
  361  to clearly and equitably reflect consideration of the
  362  policyholder’s participation in a risk management program
  363  adopted pursuant to s. 627.0625.
  364         5. A rate shall be deemed inadequate as to the premium
  365  charged to a risk or group of risks if discounts or credits are
  366  allowed which exceed a reasonable reflection of expense savings
  367  and reasonably expected loss experience from the risk or group
  368  of risks.
  369         6. A rate shall be deemed unfairly discriminatory as to a
  370  risk or group of risks if the application of premium discounts,
  371  credits, or surcharges among such risks does not bear a
  372  reasonable relationship to the expected loss and expense
  373  experience among the various risks.
  374         (g)(f) In reviewing a rate filing, the office may require
  375  the insurer to provide, at the insurer’s expense, all
  376  information necessary to evaluate the condition of the company
  377  and the reasonableness of the filing according to the criteria
  378  enumerated in this section.
  379         (h)(g) The office may at any time review a rate, rating
  380  schedule, rating manual, or rate change; the pertinent records
  381  of the insurer; and market conditions. If the office finds on a
  382  preliminary basis that a rate may be excessive, inadequate, or
  383  unfairly discriminatory, the office shall initiate proceedings
  384  to disapprove the rate and shall so notify the insurer. However,
  385  the office may not disapprove as excessive any rate for which it
  386  has given final approval or which has been deemed approved for 1
  387  year after the effective date of the filing unless the office
  388  finds that a material misrepresentation or material error was
  389  made by the insurer or was contained in the filing. Upon
  390  notification being notified, the insurer or rating organization
  391  shall, within 60 days, file with the office all information
  392  that, in the belief of the insurer or organization, proves the
  393  reasonableness, adequacy, and fairness of the rate or rate
  394  change. The office shall issue a notice of intent to approve or
  395  a notice of intent to disapprove pursuant to paragraph (a)
  396  within 90 days after receipt of the insurer’s initial response.
  397  In such instances and in any administrative proceeding relating
  398  to the legality of the rate, the insurer or rating organization
  399  shall carry the burden of proof of showing, by a preponderance
  400  of the evidence, to show that the rate is not excessive,
  401  inadequate, or unfairly discriminatory. After the office
  402  notifies an insurer that a rate may be excessive, inadequate, or
  403  unfairly discriminatory, unless the office withdraws the
  404  notification, the insurer may not alter the rate except to
  405  conform to the office’s notice until the earlier of 120 days
  406  after the date the notification was provided or 180 days after
  407  the date of implementing the rate. The office, Subject to
  408  chapter 120, the office may disapprove without the 60-day
  409  notification any rate increase filed by an insurer within the
  410  prohibited time period or during the time that the legality of
  411  the increased rate is being contested.
  412         (i)(h) If the office finds that a rate or rate change is
  413  excessive, inadequate, or unfairly discriminatory, the office
  414  shall issue an order of disapproval requiring specifying that a
  415  new rate or rate schedule, which responds to the findings of the
  416  office, be filed by the insurer. The office shall further order,
  417  for any “use and file” filing made in accordance with
  418  subparagraph (a)2., that the portion of premiums charged which
  419  constitute each policyholder constituting the portion of the
  420  rate above that which was actuarially justified be returned to
  421  the policyholder in the form of a credit or refund. If the
  422  office finds that an insurer’s rate or rate change is
  423  inadequate, the new rate or rate schedule filed with the office
  424  in response to such a finding applies is applicable only to new
  425  or renewal business of the insurer written by the insurer on or
  426  after the effective date of the responsive filing.
  427         (j)(i) Except as otherwise specifically provided in this
  428  chapter, for property and casualty insurance the office may not
  429  directly or indirectly:
  430         1. Prohibit an any insurer, including any residual market
  431  plan or joint underwriting association, from paying acquisition
  432  costs based on the full amount of premium, as defined in s.
  433  627.403, applicable to any policy, or prohibit any such insurer
  434  from including the full amount of acquisition costs in a rate
  435  filing; or
  436         2. Impede, abridge, or otherwise compromise an insurer’s
  437  right to acquire policyholders, advertise, or appoint agents,
  438  including the calculation, manner, or amount of such agent
  439  commissions, if any.
  440         (k)(j) With respect to residential property insurance rate
  441  filings, the rate filing must account for mitigation measures
  442  undertaken by policyholders to reduce hurricane losses.
  443         (l)(k)1. A residential property insurer may make a separate
  444  filing limited solely to an adjustment of its rates for
  445  reinsurance, the cost of financing products used as a
  446  replacement for reinsurance, financing costs incurred in the
  447  purchase of reinsurance, and the actual cost paid due to the
  448  application of the cash build-up factor pursuant to s.
  449  215.555(5)(b) if the insurer:
  450         a. Elects to purchase financing products, such as a
  451  liquidity instrument or line of credit, in which case the cost
  452  included in filing for the liquidity instrument or line of
  453  credit may not result in a premium increase exceeding 3 percent
  454  for any individual policyholder. All costs contained in the
  455  filing may not result in an overall premium increase of more
  456  than 15 percent for any individual policyholder.
  457         b. Includes in the filing a copy of all of its reinsurance,
  458  liquidity instrument, or line of credit contracts; proof of the
  459  billing or payment for the contracts; and the calculation upon
  460  which the proposed rate change is based demonstrating that the
  461  costs meet the criteria of this section.
  462         2. An insurer that purchases reinsurance or financing
  463  products from an affiliated company may make a separate filing
  464  only if the costs for such reinsurance or financing products are
  465  charged at or below charges made for comparable coverage by
  466  nonaffiliated reinsurers or financial entities making such
  467  coverage or financing products available in this state.
  468         3. An insurer may make only one filing per 12-month period
  469  under this paragraph.
  470         4. An insurer that elects to implement a rate change under
  471  this paragraph must file its rate filing with the office at
  472  least 45 days before the effective date of the rate change.
  473  After an insurer submits a complete filing that meets all of the
  474  requirements of this paragraph, the office has 45 days after the
  475  date of the filing to review the rate filing and determine if
  476  the rate is excessive, inadequate, or unfairly discriminatory.
  477  
  478  The provisions of this subsection do not apply to workers’
  479  compensation, employer’s liability insurance, and motor vehicle
  480  insurance.
  481         (3)
  482         (d)1. The following categories or kinds of insurance and
  483  types of commercial lines risks are not subject to paragraph
  484  (2)(a) or paragraph (2)(g) (2)(f):
  485         a. Excess or umbrella.
  486         b. Surety and fidelity.
  487         c. Boiler and machinery and leakage and fire extinguishing
  488  equipment.
  489         d. Errors and omissions.
  490         e. Directors and officers, employment practices, fiduciary
  491  liability, and management liability.
  492         f. Intellectual property and patent infringement liability.
  493         g. Advertising injury and Internet liability insurance.
  494         h. Property risks rated under a highly protected risks
  495  rating plan.
  496         i. General liability.
  497         j. Nonresidential property, except for collateral
  498  protection insurance as defined in s. 624.6085.
  499         k. Nonresidential multiperil.
  500         l. Excess property.
  501         m. Burglary and theft.
  502         n. Any other commercial lines categories or kinds of
  503  insurance or types of commercial lines risks that the office
  504  determines should not be subject to paragraph (2)(a) or
  505  paragraph (2)(g) (2)(f) because of the existence of a
  506  competitive market for such insurance, similarity of such
  507  insurance to other categories or kinds of insurance not subject
  508  to paragraph (2)(a) or paragraph (2)(g) (2)(f), or to improve
  509  the general operational efficiency of the office.
  510         2. Insurers or rating organizations shall establish and use
  511  rates, rating schedules, or rating manuals that to allow the
  512  insurer a reasonable rate of return on insurance and risks
  513  described in subparagraph 1. which are written in this state.
  514         3. An insurer must notify the office of any changes to
  515  rates for insurance and risks described in subparagraph 1.
  516  within 30 days after the effective date of the change. The
  517  notice must include the name of the insurer, the type or kind of
  518  insurance subject to rate change, total premium written during
  519  the immediately preceding year by the insurer for the type or
  520  kind of insurance subject to the rate change, and the average
  521  statewide percentage change in rates. Underwriting files,
  522  premiums, losses, and expense statistics relating with regard to
  523  such insurance and risks written by an insurer must be
  524  maintained by the insurer and subject to examination by the
  525  office. Upon examination, the office, in accordance with
  526  generally accepted and reasonable actuarial techniques, shall
  527  consider the rate factors in paragraphs (2)(b), (d) (c), and (e)
  528  (d) and the standards in paragraph (2)(f) (2)(e) to determine if
  529  the rate is excessive, inadequate, or unfairly discriminatory.
  530         4. A rating organization must notify the office of any
  531  changes to loss cost for insurance and risks described in
  532  subparagraph 1. within 30 days after the effective date of the
  533  change. The notice must include the name of the rating
  534  organization, the type or kind of insurance subject to a loss
  535  cost change, loss costs during the immediately preceding year
  536  for the type or kind of insurance subject to the loss cost
  537  change, and the average statewide percentage change in loss
  538  cost. Actuarial data relating with regard to changes to loss
  539  cost for risks not subject to paragraph (2)(a) or paragraph
  540  (2)(g) (2)(f) must be maintained by the rating organization for
  541  2 years after the effective date of the change and are subject
  542  to examination by the office. The office may require the rating
  543  organization to incur the costs associated with an examination.
  544  Upon examination, the office, in accordance with generally
  545  accepted and reasonable actuarial techniques, shall consider the
  546  rate factors in paragraphs (2)(b), (d), and (e) (2)(b)-(d) and
  547  the standards in paragraph (2)(f) (2)(e) to determine if the
  548  rate is excessive, inadequate, or unfairly discriminatory.
  549         Section 5. Paragraphs (a) and (b) of subsection (3) of
  550  section 627.0628, Florida Statutes, are amended to read:
  551         627.0628 Florida Commission on Hurricane Loss Projection
  552  Methodology; public records exemption; public meetings
  553  exemption.—
  554         (3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.—
  555         (a) The commission shall consider any actuarial methods,
  556  principles, standards, models, or output ranges that have the
  557  potential for improving the accuracy of or reliability of the
  558  hurricane loss projections and wind mitigation discounts used in
  559  residential property insurance rate filings. The commission
  560  shall, from time to time, adopt findings as to the accuracy or
  561  reliability of particular methods, principles, standards,
  562  models, or output ranges.
  563         (b) The commission shall consider any actuarial methods,
  564  principles, standards, or models that have the potential for
  565  improving the accuracy of or reliability of projecting probable
  566  maximum loss levels. The commission shall adopt findings as to
  567  the accuracy or reliability of particular methods, principles,
  568  standards, or models related to probable maximum loss
  569  calculations. The commission shall review models for accuracy of
  570  use when establishing wind mitigation discounts.
  571         Section 6. Subsections (1) and (6) of section 627.0629,
  572  Florida Statutes, are amended to read:
  573         627.0629 Residential property insurance; rate filings.—
  574         (1) It is the intent of the Legislature that insurers
  575  provide savings to consumers who install or implement windstorm
  576  damage mitigation techniques, alterations, or solutions to their
  577  properties to prevent windstorm losses. A rate filing for
  578  residential property insurance must include notice of the
  579  mitigation discounts offered by the insurer, which must be
  580  actuarially reasonable discounts, credits, or other rate
  581  differentials, or appropriate reductions in deductibles, for
  582  properties on which fixtures or construction techniques
  583  demonstrated to reduce the amount of loss in a windstorm have
  584  been installed or implemented. The fixtures or construction
  585  techniques must include, but are not limited to, fixtures or
  586  construction techniques that enhance roof strength, roof
  587  covering performance, roof-to-wall strength, wall-to-floor-to
  588  foundation strength, opening protection, and the impact
  589  resistance of window, door, and skylight openings strength.
  590  Credits, discounts, or other rate differentials, or appropriate
  591  reductions in deductibles, for fixtures and construction
  592  techniques that meet the minimum requirements of the Florida
  593  Building Code must be included in the rate filing. The office
  594  shall determine the discounts, credits, other rate
  595  differentials, and appropriate reductions in deductibles that
  596  reflect the full actuarial value of such revaluation, which may
  597  be used by insurers in rate filings.
