Bill Text: FL S1770 | 2013 | Regular Session | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Property Insurance

Spectrum: Committee Bill

Status: (Passed) 2013-05-29 - Chapter No. 2013-60, companion bill(s) passed, see SB 1850 (Ch. 2013-61) [S1770 Detail]

Download: Florida-2013-S1770-Comm_Sub.html
       Florida Senate - 2013                             CS for SB 1770
       
       
       
       By the Committees on Appropriations; and Banking and Insurance
       
       
       
       
       576-03539-13                                          20131770c1
    1                        A bill to be entitled                      
    2         An act relating to property insurance; amending s.
    3         215.555, F.S.; changing the name of the Florida
    4         Hurricane Catastrophe Fund Finance Corporation to the
    5         State Board of Administration Finance Corporation;
    6         creating s. 215.5551, F.S.; creating the Florida
    7         Catastrophe Risk Capital Access Facility to increase
    8         the access of small domestic insurers to risk-capital
    9         markets; providing intent; establishing the facility
   10         in the State Board of Administration; providing the
   11         purposes of the facility; requiring the facility to be
   12         funded entirely by participating insurers after
   13         initial apportionment; providing limitations;
   14         providing for a board of directors; providing immunity
   15         from liability; providing for an annual report;
   16         amending s. 624.155, F.S.; providing that Citizens
   17         Property Insurance Corporation is an insurer subject
   18         to civil actions as an agent of the state covered by
   19         sovereign immunity; amending s. 626.752, F.S.,
   20         relating to the exchange of business between an agent
   21         and insurer; providing an exemption from the
   22         requirements of that section to the corporation or
   23         certain private entities under certain circumstances;
   24         amending s. 627.062, F.S.; requiring the Office of
   25         Insurance Regulation to calculate and publish
   26         insurance inflation factors for use in residential
   27         property insurance filings; prohibiting the office
   28         from disapproving a rate as excessive due to the
   29         insurer’s purchase of reinsurance for certain
   30         purposes; deleting obsolete provisions; conforming
   31         cross-references; amending s. 627.0628, F.S.;
   32         requiring the Florida Commission on Hurricane Loss
   33         Projection Methodology to consider methods for
   34         improving the accuracy of wind mitigation discounts;
   35         amending s. 627.0629, F.S.; requiring insurers to
   36         provide notice of mitigation discounts in a
   37         residential property insurance rate filing; revising
   38         the criteria for when the office may hold a public
   39         hearing regarding a rate filing; amending s. 627.171,
   40         F.S.; allowing a consent to an excess rate to apply to
   41         subsequent policy renewals; limiting the allowable
   42         amount of excess rates to counties where there is no
   43         competition; amending s. 627.351, F.S.; revising
   44