  598         (6) The office may hold a public hearing for a any rate
  599  filing that is based in whole or in part on data from a computer
  600  model which exceeds may not exceed 15 percent in counties the
  601  office determines do not have a reasonable degree of competition
  602  unless there is a public hearing.
  603         Section 7. Section 627.171, Florida Statutes, is amended to
  604  read:
  605         627.171 Excess rates.—
  606         (1) With the written consent of the insured signed before
  607  prior to the policy inception date and filed with the insurer,
  608  the insurer may use a rate in excess of the otherwise applicable
  609  filed rate on any specific risk. The signed consent form is
  610  valid for subsequent renewals and must include the filed rate as
  611  well as the excess rate for the risk insured., and A copy of the
  612  form must be maintained by the insurer for 3 years and be
  613  available for review by the office.
  614         (2) An insurer may not use excess rates authorized under
  615  pursuant to this section for more than 10 percent of its
  616  commercial insurance policies written or renewed in each
  617  calendar year for any line of commercial insurance or for more
  618  than 5 percent of its personal lines insurance policies written
  619  or renewed in each calendar year for any line of personal
  620  insurance in those counties in which the office has determined
  621  there is not a reasonable degree of competition. In determining
  622  the 10-percent limitation for commercial insurance policies, the
  623  insurer shall exclude a any workers’ compensation policy that
  624  was written for an employer who had coverage in the joint
  625  underwriting plan created by s. 627.311(5) immediately before
  626  prior to the writing of the policy by the insurer and a any
  627  workers’ compensation policy that was written for an employer
  628  who had been offered coverage in the joint underwriting plan but
  629  who was written a policy by the insurer in lieu of accepting the
  630  joint underwriting plan policy. Such These workers’ compensation
  631  policies shall be excluded from the 10-percent limitation for
  632  the first 3 years of coverage.
  633         Section 8. Paragraphs (a), (b), (c), (m), and (q) of
  634  subsection (6) of section 627.351, Florida Statutes, are amended
  635  to read:
  636         627.351 Insurance risk apportionment plans.—
  637         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
  638         (a) The public purpose of this subsection is to ensure that
  639  there is an orderly market for property insurance for residents
  640  and businesses of this state.
  641         1. The Legislature finds that private insurers are
  642  unwilling or unable to provide affordable property insurance
  643  coverage rates in certain parts of the in this state to the
  644  extent sought and needed. The absence of affordable property
  645  insurance threatens the public health, safety, and welfare and
  646  likewise threatens the economic health of the state. The state,
  647  therefore, has a compelling public interest and a public purpose
  648  to assist in assuring that property in the state is insured and
  649  that it is insured at affordable rates so as to facilitate the
  650  remediation, reconstruction, and replacement of damaged or
  651  destroyed property in order to reduce or avoid the negative
  652  effects on otherwise resulting to the public health, safety, and
  653  welfare, to the economy of the state, and to the revenues of the
  654  state and local governments which are needed to provide for the
  655  public welfare. It is necessary, therefore, to make provide
  656  affordable property insurance available to applicants who are,
  657  in good faith, entitled to procure insurance through the
  658  voluntary market but are unable to do so. The Legislature
  659  intends, therefore, that affordable property insurance be
  660  provided and that it continue to be provided, as long as
  661  necessary, through Citizens Property Insurance Corporation, a
  662  government entity that is an integral part of the state, and
  663  that is not a private insurance company, or through referrals to
  664  private insurers participating in a clearinghouse established by
  665  the corporation. To that end, the corporation shall strive to
  666  increase the availability of affordable property insurance in
  667  this state, while achieving efficiencies and economies, and
  668  while providing service to policyholders, applicants, and agents
  669  which is no less than the quality generally provided in the
  670  voluntary market, for the achievement of the foregoing public
  671  purposes. Because it is essential for this government entity to
  672  have the maximum financial resources to pay claims following a
  673  catastrophic hurricane, it is further the intent of the
  674  Legislature that the corporation continue to be an integral part
  675  of the state and not a private insurance company, and that the
  676  income of the corporation be exempt from federal income taxation
  677  and that interest on the debt obligations issued by the
  678  corporation be exempt from federal income taxation.
  679         2. The Residential Property and Casualty Joint Underwriting
  680  Association originally created by this statute shall be known as
  681  the Citizens Property Insurance Corporation. The corporation
  682  shall provide insurance for residential and commercial property
  683  insurance, for applicants who are entitled, but, in good faith,
  684  are unable to procure insurance through the voluntary market.
  685  The corporation shall operate pursuant to a plan of operation
  686  approved by order of the Financial Services Commission. The plan
  687  is subject to continuous review by the commission, and. the
  688  commission may, by order, withdraw approval of all or part of a
  689  plan if the commission determines that conditions have changed
  690  since approval was granted and that the purposes of the plan
  691  require changes in the plan. For the purposes of this
  692  subsection, residential coverage includes both personal lines
  693  residential coverage, which consists of the type of coverage
  694  provided by homeowner’s, mobile home owner’s, dwelling,
  695  tenant’s, condominium unit owner’s, and similar policies; and
  696  commercial lines residential coverage, which consists of the
  697  type of coverage provided by condominium association, apartment
  698  building, and similar policies.
  699         3. Effective January 1, 2009, A personal lines residential
  700  structure that has a dwelling replacement cost of $600,000 $2
  701  million or more, or a single condominium unit that has a
  702  combined dwelling and contents replacement cost of $600,000 $2
  703  million or more is not eligible for coverage by the corporation.
  704  Such dwellings insured by the corporation on December 31, 2008,
  705  may continue to be covered by the corporation until the end of
  706  the policy term. However, such dwellings may reapply and obtain
  707  coverage if the property owner provides the corporation with a
  708  sworn affidavit from one or more insurance agents, on a form
  709  provided by the corporation, stating that the agents have made
  710  their best efforts to obtain coverage and that the property has
  711  been rejected for coverage by at least one authorized insurer
  712  and at least three surplus lines insurers. If such conditions
  713  are met, the dwelling may be insured by the corporation for up
  714  to 3 years, after which time the dwelling is ineligible for
  715  coverage. The office shall approve the method used by the
  716  corporation for valuing the dwelling replacement costs under
  717  cost for the purposes of this subparagraph. If a policyholder is
  718  insured by the corporation before prior to being determined to
  719  be ineligible pursuant to this subparagraph and such
  720  policyholder files a lawsuit challenging the determination, the
  721  policyholder may remain insured by the corporation until the
  722  conclusion of the litigation.
  723         4. It is the intent of the Legislature that policyholders,
  724  applicants, and agents of the corporation receive service and
  725  treatment of the highest possible level but never less than that
  726  generally provided in the voluntary market. It is also intended
  727  that the corporation be held to service standards no less than
  728  those applied to insurers in the voluntary market by the office
  729  with respect to responsiveness, timeliness, customer courtesy,
  730  and overall dealings with policyholders, applicants, or agents
  731  of the corporation.
  732         5. Any structure for which a notice of commencement has
  733  been issued on or after July 1, 2013, pursuant to s. 713.135,
  734  which is located seaward of the coastal construction control
  735  line created pursuant to s. 161.053, is ineligible for coverage
  736  through the corporation unless the structure meets the coastal
  737  code-plus building code criteria developed and recommended by
  738  the Florida Building Commission.
  739         5. Effective January 1, 2009, a personal lines residential
  740  structure that is located in the “wind-borne debris region,” as
  741  defined in s. 1609.2, International Building Code (2006), and
  742  that has an insured value on the structure of $750,000 or more
  743  is not eligible for coverage by the corporation unless the
  744  structure has opening protections as required under the Florida
  745  Building Code for a newly constructed residential structure in
  746  that area. A residential structure shall be deemed to comply
  747  with this subparagraph if it has shutters or opening protections
  748  on all openings and if such opening protections complied with
  749  the Florida Building Code at the time they were installed.
  750         6. For any claim filed under any policy of the corporation,
  751  a public adjuster may not charge, agree to, or accept any
  752  compensation, payment, commission, fee, or other thing of value
  753  greater than 10 percent of the additional amount actually paid
  754  over the amount that was originally offered by the corporation
  755  for any one claim.
  756         (b)1. All insurers authorized to write one or more subject
  757  lines of business in this state are subject to assessment by the
  758  corporation and, for the purposes of this subsection, are
  759  referred to collectively as “assessable insurers.” Insurers
  760  writing one or more subject lines of business in this state
  761  pursuant to part VIII of chapter 626 are not assessable
  762  insurers; however, but insureds who procure one or more subject
  763  lines of business in this state pursuant to part VIII of chapter
  764  626 are subject to assessment by the corporation and are
  765  referred to collectively as “assessable insureds.” An insurer’s
  766  assessment liability begins on the first day of the calendar
  767  year following the year in which the insurer was issued a
  768  certificate of authority to transact insurance for subject lines
  769  of business in this state and terminates 1 year after the end of
  770  the first calendar year during which the insurer no longer holds
  771  a certificate of authority to transact insurance for subject
  772  lines of business in this state.
  773         2.a. All revenues, assets, liabilities, losses, and
  774  expenses of the corporation shall be divided into three separate
  775  accounts as follows:
  776         (I) A personal lines account for personal residential
  777  policies issued by the corporation, or issued by the Residential
  778  Property and Casualty Joint Underwriting Association and renewed
  779  by the corporation, which provides comprehensive, multiperil
  780  coverage on risks that are not located in areas eligible for
  781  coverage by the Florida Windstorm Underwriting Association as
  782  those areas were defined on January 1, 2002, and for policies
  783  that do not provide coverage for the peril of wind on risks that
  784  are located in such areas;
  785         (II) A commercial lines account for commercial residential
  786  and commercial nonresidential policies issued by the
  787  corporation, or issued by the Residential Property and Casualty
  788  Joint Underwriting Association and renewed by the corporation,
  789  which provides coverage for basic property perils on risks that
  790  are not located in areas eligible for coverage by the Florida
  791  Windstorm Underwriting Association as those areas were defined
  792  on January 1, 2002, and for policies that do not provide
  793  coverage for the peril of wind on risks that are located in such
  794  areas; and
  795         (III) A coastal account for personal residential policies
  796  and commercial residential and commercial nonresidential
  797  property policies issued by the corporation, or transferred to
  798  the corporation, which provides coverage for the peril of wind
  799  on risks that are located in areas eligible for coverage by the
  800  Florida Windstorm Underwriting Association as those areas were
  801  defined on January 1, 2002. The corporation may offer policies
  802  that provide multiperil coverage and the corporation shall
  803  continue to offer policies that provide coverage only for the
  804  peril of wind for risks located in areas eligible for coverage
  805  in the coastal account. In issuing multiperil coverage, the
  806  corporation may use its approved policy forms and rates for the
  807  personal lines account. An applicant or insured who is eligible
  808  to purchase a multiperil policy from the corporation may
  809  purchase a multiperil policy from an authorized insurer without
  810  prejudice to the applicant’s or insured’s eligibility to
  811  prospectively purchase a policy that provides coverage only for
  812  the peril of wind from the corporation. An applicant or insured
  813  who is eligible for a corporation policy that provides coverage
  814  only for the peril of wind may elect to purchase or retain such
  815  policy and also purchase or retain coverage excluding wind from
  816  an authorized insurer without prejudice to the applicant’s or
  817  insured’s eligibility to prospectively purchase a policy that
  818  provides multiperil coverage from the corporation. It is the
  819  goal of the Legislature that there be an overall average savings
  820  of 10 percent or more for a policyholder who currently has a
  821  wind-only policy with the corporation, and an ex-wind policy
  822  with a voluntary insurer or the corporation, and who obtains a
  823  multiperil policy from the corporation. It is the intent of the
  824  Legislature that the offer of multiperil coverage in the coastal
  825  account be made and implemented in a manner that does not
  826  adversely affect the tax-exempt status of the corporation or
  827  creditworthiness of or security for currently outstanding
  828  financing obligations or credit facilities of the coastal
  829  account, the personal lines account, or the commercial lines
  830  account. The coastal account must also include quota share
  831  primary insurance under subparagraph (c)2. The area eligible for
  832  coverage under the coastal account also includes the area within
  833  Port Canaveral, which is bordered on the south by the City of
  834  Cape Canaveral, bordered on the west by the Banana River, and
  835  bordered on the north by Federal Government property.
  836         b. The three separate accounts must be maintained as long
  837  as financing obligations entered into by the Florida Windstorm
  838  Underwriting Association or Residential Property and Casualty
  839  Joint Underwriting Association are outstanding, in accordance
  840  with the terms of the corresponding financing documents. If the
  841  financing obligations are no longer outstanding, the corporation
  842  may use a single account for all revenues, assets, liabilities,
  843  losses, and expenses of the corporation. Consistent with this
  844  subparagraph and prudent investment policies that minimize the
  845  cost of carrying debt, the board shall exercise its best efforts
  846  to retire existing debt or obtain the approval of necessary
  847  parties to amend the terms of existing debt, in order so as to
  848  structure the most efficient plan for consolidating to
  849  consolidate the three separate accounts into a single account.
  850         c. Creditors of the Residential Property and Casualty Joint
  851  Underwriting Association and the accounts specified in sub-sub
  852  subparagraphs a.(I) and (II) may have a claim against, and
  853  recourse to, those accounts and no claim against, or recourse
  854  to, the account referred to in sub-sub-subparagraph a.(III).
  855  Creditors of the Florida Windstorm Underwriting Association have
  856  a claim against, and recourse to, the account referred to in
  857  sub-sub-subparagraph a.(III) and no claim against, or recourse
  858  to, the accounts referred to in sub-sub-subparagraphs a.(I) and
  859  (II).
  860         d. Revenues, assets, liabilities, losses, and expenses not
  861  attributable to particular accounts shall be prorated among the
  862  accounts.
  863         e. The Legislature finds that the revenues of the
  864  corporation are revenues that are necessary to meet the
  865  requirements set forth in documents authorizing the issuance of
  866  bonds under this subsection.
  867         f. The income of the corporation may not inure to the
  868  benefit of any private person.
  869         3. With respect to a deficit in an account:
  870         a. After accounting for the Citizens policyholder surcharge
  871  imposed under sub-subparagraph i., if the remaining projected
  872  deficit incurred in the coastal account in a particular calendar
  873  year:
  874         (I) Is not greater than 2 percent of the aggregate
  875  statewide direct written premium for the subject lines of
  876  business for the prior calendar year, the entire deficit shall
  877  be recovered through regular assessments of assessable insurers
  878  under paragraph (q) and assessable insureds.
  879         (II) Exceeds 2 percent of the aggregate statewide direct
  880  written premium for the subject lines of business for the prior
  881  calendar year, the corporation shall levy regular assessments on
  882  assessable insurers under paragraph (q) and on assessable
  883  insureds in an amount equal to the greater of 2 percent of the
  884  projected deficit or 2 percent of the aggregate statewide direct
  885  written premium for the subject lines of business for the prior
  886  calendar year. Any remaining projected deficit shall be
  887  recovered through emergency assessments under sub-subparagraph
  888  d.
  889         b. Each assessable insurer’s share of the amount being
  890  assessed under sub-subparagraph a. must be in the proportion
  891  that the assessable insurer’s direct written premium for the
  892  subject lines of business for the year preceding the assessment
  893  bears to the aggregate statewide direct written premium for the
  894  subject lines of business for that year. The assessment
  895  percentage applicable to each assessable insured is the ratio of
  896  the amount being assessed under sub-subparagraph a. to the
  897  aggregate statewide direct written premium for the subject lines
  898  of business for the prior year. Assessments levied by the
  899  corporation on assessable insurers under sub-subparagraph a.
  900  must be paid as required by the corporation’s plan of operation
  901  and paragraph (q). Assessments levied by the corporation on
  902  assessable insureds under sub-subparagraph a. shall be collected
  903  by the surplus lines agent at the time the surplus lines agent
  904  collects the surplus lines tax required by s. 626.932, and paid
  905  to the Florida Surplus Lines Service Office at the time the
  906  surplus lines agent pays the surplus lines tax to that office.
  907  Upon receipt of regular assessments from surplus lines agents,
  908  the Florida Surplus Lines Service Office shall transfer the
  909  assessments directly to the corporation as determined by the
  910  corporation.
  911         c. After accounting for the Citizens policyholder surcharge
  912  imposed under sub-subparagraph i., the remaining projected
  913  deficits in the personal lines account and in the commercial
  914  lines account in a particular calendar year shall be recovered
  915  through emergency assessments under sub-subparagraph d.
  916         d. Upon a determination by the board of governors that a
  917  projected deficit in an account exceeds the amount that is
  918  expected to be recovered through regular assessments under sub
  919  subparagraph a., plus the amount that is expected to be
  920  recovered through policyholder surcharges under sub-subparagraph
  921  i., the board, after verification by the office, shall levy
  922  emergency assessments for as many years as necessary to cover
  923  the deficits, to be collected by assessable insurers and the
  924  corporation and collected from assessable insureds upon issuance
  925  or renewal of policies for subject lines of business, excluding
  926  National Flood Insurance policies. The amount collected in a
  927  particular year must be a uniform percentage of that year’s
  928  direct written premium for subject lines of business and all
  929  accounts of the corporation, excluding National Flood Insurance
  930  Program policy premiums, as annually determined by the board and
  931  verified by the office. The office shall verify the arithmetic
  932  calculations involved in the board’s determination within 30
  933  days after receipt of the information on which the determination
  934  was based. The office shall notify assessable insurers and the
  935  Florida Surplus Lines Service Office of the date on which
  936  assessable insurers shall begin to collect and assessable
  937  insureds shall begin to pay such assessment. The date must be at
  938  least may be not less than 90 days after the date the
  939  corporation levies emergency assessments pursuant to this sub
  940  subparagraph. Notwithstanding any other provision of law, the
  941  corporation and each assessable insurer that writes subject
  942  lines of business shall collect emergency assessments from its
  943  policyholders without such obligation being affected by any
  944  credit, limitation, exemption, or deferment. Emergency
  945  assessments levied by the corporation on assessable insureds
  946  shall be collected by the surplus lines agent at the time the
  947  surplus lines agent collects the surplus lines tax required by
  948  s. 626.932 and paid to the Florida Surplus Lines Service Office
  949  at the time the surplus lines agent pays the surplus lines tax
  950  to that office. The emergency assessments collected shall be
  951  transferred directly to the corporation on a periodic basis as
  952  determined by the corporation and held by the corporation solely
  953  in the applicable account. The aggregate amount of emergency
  954  assessments levied for an account under this sub-subparagraph in
  955  any calendar year may be less than but not exceed the greater of
  956  10 percent of the amount needed to cover the deficit, plus
  957  interest, fees, commissions, required reserves, and other costs
  958  associated with financing the original deficit, or 10 percent of
  959  the aggregate statewide direct written premium for subject lines
  960  of business and all accounts of the corporation for the prior
  961  year, plus interest, fees, commissions, required reserves, and
  962  other costs associated with financing the deficit.
  963         e. The corporation may pledge the proceeds of assessments,
  964  projected recoveries from the Florida Hurricane Catastrophe
  965  Fund, other insurance and reinsurance recoverables, policyholder
  966  surcharges and other surcharges, and other funds available to
  967  the corporation as the source of revenue for and to secure bonds
  968  issued under paragraph (q), bonds or other indebtedness issued
  969  under subparagraph (c)3., or lines of credit or other financing
  970  mechanisms issued or created under this subsection, or to retire
  971  any other debt incurred as a result of deficits or events giving
  972  rise to deficits, or in any other way that the board determines
  973  will efficiently recover such deficits. The purpose of the lines
  974  of credit or other financing mechanisms is to provide additional
  975  resources to assist the corporation in covering claims and
  976  expenses attributable to a catastrophe. As used in this
  977  subsection, the term “assessments” includes regular assessments
  978  under sub-subparagraph a. or subparagraph (q)1. and emergency
  979  assessments under sub-subparagraph d. Emergency assessments
  980  collected under sub-subparagraph d. are not part of an insurer’s
  981  rates, are not premium, and are not subject to premium tax,
  982  fees, or commissions; however, failure to pay the emergency
  983  assessment shall be treated as failure to pay premium. The
  984  emergency assessments under sub-subparagraph d. shall continue
  985  as long as any bonds issued or other indebtedness incurred with
  986  respect to a deficit for which the assessment was imposed remain
  987  outstanding, unless adequate provision has been made for the
  988  payment of such bonds or other indebtedness pursuant to the
  989  documents governing such bonds or indebtedness.
  990         f. As used in this subsection for purposes of any deficit
  991  incurred on or after January 25, 2007, the term “subject lines
  992  of business” means insurance written by assessable insurers or
  993  procured by assessable insureds for all property and casualty
  994  lines of business in this state, but not including workers’
  995  compensation or medical malpractice. As used in this sub
  996  subparagraph, the term “property and casualty lines of business”
  997  includes all lines of business identified on Form 2, Exhibit of
  998  Premiums and Losses, in the annual statement required of
  999  authorized insurers under s. 624.424 and any rule adopted under
 1000  this section, except for those lines identified as accident and
 1001  health insurance and except for policies written under the
 1002  National Flood Insurance Program or the Federal Crop Insurance
 1003  Program. For purposes of this sub-subparagraph, the term
 1004  “workers’ compensation” includes both workers’ compensation
 1005  insurance and excess workers’ compensation insurance.
 1006         g. The Florida Surplus Lines Service Office shall annually
 1007  determine annually the aggregate statewide written premium in
 1008  subject lines of business procured by assessable insureds and
 1009  report that information to the corporation in a form and at a
 1010  time the corporation specifies to ensure that the corporation
 1011  can meet the requirements of this subsection and the
 1012  corporation’s financing obligations.
 1013         h. The Florida Surplus Lines Service Office shall verify
 1014  the proper application by surplus lines agents of assessment
 1015  percentages for regular assessments and emergency assessments
 1016  levied under this subparagraph on assessable insureds and assist
 1017  the corporation in ensuring the accurate, timely collection and
 1018  payment of assessments by surplus lines agents as required by
 1019  the corporation.
 1020         i. In 2008 or thereafter, Upon a determination by the board
 1021  of governors that an account has a projected deficit, the board
 1022  shall levy a Citizens policyholder surcharge against all
 1023  policyholders of the corporation.
 1024         (I) The surcharge shall be levied as a uniform percentage
 1025  of the premium for the policy of up to 15 percent of the policy
 1026  such premium, which funds shall be used to offset the deficit.
 1027         (II) The surcharge is payable upon cancellation or
 1028  termination of the policy, upon renewal of the policy, or upon
 1029  issuance of a new policy by the corporation within the first 12
 1030  months after the date of the levy or the period of time
 1031  necessary to fully collect the surcharge amount.
 1032         (III) The corporation may not levy any regular assessments
 1033  under paragraph (q) pursuant to sub-subparagraph a. or sub
 1034  subparagraph b. with respect to a particular year’s deficit
 1035  until the corporation has first levied the full amount of the
 1036  surcharge authorized by this sub-subparagraph.
 1037         (IV) The surcharge is not considered premium and is not
 1038  subject to commissions, fees, or premium taxes. However, failure
 1039  to pay the surcharge shall be treated as failure to pay premium.
 1040         j. If the amount of any assessments or surcharges collected
 1041  from corporation policyholders, assessable insurers or their
 1042  policyholders, or assessable insureds exceeds the amount of the
 1043  deficits, such excess amounts shall be remitted to and retained
 1044  by the corporation in a reserve to be used by the corporation,
 1045  as determined by the board of governors and approved by the
 1046  office, to pay claims or reduce any past, present, or future
 1047  plan-year deficits or to reduce outstanding debt.
 1048         (c) The corporation’s plan of operation:
 1049         1. Must provide for adoption of residential property and
 1050  casualty insurance policy forms and commercial residential and
 1051  nonresidential property insurance forms, which must be approved
 1052  by the office before use. The corporation shall adopt the
 1053  following policy forms:
 1054         a. Standard personal lines policy forms that are
 1055  comprehensive multiperil policies providing full coverage of a
 1056  residential property equivalent to the coverage provided in the
 1057  private insurance market under an HO-3, HO-4, or HO-6 policy.
 1058         b. Basic personal lines policy forms that are policies
 1059  similar to an HO-8 policy or a dwelling fire policy that provide
 1060  coverage meeting the requirements of the secondary mortgage
 1061  market, but which is more limited than the coverage under a
 1062  standard policy.
 1063         c. Commercial lines residential and nonresidential policy
 1064  forms that are generally similar to the basic perils of full
 1065  coverage obtainable for commercial residential structures and
 1066  commercial nonresidential structures in the admitted voluntary
 1067  market.
 1068         d. Personal lines and commercial lines residential property
 1069  insurance forms that cover the peril of wind only. Such The
 1070  forms are applicable only to residential properties located in
 1071  areas eligible for coverage under the coastal account referred
 1072  to in sub-subparagraph (b)2.a.
 1073         e. Commercial lines nonresidential property insurance forms
 1074  that cover the peril of wind only. Such The forms are applicable
 1075  only to nonresidential properties located in areas eligible for
 1076  coverage under the coastal account referred to in sub
 1077  subparagraph (b)2.a.
 1078         f. The corporation may adopt variations of the policy forms
 1079  listed in sub-subparagraphs a.-e. which contain more restrictive
 1080  coverage.
 1081         g. Effective January 1, 2013, the corporation shall offer a
 1082  basic personal lines policy similar to an HO-8 policy with
 1083  dwelling repair based on common construction materials and
 1084  methods.
 1085         2. Must provide that the corporation and an authorized
 1086  insurer may enter into a risk-sharing agreement for the purpose
 1087  of reducing the corporation’s exposure. As used in this
 1088  subparagraph, the term “risk-sharing agreement” means an
 1089  agreement between the corporation and an authorized insurer for
 1090  the corporation to retain part, but not all, of the risk for a
 1091  specified group of policies or specified perils within a group
 1092  of policies, as part of the terms for removal of policies from
 1093  the corporation.
 1094         a. Entering into a risk-sharing agreement is voluntary and
 1095  at the discretion of the corporation and the authorized insurer.
 1096  To avoid unnecessary expense, the board of governors may limit
 1097  the corporation’s participation in risk-sharing agreements to
 1098  those participants capable and willing to assume a minimum of 25
 1099  percent of the exposure on at least 100,000 policies and may
 1100  specify other limitations. A risk-sharing agreement in which the
 1101  corporation retains part of the risk may not exceed 5 years.
 1102         b. The risk-sharing agreement may cover policies in any
 1103  account and may cover any perils. The corporation may act as a
 1104  reinsurer or a cedent under a risk sharing agreement or an
 1105  excess of loss agreement. If the corporation is the reinsurer,
 1106  the insurance policy forms and endorsements must be approved by
 1107  the office, cover all perils that are the subject of the risk
 1108  sharing agreement, and cover at least the same limits as the
 1109  corporation policies being replaced.
 1110         c. The terms of each risk-sharing agreement must ensure
 1111  that the consideration received by the corporation is
 1112  commensurate with the risk retained by the corporation and the
 1113  risk assumed by the authorized insurer. The corporation may not
 1114  share risk for bad faith.
 1115         d. The risk-sharing agreement must specify the proportion
 1116  of exposure that the authorized insurer reports to the Florida
 1117  Hurricane Catastrophe Fund and the exposure retained by the
 1118  corporation. Each shall pay premium and receive reimbursements
 1119  from the fund for the exposure that they retain or assume as
 1120  provided in the risk-sharing agreement. The risk retained or
 1121  assumed is eligible for coverage by the fund and is not
 1122  considered reinsurance for purposes of coverage by the fund.
 1123  However, the authorized insurer and the corporation may report
 1124  participation in the risk sharing agreement on their financial
 1125  statements as reinsurance if appropriate according to the
 1126  characteristics of the agreement based on statutory accounting
 1127  rules and instructions.
 1128         e. Notwithstanding any other provision of law:
 1129         (I) Policies offered coverage by the corporation or an
 1130  authorized insurer through a risk-sharing agreement are not
 1131  eligible for coverage by the corporation outside of the
 1132  agreement; and
 1133         (II) A risk-sharing agreement between the corporation and
 1134  an authorized insurer is not subject to the requirements of a
 1135  take-out or keep-out program under ss. 627.3517 and this
 1136  subsection, except that the agreement must be filed by the
 1137  authorized insurer with the office for review and approval
 1138  before the execution of the agreement by the insurer.
 1139         2. Must provide that the corporation adopt a program in
 1140  which the corporation and authorized insurers enter into quota
 1141  share primary insurance agreements for hurricane coverage, as
 1142  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 1143  property insurance forms for eligible risks which cover the
 1144  peril of wind only.
 1145         a. As used in this subsection, the term:
 1146         (I) “Quota share primary insurance” means an arrangement in
 1147  which the primary hurricane coverage of an eligible risk is
 1148  provided in specified percentages by the corporation and an
 1149  authorized insurer. The corporation and authorized insurer are
 1150  each solely responsible for a specified percentage of hurricane
 1151  coverage of an eligible risk as set forth in a quota share
 1152  primary insurance agreement between the corporation and an
 1153  authorized insurer and the insurance contract. The
 1154  responsibility of the corporation or authorized insurer to pay
 1155  its specified percentage of hurricane losses of an eligible
 1156  risk, as set forth in the agreement, may not be altered by the
 1157  inability of the other party to pay its specified percentage of
 1158  losses. Eligible risks that are provided hurricane coverage
 1159  through a quota share primary insurance arrangement must be
 1160  provided policy forms that set forth the obligations of the
 1161  corporation and authorized insurer under the arrangement,
 1162  clearly specify the percentages of quota share primary insurance
 1163  provided by the corporation and authorized insurer, and
 1164  conspicuously and clearly state that the authorized insurer and
 1165  the corporation may not be held responsible beyond their
 1166  specified percentage of coverage of hurricane losses.
 1167         (II) “Eligible risks” means personal lines residential and
 1168  commercial lines residential risks that meet the underwriting
 1169  criteria of the corporation and are located in areas that were
 1170  eligible for coverage by the Florida Windstorm Underwriting
 1171  Association on January 1, 2002.
 1172         b. The corporation may enter into quota share primary
 1173  insurance agreements with authorized insurers at corporation
 1174  coverage levels of 90 percent and 50 percent.
 1175         c. If the corporation determines that additional coverage
 1176  levels are necessary to maximize participation in quota share
 1177  primary insurance agreements by authorized insurers, the
 1178  corporation may establish additional coverage levels. However,
 1179  the corporation’s quota share primary insurance coverage level
 1180  may not exceed 90 percent.
 1181         d. Any quota share primary insurance agreement entered into
 1182  between an authorized insurer and the corporation must provide
 1183  for a uniform specified percentage of coverage of hurricane
 1184  losses, by county or territory as set forth by the corporation
 1185  board, for all eligible risks of the authorized insurer covered
 1186  under the agreement.
 1187         e. Any quota share primary insurance agreement entered into
 1188  between an authorized insurer and the corporation is subject to
 1189  review and approval by the office. However, such agreement shall
 1190  be authorized only as to insurance contracts entered into
 1191  between an authorized insurer and an insured who is already
 1192  insured by the corporation for wind coverage.
 1193         f. For all eligible risks covered under quota share primary
 1194  insurance agreements, the exposure and coverage levels for both
 1195  the corporation and authorized insurers shall be reported by the
 1196  corporation to the Florida Hurricane Catastrophe Fund. For all
 1197  policies of eligible risks covered under such agreements, the
 1198  corporation and the authorized insurer must maintain complete
 1199  and accurate records for the purpose of exposure and loss
 1200  reimbursement audits as required by fund rules. The corporation
 1201  and the authorized insurer shall each maintain duplicate copies
 1202  of policy declaration pages and supporting claims documents.
 1203         g. The corporation board shall establish in its plan of
 1204  operation standards for quota share agreements which ensure that
 1205  there is no discriminatory application among insurers as to the
 1206  terms of the agreements, pricing of the agreements, incentive
 1207  provisions if any, and consideration paid for servicing policies
 1208  or adjusting claims.
 1209         h. The quota share primary insurance agreement between the
 1210  corporation and an authorized insurer must set forth the
 1211  specific terms under which coverage is provided, including, but
 1212  not limited to, the sale and servicing of policies issued under
 1213  the agreement by the insurance agent of the authorized insurer
 1214  producing the business, the reporting of information concerning
 1215  eligible risks, the payment of premium to the corporation, and
 1216  arrangements for the adjustment and payment of hurricane claims
 1217  incurred on eligible risks by the claims adjuster and personnel
 1218  of the authorized insurer. Entering into a quota sharing
 1219  insurance agreement between the corporation and an authorized
 1220  insurer is voluntary and at the discretion of the authorized
 1221  insurer.
 1222         3.a. May provide that the corporation may employ or
 1223  otherwise contract with individuals or other entities to provide
 1224  administrative or professional services that may be appropriate
 1225  to effectuate the plan. The corporation may borrow funds by
 1226  issuing bonds or by incurring other indebtedness, and shall have
 1227  other powers reasonably necessary to effectuate the requirements
 1228  of this subsection, including, without limitation, the power to
 1229  issue bonds and incur other indebtedness in order to refinance
 1230  outstanding bonds or other indebtedness. The corporation may
 1231  seek judicial validation of its bonds or other indebtedness
 1232  under chapter 75. The corporation may issue bonds or incur other
 1233  indebtedness, or have bonds issued on its behalf by a unit of
 1234  local government pursuant to subparagraph (q)2. in the absence
 1235  of a hurricane or other weather-related event, upon a
 1236  determination by the corporation, subject to approval by the
 1237  office, that such action would enable it to efficiently meet the
 1238  financial obligations of the corporation and that such
 1239  financings are reasonably necessary to effectuate the
 1240  requirements of this subsection. The corporation may take all
 1241  actions needed to facilitate tax-free status for such bonds or
 1242  indebtedness, including formation of trusts or other affiliated
 1243  entities. The corporation may pledge assessments, projected
 1244  recoveries from the Florida Hurricane Catastrophe Fund, other
 1245  reinsurance recoverables, Citizens policyholder surcharges and
 1246  other surcharges, and other funds available to the corporation
 1247  as security for bonds or other indebtedness. In recognition of
 1248  s. 10, Art. I of the State Constitution, prohibiting the
 1249  impairment of obligations of contracts, it is the intent of the
 1250  Legislature that no action not be taken whose purpose is to
 1251  impair any bond indenture or financing agreement or any revenue
 1252  source committed by contract to such bond or other indebtedness.
 1253         b. May provide that the corporation employ or otherwise
 1254  contract with individuals or other entities to provide
 1255  administrative or professional services that may be appropriate
 1256  to effectuate the plan. To ensure that the corporation is
 1257  operating in an efficient and economic manner while providing
 1258  quality service to policyholders, applicants, and agents, the
 1259  board shall commission an independent third-party consultant
 1260  having expertise in insurance company management or insurance
 1261  company management consulting to prepare a report and make
 1262  recommendations on the relative costs and benefits of
 1263  outsourcing various policy issuance and service functions to
 1264  private servicing carriers or entities performing similar
 1265  functions in the private market for a fee, rather than
 1266  performing such functions in-house. In making such
 1267  recommendations, the consultant shall consider how other
 1268  residual markets, both in this state and around the country,
 1269  outsource appropriate functions or use servicing carriers to
 1270  better match expenses with revenues that fluctuate based on a
 1271  widely varying policy count. The report must be completed by
 1272  July 1, 2012. Upon receiving the report, the board shall develop
 1273  a plan to implement the report and submit the plan for review,
 1274  modification, and approval to the Financial Services Commission.
 1275  Upon the commission’s approval of the plan, the board shall
 1276  begin implementing the plan by January 1, 2013.
 1277         4. Must require that the corporation operate subject to the
 1278  supervision and approval of a board of governors consisting of
 1279  eight individuals who are residents of this state and who are,
 1280  from different geographical areas of the this state.
 1281         a. The Governor, the Chief Financial Officer, the President
 1282  of the Senate, and the Speaker of the House of Representatives
 1283  shall each appoint two members of the board. At least one of the
 1284  two members appointed by each appointing officer must have
 1285  demonstrated expertise in insurance and is deemed to be within
 1286  the scope of the exemption provided under in s. 112.313(7)(b).
 1287  The Chief Financial Officer shall designate one of the
 1288  appointees as chair. All board members serve at the pleasure of
 1289  the appointing officer. All members of the board are subject to
 1290  removal at will by the officers who appointed them. All board
 1291  members, including the chair, shall must be appointed to serve
 1292  for 3-year terms beginning annually on a date designated by the
 1293  plan. However, for the first term beginning on or after July 1,
 1294  2009, each appointing officer shall appoint one member of the
 1295  board for a 2-year term and one member for a 3-year term. A
 1296  board vacancy shall be filled for the unexpired term by the
 1297  appointing officer. The Chief Financial Officer shall appoint a
 1298  technical advisory group to provide information and advice to
 1299  the board in connection with the board’s duties under this
 1300  subsection. The executive director and senior managers of the
 1301  corporation shall be engaged by the board and serve at the
 1302  pleasure of the board. Any executive director appointed on or
 1303  after July 1, 2006, is subject to confirmation by the Senate.
 1304  The executive director is responsible for employing other staff
 1305  as the corporation may require, subject to review and
 1306  concurrence by the board.
 1307         b. The board shall create a Market Accountability Advisory
 1308  Committee to assist the corporation in developing awareness of
 1309  its rates and its customer and agent service levels in
 1310  relationship to the voluntary market insurers writing similar
 1311  coverage.
 1312         (I) The members of the advisory committee consist of the
 1313  following 11 persons, one of whom must be elected chair by the
 1314  members of the committee: four representatives, one appointed by
 1315  the Florida Association of Insurance Agents, one by the Florida
 1316  Association of Insurance and Financial Advisors, one by the
 1317  Professional Insurance Agents of Florida, and one by the Latin
 1318  American Association of Insurance Agencies; three
 1319  representatives appointed by the insurers with the three highest
 1320  voluntary market share of residential property insurance
 1321  business in the state; one representative from the Office of
 1322  Insurance Regulation; one consumer appointed by the board who is
 1323  insured by the corporation at the time of appointment to the
 1324  committee; one representative appointed by the Florida
 1325  Association of Realtors; and one representative appointed by the
 1326  Florida Bankers Association. All members shall be appointed to
 1327  3-year terms and may serve for consecutive terms.
 1328         (II) The committee shall report to the corporation at each
 1329  board meeting on insurance market issues that which may include
 1330  rates and rate competition within with the voluntary market;
 1331  service, including policy issuance, claims processing, and
 1332  general responsiveness to policyholders, applicants, and agents;
 1333  and matters relating to depopulation.
 1334         5. Must provide a procedure for determining the eligibility
 1335  of a risk for coverage by the corporation which applies to both
 1336  new and renewal policies, as follows:
 1337         a. Subject to s. 627.3517, with respect to personal lines
 1338  residential risks, if the risk is offered coverage from an
 1339  authorized insurer at the insurer’s approved rate under a
 1340  standard policy including wind coverage or, if consistent with
 1341  the insurer’s underwriting rules as filed with the office, a
 1342  basic policy including wind coverage, for a new application to
 1343  the corporation for coverage, the risk is not eligible for any
 1344  policy issued by the corporation unless the premium for coverage
 1345  from the authorized insurer is more than 15 percent greater than
 1346  the premium for comparable coverage from the corporation. If the
 1347  risk is not able to obtain such offer, the risk is eligible for
 1348  a standard policy including wind coverage or a basic policy
 1349  including wind coverage issued by the corporation; however, if
 1350  the risk could not be insured under a standard policy including
 1351  wind coverage regardless of market conditions, the risk is
 1352  eligible for a basic policy including wind coverage unless
 1353  rejected under subparagraph 8. However, a policyholder of the
 1354  corporation or a policyholder removed from the corporation
 1355  through an assumption agreement until the end of the assumption
 1356  period remains eligible for coverage from the corporation
 1357  regardless of any offer of coverage from an authorized insurer
 1358  or surplus lines insurer. The corporation shall determine the
 1359  type of policy to be provided on the basis of objective
 1360  standards specified in the underwriting manual and based on
 1361  generally accepted underwriting practices.
 1362         (I) If the risk accepts an offer of coverage through the
 1363  market assistance plan or through a mechanism established by the
 1364  corporation before a policy is issued to the risk by the
 1365  corporation or during the first 30 days of coverage by the
 1366  corporation, and the producing agent who submitted the
 1367  application to the plan or to the corporation is not currently
 1368  appointed by the insurer, the insurer shall:
 1369         (A) Pay to the producing agent of record of the policy for
 1370  the first year, an amount that is the greater of the insurer’s
 1371  usual and customary commission for the type of policy written or
 1372  a fee equal to the usual and customary commission of the
 1373  corporation; or
 1374         (B) Offer to allow the producing agent of record of the
 1375  policy to continue servicing the policy for at least 1 year and
 1376  offer to pay the agent the greater of the insurer’s or the
 1377  corporation’s usual and customary commission for the type of
 1378  policy written.
 1379  
 1380  If the producing agent is unwilling or unable to accept
 1381  appointment, the new insurer shall pay the agent in accordance
 1382  with sub-sub-sub-subparagraph (A).
 1383         (II) If the corporation enters into a contractual agreement
 1384  for a take-out plan, the producing agent of record of the
 1385  corporation policy is entitled to retain any unearned commission
 1386  on the policy, and the insurer shall:
 1387         (A) Pay to the producing agent of record, for the first
 1388  year, an amount that is the greater of the insurer’s usual and
 1389  customary commission for the type of policy written or a fee
 1390  equal to the usual and customary commission of the corporation;
 1391  or
 1392         (B) Offer to allow the producing agent of record to
 1393  continue servicing the policy for at least 1 year and offer to
 1394  pay the agent the greater of the insurer’s or the corporation’s
 1395  usual and customary commission for the type of policy written.
 1396  
 1397  If the producing agent is unwilling or unable to accept
 1398  appointment, the new insurer shall pay the agent in accordance
 1399  with sub-sub-sub-subparagraph (A).
 1400         b. With respect to commercial lines residential risks, for
 1401  a new application to the corporation for coverage, if the risk
 1402  is offered coverage under a policy including wind coverage from
 1403  an authorized insurer at its approved rate, the risk is not
 1404  eligible for a policy issued by the corporation unless the
 1405  premium for coverage from the authorized insurer is more than 15
 1406  percent greater than the premium for comparable coverage from
 1407  the corporation. If the risk is not able to obtain any such
 1408  offer, the risk is eligible for a policy including wind coverage
 1409  issued by the corporation. However, a policyholder of the
 1410  corporation or a policyholder removed from the corporation
 1411  through an assumption agreement until the end of the assumption
 1412  period remains eligible for coverage from the corporation
 1413  regardless of an offer of coverage from an authorized insurer or
 1414  surplus lines insurer.
 1415         (I) If the risk accepts an offer of coverage through the
 1416  market assistance plan or through a mechanism established by the
 1417  corporation before a policy is issued to the risk by the
 1418  corporation or during the first 30 days of coverage by the
 1419  corporation, and the producing agent who submitted the
 1420  application to the plan or the corporation is not currently
 1421  appointed by the insurer, the insurer shall:
 1422         (A) Pay to the producing agent of record of the policy, for
 1423  the first year, an amount that is the greater of the insurer’s
 1424  usual and customary commission for the type of policy written or
 1425  a fee equal to the usual and customary commission of the
 1426  corporation; or
 1427         (B) Offer to allow the producing agent of record of the
 1428  policy to continue servicing the policy for at least 1 year and
 1429  offer to pay the agent the greater of the insurer’s or the
 1430  corporation’s usual and customary commission for the type of
 1431  policy written.
 1432  
 1433  If the producing agent is unwilling or unable to accept
 1434  appointment, the new insurer shall pay the agent in accordance
 1435  with sub-sub-sub-subparagraph (A).
 1436         (II) If the corporation enters into a contractual agreement
 1437  for a take-out plan, the producing agent of record of the
 1438  corporation policy is entitled to retain any unearned commission
 1439  on the policy, and the insurer shall:
 1440         (A) Pay to the producing agent of record, for the first
 1441  year, an amount that is the greater of the insurer’s usual and
 1442  customary commission for the type of policy written or a fee
 1443  equal to the usual and customary commission of the corporation;
 1444  or
 1445         (B) Offer to allow the producing agent of record to
 1446  continue servicing the policy for at least 1 year and offer to
 1447  pay the agent the greater of the insurer’s or the corporation’s
 1448  usual and customary commission for the type of policy written.
 1449  
 1450  If the producing agent is unwilling or unable to accept
 1451  appointment, the new insurer shall pay the agent in accordance
 1452  with sub-sub-sub-subparagraph (A).
 1453         c. For purposes of determining comparable coverage under
 1454  sub-subparagraphs a. and b., the comparison must be based on
 1455  those forms and coverages that are reasonably comparable. The
 1456  corporation may rely on a determination of comparable coverage
 1457  and premium made by the producing agent who submits the
 1458  application to the corporation, made in the agent’s capacity as
 1459  the corporation’s agent. A comparison may be made solely of the
 1460  premium with respect to the main building or structure only on
 1461  the following basis: the same coverage A or other building
 1462  limits; the same percentage hurricane deductible that applies on
 1463  an annual basis or that applies to each hurricane for commercial
 1464  residential property; the same percentage of ordinance and law
 1465  coverage, if the same limit is offered by both the corporation
 1466  and the authorized insurer; the same mitigation credits, to the
 1467  extent the same types of credits are offered both by the
 1468  corporation and the authorized insurer; the same method for loss
 1469  payment, such as replacement cost or actual cash value, if the
 1470  same method is offered both by the corporation and the
 1471  authorized insurer in accordance with underwriting rules; and
 1472  any other form or coverage that is reasonably comparable as
 1473  determined by the board. If an application is submitted to the
 1474  corporation for wind-only coverage in the coastal account, the
 1475  premium for the corporation’s wind-only policy plus the premium
 1476  for the ex-wind policy that is offered by an authorized insurer
 1477  to the applicant must be compared to the premium for multiperil
 1478  coverage offered by an authorized insurer, subject to the
 1479  standards for comparison specified in this subparagraph. If the
 1480  corporation or the applicant requests from the authorized
 1481  insurer a breakdown of the premium of the offer by types of
 1482  coverage so that a comparison may be made by the corporation or
 1483  its agent and the authorized insurer refuses or is unable to
 1484  provide such information, the corporation may treat the offer as
 1485  not being an offer of coverage from an authorized insurer at the
 1486  insurer’s approved rate.
 1487         6. Must include rules for classifications of risks and
 1488  rates.
 1489         7. Must provide that if premium and investment income for
 1490  an account attributable to a particular calendar year are in
 1491  excess of projected losses and expenses for the account
 1492  attributable to that year, such excess must shall be held in
 1493  surplus in the account. Such surplus must be available to defray
 1494  deficits in that account as to future years and used for that
 1495  purpose before assessing assessable insurers and assessable
 1496  insureds as to any calendar year.
 1497         8. Must provide objective criteria and procedures that are
 1498  to be uniformly applied to all applicants in determining whether
 1499  an individual risk is so hazardous as to be uninsurable. In
 1500  making this determination and in establishing the criteria and
 1501  procedures, the following must be considered:
 1502         a. Whether the likelihood of a loss for the individual risk
 1503  is substantially higher than for other risks of the same class;
 1504  and
 1505         b. Whether the uncertainty associated with the individual
 1506  risk is such that an appropriate premium cannot be determined.
 1507  
 1508  The acceptance or rejection of a risk by the corporation shall
 1509  be construed as the private placement of insurance, and the
 1510  provisions of chapter 120 do not apply.
 1511         9. Must provide that the corporation make its best efforts
 1512  to procure catastrophe reinsurance at reasonable rates, to cover
 1513  its projected 100-year probable maximum loss as determined by
 1514  the board of governors.
 1515         10. Must provide that the policies issued by the
 1516  corporation must provide that if the corporation or the market
 1517  assistance plan obtains an offer from an authorized insurer to
 1518  cover the risk at its approved rates, the risk is no longer
 1519  eligible for renewal through the corporation, except as
 1520  otherwise provided in this subsection.
 1521         11. Must provide that corporation policies and applications
 1522  must include a notice that the corporation policy could, under
 1523  this section, be replaced with a policy issued by an authorized
 1524  insurer which does not provide coverage identical to the
 1525  coverage provided by the corporation. The notice must also
 1526  specify that acceptance of corporation coverage creates a
 1527  conclusive presumption that the applicant or policyholder is
 1528  aware of this potential.
 1529         12. May establish, subject to approval by the office,
 1530  different eligibility requirements and operational procedures
 1531  for any line or type of coverage for any specified county or
 1532  area if the board determines that such changes are justified due
 1533  to the voluntary market being sufficiently stable and
 1534  competitive in such area or for such line or type of coverage
 1535  and that consumers who, in good faith, are unable to obtain
 1536  insurance through the voluntary market through ordinary methods
 1537  continue to have access to coverage from the corporation. If
 1538  coverage is sought in connection with a real property transfer,
 1539  the requirements and procedures may not provide an effective
 1540  date of coverage later than the date of the closing of the
 1541  transfer as established by the transferor, the transferee, and,
 1542  if applicable, the lender.
 1543         13. Must provide that, with respect to the coastal account,
 1544  any assessable insurer that has with a surplus as to
 1545  policyholders of $25 million or less writing 25 percent or more
 1546  of its total countrywide property insurance premiums in this
 1547  state may petition the office, within the first 90 days of each
 1548  calendar year, petition the office to qualify as a limited
 1549  apportionment company. A regular assessment levied by the
 1550  corporation on a limited apportionment company for a deficit
 1551  incurred by the corporation for the coastal account may be paid
 1552  to the corporation on a monthly basis as the assessments are
 1553  collected by the limited apportionment company from its
 1554  insureds. The, but a limited apportionment company must begin
 1555  collecting the regular assessments within not later than 90 days
 1556  after the regular assessments are levied by the corporation, and
 1557  the regular assessments must be paid in full within 15 months
 1558  after being levied by the corporation. A limited apportionment
 1559  company shall collect from its policyholders any emergency
 1560  assessment imposed under sub-subparagraph (b)3.d. The plan must
 1561  provide that, if the office determines that any regular
 1562  assessment will result in an impairment of the surplus of a
 1563  limited apportionment company, the office may direct that all or
 1564  part of such assessment be deferred as provided in subparagraph
 1565  (q)4. However, an emergency assessment to be collected from
 1566  policyholders under sub-subparagraph (b)3.d. may not be limited
 1567  or deferred.
 1568         14. Must provide that the corporation appoint as its
 1569  licensed agents only those agents who at the time of initial
 1570  appointment also hold an appointment as defined in s. 626.015(3)
 1571  with an insurer who at the time of the agent’s initial
 1572  appointment by the corporation is authorized to write and is
 1573  actually writing personal lines residential property coverage,
 1574  commercial residential property coverage, or commercial
 1575  nonresidential property coverage within the state. As a
 1576  condition of continued appointment, agents of the corporation
 1577  must maintain appropriate documentation specified by the
 1578  corporation which warrants and certifies that alternative
 1579  coverage was annually sought for each risk placed by that agent
 1580  with the corporation in accordance with s. 627.3518. After
 1581  January 1, 2014, if an agent places a policy with the
 1582  corporation which was ineligible for coverage based on
 1583  eligibility standards at the time of placement, agent
 1584  commissions may not be paid on that policy.
 1585         15. Must provide a premium payment plan option to its
 1586  policyholders which, at a minimum, allows for quarterly and
 1587  semiannual payment of premiums. A monthly payment plan may, but
 1588  is not required to, be offered.
 1589         16. Must limit coverage on mobile homes or manufactured
 1590  homes built before 1994 to actual cash value of the dwelling
 1591  rather than replacement costs of the dwelling.
 1592         17. May provide such limits of coverage as the board
 1593  determines, consistent with the requirements of this subsection.
 1594         18. May require commercial property to meet specified
 1595  hurricane mitigation construction features as a condition of
 1596  eligibility for coverage.
 1597         19. Must provide that new or renewal policies issued by the
 1598  corporation on or after January 1, 2012, which cover sinkhole
 1599  loss do not include coverage for any loss to appurtenant
 1600  structures, driveways, sidewalks, decks, or patios that are
 1601  directly or indirectly caused by sinkhole activity. The
 1602  corporation shall exclude such coverage using a notice of
 1603  coverage change, which may be included with the policy renewal,
 1604  and not by issuance of a notice of nonrenewal of the excluded
 1605  coverage upon renewal of the current policy.
 1606         20. Must, as of July January 1, 2014 2012, must require
 1607  that the agent obtain from an applicant for coverage from the
 1608  corporation an acknowledgment signed by the applicant, which
 1609  includes, at a minimum, the following statement:
 1610  
 1611                ACKNOWLEDGMENT OF POTENTIAL SURCHARGE              
 1612                      AND ASSESSMENT LIABILITY:                    
 1613  
 1614         1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
 1615  CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
 1616  DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
 1617  MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
 1618  PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
 1619  POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
 1620  OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
 1621  LEGISLATURE.
 1622         2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
 1623  SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM,
 1624  BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
 1625  BE ELIGIBLE FOR COVERAGE BY CITIZENS I MUST FIRST TRY TO OBTAIN
 1626  PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
 1627  WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
 1628  ARE REGULATED AND APPROVED BY THE STATE.
 1629         3.2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
 1630  ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
 1631  INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
 1632  FLORIDA LEGISLATURE.
 1633         4.3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
 1634  CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
 1635  STATE OF FLORIDA.
 1636         a. The corporation shall maintain, in electronic format or
 1637  otherwise, a copy of the applicant’s signed acknowledgment and
 1638  provide a copy of the statement to the policyholder as part of
 1639  his or her the first renewal after the effective date of this
 1640  subparagraph.
 1641         b. The signed acknowledgment form creates a conclusive
 1642  presumption that the policyholder understood and accepted his or
 1643  her potential surcharge and assessment liability as a
 1644  policyholder of the corporation.
 1645         (m)1. The Auditor General shall conduct an operational
 1646  audit of the corporation annually every 3 years to evaluate
 1647  management’s performance in administering laws, policies, and
 1648  procedures governing the operations of the corporation in an
 1649  efficient and effective manner. The scope of the review must
 1650  shall include, but is not limited to, evaluating claims
 1651  handling, customer service, take-out programs and bonuses;,
 1652  financing arrangements made to address a 100-year probable
 1653  maximum loss; personnel costs and administration; underwriting,
 1654  including processes designed to ensure compliance with policy
 1655  eligibility requirements of law;, procurement of goods and
 1656  services;, internal controls;, and the internal audit function;
 1657  and related internal controls. A copy of the report shall be
 1658  provided to the corporation’s board, the President of the
 1659  Senate, the Speaker of the House of Representatives, each member
 1660  of the Financial Services Commission, and the Office of
 1661  Insurance Regulation. The initial audit must be completed by
 1662  February 1, 2009.
 1663         2. The board shall contract with an independent auditing
 1664  firm to conduct a performance audit of the corporation every 2
 1665  years. The objectives of the audit include, but are not limited
 1666  to, an evaluation, within the context of insurance industry best
 1667  practices, of the corporation’s strategic planning processes,
 1668  the functionality of the corporation’s organizational structure,
 1669  the compensation levels of senior management, and the overall
 1670  management and operations of the corporation. A copy of the
 1671  audit report shall be provided to the corporation’s board, the
 1672  President of the Senate, the Speaker of the House of
 1673  Representatives, each member of the Financial Services
 1674  Commission, the Office of Insurance Regulation, and the Auditor
 1675  General. The initial audit must be completed by June 1, 2014.
 1676         (q)1. The corporation shall certify to the office its needs
 1677  for annual assessments as to a particular calendar year, and for
 1678  any interim assessments that it deems to be necessary to sustain
 1679  operations as to a particular year pending the receipt of annual
 1680  assessments. Upon verification, the office shall approve such
 1681  certification, and the corporation shall levy such annual or
 1682  interim assessments. Such assessments shall be prorated as
 1683  provided in paragraph (b). The corporation shall take all
 1684  reasonable and prudent steps necessary to collect the amount of
 1685  assessments due from each assessable insurer, including, if
 1686  prudent, filing suit to collect the assessments, and the office
 1687  may provide such assistance to the corporation it deems
 1688  appropriate. If the corporation is unable to collect an
 1689  assessment from any assessable insurer, the uncollected
 1690  assessments shall be levied as an additional assessment against
 1691  the assessable insurers and any assessable insurer required to
 1692  pay an additional assessment as a result of such failure to pay
 1693  shall have a cause of action against the such nonpaying
 1694  assessable insurer. Assessments must shall be included as an
 1695  appropriate factor in the making of rates. The failure of a
 1696  surplus lines agent to collect and remit any regular or
 1697  emergency assessment levied by the corporation is considered to
 1698  be a violation of s. 626.936 and subjects the surplus lines
 1699  agent to the penalties provided in that section.
 1700         2. The governing body of any unit of local government, any
 1701  residents of which are insured by the corporation, may issue
 1702  bonds as defined in s. 125.013 or s. 166.101 from time to time
 1703  to fund an assistance program, in conjunction with the
 1704  corporation, for the purpose of defraying deficits of the
 1705  corporation. In order to avoid needless and indiscriminate
 1706  proliferation, duplication, and fragmentation of such assistance
 1707  programs, the any unit of local government, any residents of
 1708  which are insured by the corporation, may provide for the
 1709  payment of losses, regardless of whether or not the losses
 1710  occurred within or outside of the territorial jurisdiction of
 1711  the local government. Revenue bonds under this subparagraph may
 1712  not be issued until validated pursuant to chapter 75, unless a
 1713  state of emergency is declared by executive order or
 1714  proclamation of the Governor pursuant to s. 252.36 which makes
 1715  making such findings as are necessary to determine that it is in
 1716  the best interests of, and necessary for, the protection of the
 1717  public health, safety, and general welfare of residents of this
 1718  state and declaring it an essential public purpose to permit
 1719  certain municipalities or counties to issue such bonds as will
 1720  permit relief to claimants and policyholders of the corporation.
 1721  Any such unit of local government may enter into such contracts
 1722  with the corporation and with any other entity created pursuant
 1723  to this subsection as are necessary to carry out this paragraph.
 1724  Any bonds issued are under this subparagraph shall be payable
 1725  from and secured by moneys received by the corporation from
 1726  emergency assessments under sub-subparagraph (b)3.d., and
 1727  assigned and pledged to or on behalf of the unit of local
 1728  government for the benefit of the holders of such bonds. The
 1729  funds, credit, property, and taxing power of the state or of the
 1730  unit of local government may shall not be pledged for the
 1731  payment of such bonds.
 1732         3.a. The corporation shall adopt one or more programs
 1733  subject to approval by the office for the reduction of both new
 1734  and renewal writings by in the corporation. The corporation may
 1735  consider any prudent and not unfairly discriminatory approach to
 1736  reducing corporation writings.
 1737         a. The corporation may adopt a credit against assessment
 1738  liability or other liability which provides an incentive for
 1739  insurers to take and keep risks out of the corporation by
 1740  maintaining or increasing voluntary writings in counties or
 1741  areas in which corporation risks are highly concentrated, and a
 1742  program to provide a formula under which an insurer voluntarily
 1743  taking risks out of the corporation by maintaining or increasing
 1744  voluntary writings is relieved, wholly or partially, from
 1745  assessments under sub-subparagraph (b)3.a.
 1746         b.Beginning January 1, 2008, Any program the corporation
 1747  adopts for the payment of bonuses to an insurer for each risk
 1748  the insurer removes from the corporation must shall comply with
 1749  s. 627.3511(2) and may not exceed the amount referenced in s.
 1750  627.3511(2) for each risk removed. The corporation may consider
 1751  any prudent and not unfairly discriminatory approach to reducing
 1752  corporation writings, and may adopt a credit against assessment
 1753  liability or other liability that provides an incentive for
 1754  insurers to take risks out of the corporation and to keep risks
 1755  out of the corporation by maintaining or increasing voluntary
 1756  writings in counties or areas in which corporation risks are
 1757  highly concentrated and a program to provide a formula under
 1758  which an insurer voluntarily taking risks out of the corporation
 1759  by maintaining or increasing voluntary writings will be relieved
 1760  wholly or partially from assessments under sub-subparagraph
 1761  (b)3.a. However, Any “take-out bonus” or payment to an insurer
 1762  must be conditioned on the property being insured for at least 5
 1763  years by the insurer, unless canceled or nonrenewed by the
 1764  policyholder. If the policy is canceled or nonrenewed by the
 1765  policyholder before the end of the 5-year period, the amount of
 1766  the take-out bonus must be prorated for the time period the
 1767  policy was insured. If When the corporation enters into a
 1768  contractual agreement for a take-out plan, the producing agent
 1769  of record of the corporation policy is entitled to retain any
 1770  unearned commission on such policy, and the insurer shall
 1771  either:
 1772         (I) Pay to the producing agent of record of the policy, for
 1773  the first year, an amount which is the greater of the insurer’s
 1774  usual and customary commission for the type of policy written or
 1775  a policy fee equal to the usual and customary commission of the
 1776  corporation; or
 1777         (II) Offer to allow the producing agent of record of the
 1778  policy to continue servicing the policy for at least a period of
 1779  not less than 1 year and offer to pay the agent the insurer’s
 1780  usual and customary commission for the type of policy written.
 1781  If the producing agent is unwilling or unable to accept
 1782  appointment by the new insurer, the new insurer shall pay the
 1783  agent in accordance with sub-sub-subparagraph (I).
 1784         c.b. Any credit or exemption from regular assessments
 1785  adopted under this subparagraph shall last up to no longer than
 1786  the 3 years after following the cancellation or expiration of
 1787  the policy by the corporation. With the approval of the office,
 1788  the board may extend such credits for an additional year if the
 1789  insurer guarantees an additional year of renewability for all
 1790  policies removed from the corporation, or for 2 additional years
 1791  if the insurer guarantees 2 additional years of renewability for
 1792  all policies so removed.
 1793         d.c.A There shall be no credit, limitation, exemption, or
 1794  deferment from emergency assessments to be collected from
 1795  policyholders pursuant to sub-subparagraph (b)3.d. is
 1796  prohibited.
 1797         4. The corporation plan shall provide for the deferment, in
 1798  whole or in part, of the assessment of an assessable insurer,
 1799  other than an emergency assessment collected from policyholders
 1800  pursuant to sub-subparagraph (b)3.d., if the office finds that
 1801  payment of the assessment would endanger or impair the solvency
 1802  of the insurer. If In the event an assessment against an
 1803  assessable insurer is deferred in whole or in part, the amount
 1804  by which such assessment is deferred may be assessed against the
 1805  other assessable insurers in a manner consistent with the basis
 1806  for assessments set forth in paragraph (b).
 1807         5. Effective July 1, 2007, In order to evaluate the costs
 1808  and benefits of approved take-out plans, if the corporation pays
 1809  a bonus or other payment to an insurer for an approved take-out
 1810  plan, it shall maintain a record of the address or such other
 1811  identifying information on the property or risk removed in order
 1812  to track if and when the property or risk is later insured by
 1813  the corporation.
 1814         6. Any policy taken out, assumed, or removed from the
 1815  corporation is, as of the effective date of the take-out,
 1816  assumption, or removal, direct insurance issued by the insurer
 1817  and not by the corporation, even if the corporation continues to
 1818  service the policies. This subparagraph applies to policies of
 1819  the corporation and not policies taken out, assumed, or removed
 1820  from any other entity.
 1821         6. The corporation may adopt one or more programs to
 1822  encourage authorized insurers to remove policies from the
 1823  corporation through a loan from the corporation to an insurer
 1824  secured by a surplus note that contains such necessary and
 1825  reasonable provisions as the corporation requires. Such surplus
 1826  note is subject to the review and approval of the office
 1827  pursuant to s. 628.401. The corporation may include, but is not
 1828  limited to, provisions regarding the maximum size of a loan to
 1829  an insurer, capital matching requirements, the relationship
 1830  between the aggregate number of policies or amount of loss
 1831  exposure removed from the association and the amount of a loan,
 1832  retention requirements related to policies removed from the
 1833  corporation, and limitations on the number of insurers receiving
 1834  loans from the corporation under any one management group in
 1835  whatever form or arrangement. If a loan secured by a surplus
 1836  note is provided to a new mutual insurance company, the
 1837  corporation may require the board of the new mutual insurer to
 1838  have a majority of independent board members, may restrict the
 1839  ability of the new mutual insurer to convert to a stock insurer
 1840  while the mutual insurer owes any principal or interest under
 1841  the surplus note to the corporation, establish a capital match
 1842  requirement of up to $1 of private capital for each $4 of the
 1843  corporation’s loan to a new mutual insurer, and limit the
 1844  eligibility of a new mutual insurer for a waiver of the ceding
 1845  commission traditionally associated with take-out programs from
 1846  the corporation to those new mutual insurers that agree
 1847  contractually to maintain an expense ratio below 20 per cent of
 1848  written premium. For this purpose, the term “expense ratio”
 1849  means the sum of agent commissions and other acquisition
 1850  expenses; general and administrative expenses; and premium
 1851  taxes, licenses, and fees, divided by the gross written premium.
 1852         Section 9. Effective January 1, 2014, paragraph (n) of
 1853  subsection (6) of section 627.351, Florida Statutes, is amended
 1854  to read:
 1855         627.351 Insurance risk apportionment plans.—
 1856         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 1857         (n)1. Rates for coverage provided by the corporation must
 1858  be actuarially sound and subject to s. 627.062, Except as
 1859  otherwise provided in this paragraph, rates for coverage
 1860  provided by the corporation must be actuarially sound and not
 1861  competitive with approved rates charged in the admitted
 1862  voluntary market in order for the corporation to function as a
 1863  residual market mechanism that provides insurance only if
 1864  insurance cannot be procured in the voluntary market.
 1865         a. In establishing actuarially sound rates the corporation
 1866  shall include an appropriate catastrophe risk load factor that
 1867  reflects the actual catastrophic risk exposure retained by the
 1868  corporation.
 1869         b. Rates for personal and commercial lines residential
 1870  policies, other than mobile home coverage, and commercial lines
 1871  nonresidential policies are not competitive with approved rates
 1872  charged in the admitted voluntary market if the average rates of
 1873  the corporation for each rating territory are no lower than the
 1874  average rates charged by the insurer that had the highest
 1875  average rate in that rating territory among the 20 admitted
 1876  insurers with the greatest total direct written premium in the
 1877  state for that line of business in the preceding year.
 1878         c. Rates for mobile home coverage are not competitive with
 1879  approved rates charged in the admitted voluntary market if the
 1880  average rates of the corporation for mobile home coverages are
 1881  no lower than the average rates charged by the insurer that had
 1882  the highest average rate in that rating territory among the 5
 1883  admitted insurers with the greatest total written premium for
 1884  mobile home owner’s policies in the state in the preceding year.
 1885  The corporation shall file its recommended rates with the office
 1886  at least annually. The corporation shall provide any additional
 1887  information regarding the rates which the office requires. The
 1888  office shall consider the recommendations of the board and issue
 1889  a final order establishing the rates for the corporation within
 1890  45 days after the recommended rates are filed. The corporation
 1891  may not pursue an administrative challenge or judicial review of
 1892  the final order of the office.
 1893         d. The requirement that rates for coverage provided by the
 1894  corporation not be competitive with approved rates charged in
 1895  the admitted voluntary market does not apply to new and renewal
 1896  policies covered by the corporation in territories where the
 1897  office determines there is not a reasonable degree of
 1898  competition. The corporation rates in such territories must be
 1899  actuarially sound.
 1900         2. In addition to the rates otherwise determined pursuant
 1901  to this paragraph, the corporation shall impose and collect an
 1902  amount equal to the premium tax provided in s. 624.509 to
 1903  augment the financial resources of the corporation.
 1904         3. After the public hurricane loss-projection model under
 1905  s. 627.06281 has been found to be accurate and reliable by the
 1906  Florida Commission on Hurricane Loss Projection Methodology, the
 1907  model shall serve as the minimum benchmark for determining the
 1908  windstorm portion of the corporation’s rates. This subparagraph
 1909  does not require or allow the corporation to adopt rates lower
 1910  than the rates otherwise required or allowed by this paragraph.
 1911         4. The rate filings for the corporation which were approved
 1912  by the office and took effect January 1, 2007, are rescinded,
 1913  except for those rates that were lowered. As soon as possible,
 1914  the corporation shall begin using the lower rates that were in
 1915  effect on December 31, 2006, and provide refunds to
 1916  policyholders who paid higher rates as a result of that rate
 1917  filing. The rates in effect on December 31, 2006, remain in
 1918  effect for the 2007 and 2008 calendar years except for any rate
 1919  change that results in a lower rate. The next rate change that
 1920  may increase rates shall take effect pursuant to a new rate
 1921  filing recommended by the corporation and established by the
 1922  office, subject to this paragraph.
 1923         5. Beginning on July 15, 2009, and annually thereafter, the
 1924  corporation must make a recommended actuarially sound rate
 1925  filing for each personal and commercial line of business it
 1926  writes, to be effective no earlier than January 1, 2010.
 1927         3.6.Beginning on or after January 1, 2010, and
 1928  notwithstanding the board’s recommended rates and the office’s
 1929  final order regarding the corporation’s filed rates under
 1930  subparagraph 1., The corporation shall annually implement a rate
 1931  increase which, except for sinkhole coverage, does not exceed 10
 1932  percent for any territory single policy issued by the
 1933  corporation, excluding coverage changes and surcharges. This
 1934  subparagraph is limited to:
 1935         a. Personal lines residential policies that have a dwelling
 1936  replacement cost of less than $300,000 and cover homestead
 1937  personal residential properties or personal residential
 1938  properties that are occupied by renters as a permanent
 1939  residence, that were initially insured by the corporation before
 1940  July 1, 2013, and that have been continuously insured by the
 1941  corporation since that date.
 1942         b. Personal lines residential wind-only policies that have
 1943  a dwelling replacement cost of less than $300,000 and cover
 1944  homestead personal residential properties, or personal
 1945  residential properties that are occupied by renters as a
 1946  permanent resident, that were initially insured by the
 1947  corporation before July 1, 2013, and that have been continuously
 1948  insured by the corporation since that date.
 1949         c. Commercial lines residential properties that were
 1950  initially insured by the corporation before July 1, 2013, and
 1951  that have been continuously insured by the corporation since
 1952  that date.
 1953         4. The corporation shall also implement the following rate
 1954  increases:
 1955         a.7.The corporation may also implement An increase to
 1956  reflect the effect on the corporation of the cash buildup factor
 1957  pursuant to s. 215.555(5)(b).
 1958         b. An increase of up to 3 percent, which may be used to
 1959  procure catastrophe reinsurance or other risk transfer
 1960  mechanisms. Such increase must reflect the actual cost of the
 1961  procurement of catastrophe reinsurance or other risk transfer
 1962  mechanisms. In any year for which the 3 percent increase is
 1963  imposed, there must be a corresponding 3 percent decrease, 1
 1964  percent per account, from the Citizens policyholder surcharge in
 1965  (b)3.i.
 1966         5.8. The corporation’s implementation of rates as
 1967  prescribed in subparagraph 3. 6. shall cease for any line of
 1968  business written by the corporation upon the corporation’s
 1969  implementation of the rates described in subparagraph 1.
 1970  actuarially sound rates. Thereafter, the corporation shall
 1971  annually make a recommended actuarially sound rate filing
 1972  implementing such rates for each commercial and personal line of
 1973  business the corporation writes.
 1974         6. The corporation shall annually certify to the office
 1975  that its rates comply with the requirements of this paragraph.
 1976  If any adjustment in the rates or rating factors of the
 1977  corporation is necessary to ensure such compliance, the
 1978  corporation shall make and implement such adjustments and file
 1979  its revised rates and rating factors with the office. If the
 1980  office thereafter determines that the revised rates and rating
 1981  factors fail to comply with this paragraph, it shall notify the
 1982  corporation and require the corporation to amend its rates or
 1983  rating factors in conjunction with its next rate filing. The
 1984  office must notify the corporation by electronic means of any
 1985  rate filing it approves for any insurer among the insurers
 1986  referred to in this paragraph.
 1987         7. By January 1, 2014, the board shall provide
 1988  recommendations to the Legislature on how to provide relief to a
 1989  policyholder whose premium reflects the full rate required under
 1990  subparagraph 1. and who demonstrates a financial need at the
 1991  time of application or renewal.
 1992         Section 10. Section 627.3518, Florida Statutes, is created
 1993  to read:
 1994         627.3518Citizens Property Insurance Corporation
 1995  clearinghouse.—The Legislature recognizes that Citizens Property
 1996  Insurance Corporation has authority to establish a clearinghouse
 1997  as a separate organizational unit within the corporation for the
 1998  purpose of determining the eligibility of new and renewal risks
 1999  seeking coverage through the corporation and facilitating the
 2000  identification and diversion of ineligible applicants and
 2001  current policyholders from the corporation into the voluntary
 2002  insurance market. The purpose of this section is to augment that
 2003  authority by providing a framework for the corporation to
 2004  implement such program by July 1, 2013.
 2005         (1) DEFINITIONS.—As used in this section, the term:
 2006         (a) “Clearinghouse” means the clearinghouse diversion
 2007  program created under this section.
 2008         (b) “Corporation” means Citizens Property Insurance
 2009  Corporation.
 2010         (c) “Exclusive agent” means any licensed insurance agent
 2011  who has, by contract, agreed to act exclusively for one company
 2012  or group of affiliated insurance companies, and who is
 2013  disallowed by that contract to directly write for any other
 2014  unaffiliated insurer absent express consent from the company or
 2015  group of affiliated companies.
 2016         (d) “Independent agent” means a licensed insurance agent
 2017  who is not required by contract to act only on behalf of one
 2018  company or group of affiliated insurance companies.
 2019         (2) The clearinghouse shall have all the rights and
 2020  responsibilities in carrying out its duties as a licensed
 2021  general lines agent, but is not required to employ or engage a
 2022  licensed general lines agent or maintain an insurance agency
 2023  license in order to solicit and place insurance coverage. In
 2024  establishing the clearinghouse the corporation:
 2025         (a) Shall require all new applications for coverage and all
 2026  policies up for renewal to be submitted to the clearinghouse to
 2027  facilitate obtaining an offer of coverage from an authorized
 2028  insurer before binding or renewing coverage with the
 2029  corporation.
 2030         (b) Shall develop an enhanced application for obtaining
 2031  information that will assist private insurers in determining
 2032  whether or not to make an offer of coverage through the
 2033  clearinghouse.
 2034         (c) Shall require all new applications for coverage to be
 2035  subject to a 48-hour period that allows a private insurer
 2036  participating in the clearinghouse to select applicants for
 2037  coverage before the application is submitted to the corporation
 2038  for coverage. The insurer may issue a binder to a selected
 2039  applicant for at least 30 days, but not more than 60 days.
 2040         (d) Notwithstanding s. 626.916(1), if an applicant for new
 2041  or renewal coverage from the corporation does not receive an
 2042  offer of coverage from an admitted insurer, the applicant may
 2043  accept an offer from a surplus lines insurer eligible under ss.
 2044  626.913-626.937.
 2045         (e) Shall provide funds to operate the clearinghouse. The
 2046  corporation may charge a reasonable fee as a percentage of an
 2047  agent’s commission to offset, or partially offset the costs of
 2048  the clearinghouse. However, insurers participating in the
 2049  clearinghouse are not required to pay a fee to use the
 2050  clearinghouse to renew policies initially written through the
 2051  clearinghouse.
 2052         (f) Shall enter into contracts with licensed property
 2053  insurance companies operating in this state to participate in
 2054  the clearinghouse and accept appointments from voluntary market
 2055  insurers.
 2056         (g) May employ or otherwise contract with individuals or
 2057  other entities to provide administrative or professional
 2058  services in accordance with purchasing requirements set forth in
 2059  corporation’s plan under s. 627.351(6)(c).
 2060         (3) A licensed insurer may participate in the
 2061  clearinghouse. Insurers making offers of coverage to new
 2062  applicants or renewing policyholders through the clearinghouse:
 2063         (a) Are not required to individually appoint an agent whose
 2064  customer is bound and underwritten through the clearinghouse for
 2065  as long as that policy remains with the insurer. Insurers may
 2066  appoint an agent whose customer is initially underwritten and
 2067  bound through the clearinghouse. If an insurer accepts a policy
 2068  from an agent who is not appointed and thereafter elects to
 2069  accept a policy from that agent which was not submitted through
 2070  the program, the provisions of s. 626.112 requiring appointment
 2071  apply to that agent.
 2072         (b) Shall enter into a limited agency agreement with each
 2073  agent whose customer is underwritten and bound through the
 2074  clearinghouse and who is not appointed in accordance with this
 2075  subsection.
 2076         (c) Shall enter into its standard agency agreement with
 2077  each agent whose customer is underwritten and bound through the
 2078  clearinghouse if that agent has been appointed by the insurer
 2079  pursuant to s. 626.112.
 2080         (d) Must comply with the s. 627.4133(2).
 2081         (4) Notwithstanding section 627.3517, if an applicant for
 2082  new coverage from the corporation is offered coverage from an
 2083  admitted insurer through the clearinghouse or through an
 2084  alternative option under subsection (7) at a rate that is at or
 2085  below the eligibility threshold established in s. 627.351(c)5.,
 2086  the risk is not eligible for coverage with the corporation.
 2087  Notwithstanding any other provisions of law, if a policyholder
 2088  at renewal is provided an offer of coverage from an admitted
 2089  insurer through the program or through an alternative option
 2090  under subsection (7), and the offer is no more than 15 percent
 2091  above the policyholder’s premium for comparable coverage through
 2092  the corporation, the risk is not eligible for coverage with the
 2093  corporation.
 2094         (5) Independent insurance agents submitting new
 2095  applications for coverage or who are the agent of record on a
 2096  renewal policy submitted to the clearinghouse:
 2097         (a) Notwithstanding s. 626.112, are not required to be
 2098  appointed by an insurer participating in the clearinghouse for
 2099  policies written solely through the clearinghouse.
 2100         (b) May accept an appointment from an insurer participating
 2101  in the clearinghouse.
 2102         (c) Must enter into a standard or limited agency agreement
 2103  with the insurer, at the insurer’s option.
 2104         (d) Must maintain the exclusive use of expirations,
 2105  records, or other written or electronic information directly
 2106  related to such applications or renewals written through the
 2107  corporation or through an insurer participating in the
 2108  clearinghouse. Such expirations, records, or other written or
 2109  electronic information may be used to review an application,
 2110  issue a policy, or for any other purpose necessary for placing
 2111  such business through the clearinghouse.
 2112         (6) Exclusive agents submitting new applications for
 2113  coverage or that are the agent of record on a renewal policy
 2114  submitted to the program:
 2115         (a) Notwithstanding s. 626.112, are not required to be
 2116  appointed by an insurer participating in the clearinghouse for
 2117  policies written solely through the clearinghouse.
 2118         (b) May provide the new applicant or renewing policyholder
 2119  the opportunity to accept an offer of coverage from an insurer
 2120  that is participating in the clearinghouse and that had a
 2121  limited servicing agreement approved by the exclusive agent's
 2122  insurer.
 2123         (c) Must enter into only a limited servicing agreement with
 2124  the insurer making an offer of coverage.
 2125         (d) Must maintain the exclusive use of expirations,
 2126  records, or other written or electronic information directly
 2127  related to such applications or renewals written through the
 2128  corporation or through an insurer participating in the program,
 2129  notwithstanding s. 627.351(6)(c)5.a.(I)(B) and (II)(B). Such
 2130  expirations, records, or other written or electronic information
 2131  may be used to review an application, issue a policy, or for any
 2132  other purpose necessary for placing such business through the
 2133  clearinghouse.
 2134         (7) The corporation may recognize private entities that the
 2135  independent agent elects to use as an alternative to submitting
 2136  a risk to the clearinghouse. An alternative option allowed under
 2137  this subsection shall obtain offers of coverage from authorized
 2138  insurers for new applicants seeking coverage from the
 2139  corporation and for corporation policyholders on renewal. The
 2140  alternative option may not be used as a replacement for the
 2141  clearinghouse. Neither the clearinghouse nor a private entity
 2142  operating under this subsection may prohibit insurers from
 2143  electing to participate in more than one program or alternative,
 2144  and an insurer participating in the private entity alternative
 2145  must also participate in the clearinghouse.
 2146         (8) Submission of an application for coverage by the
 2147  corporation to the clearinghouse does not constitute the binding
 2148  of coverage by the corporation, and failure of the clearinghouse
 2149  to obtain an offer of coverage by an insurer is not considered
 2150  acceptance of coverage of the risk by the corporation.
 2151         Section 11. Subsection (1) of section 627.405, Florida
 2152  Statutes, is amended to read:
 2153         627.405 Insurable interest; property.—
 2154         (1) A No contract for property of insurance of property or
 2155  of any interest in property or arising from property is not
 2156  shall be enforceable as to the insurance except for the benefit
 2157  of persons having an insurable interest in the things insured as
 2158  at the time of the loss. Policyholders under a contract of
 2159  property insurance may assign benefits to be received under that
 2160  contract consistent with, and subject to, the conditions in the
 2161  policy.
 2162         Section 12. Subsection (1) of section 627.410, Florida
 2163  Statutes, is amended to read:
 2164         627.410 Filing, approval of forms.—
 2165         (1) A No basic insurance policy or annuity contract form,
 2166  or application form where written application is required and is
 2167  to be made a part of the policy or contract, or group
 2168  certificates issued under a master contract delivered in this
 2169  state, or printed rider or endorsement form or form of renewal
 2170  certificate, may not shall be delivered or issued for delivery
 2171  in this state, unless the form has been filed with the office by
 2172  or on in behalf of the insurer that which proposes to use such
 2173  form and has been approved by the office or filed pursuant to s.
 2174  627.4102. This provision does not apply to surety bonds or to
 2175  policies, riders, endorsements, or forms of unique character
 2176  that which are designed for and used with relation to insurance
 2177  on upon a particular subject, (other than as to health
 2178  insurance), or that which relate to the manner of distributing
 2179  distribution of benefits or to the reservation of rights and
 2180  benefits under life or health insurance policies and are used at
 2181  the request of the individual policyholder, contract holder, or
 2182  certificateholder. For As to group insurance policies
 2183  effectuated and delivered outside this state but covering
 2184  persons resident in this state, the group certificates to be
 2185  delivered or issued for delivery in this state shall be filed
 2186  with the office for information purposes only.
 2187         Section 13. Section 627.4102, Florida Statutes, is created
 2188  to read:
 2189         627.4102 Informational filing of forms; certification.—
 2190         (1) Property and casualty forms, except workers’
 2191  compensation forms, are exempt from the approval process
 2192  required under s. 627.410 if:
 2193         (a) The form has been electronically submitted to the
 2194  office in an informational filing made through I-File 30 days
 2195  before the delivery or issuance for delivery of the form within
 2196  this state; and
 2197         (b) At the time the informational filing is made, a
 2198  notarized certification is attached to the filing which
 2199  certifies that each form within the filing is in compliance with
 2200  all applicable state laws and rules. The certification must be
 2201  on the insurer’s letterhead and signed and dated by the
 2202  insurer’s president, chief executive officer, general counsel,
 2203  or an employee of the insurer responsible for the filing on
 2204  behalf of the insurer. The certification must contain the
 2205  following statement, and no other language: “I, ...[name]..., as
 2206  ...[title]... of ...[insurer name]..., do hereby certify that
 2207  this form filing has been thoroughly and diligently reviewed by
 2208  me and by all appropriate company personnel, as well as company
 2209  consultants, if applicable, and certify that each form contained
 2210  within the filing is in compliance with all applicable Florida
 2211  laws and rules. Should a form be found that is not in compliance
 2212  with Florida laws and rules, I acknowledge that the Office of
 2213  Insurance Regulation shall disapprove the form.”
 2214         (2) If the filing contains a form that is not in compliance
 2215  with state laws and rules, the form filing, at the discretion of
 2216  the office, is subject to prior review and approval pursuant to
 2217  s. 627.410, and the period for review and approval established
 2218  under s. 627.410(2) begins to run on the date the office
 2219  notifies the insurer of the discovery of the noncompliant form.
 2220         (3) A Notice of Change in Policy Terms form required under
 2221  s. 627.43141(2) shall be filed as a part of the informational
 2222  filing for a renewal policy that contains a change. All
 2223  modifications, additions, or deletions of terms, coverages,
 2224  duties, or conditions shall be enumerated within the body of the
 2225  form. If a renewal policy that was certified requires such form,
 2226  the insurer must provide a copy to the named insured’s agent
 2227  pursuant to s. 627.43141(6)(c) before or upon providing the form
 2228  to the named insured.
 2229         (4) This section does not preclude an insurer from electing
 2230  to file any form for approval under s. 627.410 which would
 2231  otherwise be exempt under this section.
 2232         (5) The provisions of this section supersede and replace
 2233  the existing order issued by the office exempting specified
 2234  property and casualty forms from the requirements of s. 627.410.
 2235         Section 14. Except as otherwise expressly provided in the
 2236  act, this act shall take effect July 1, 2013.

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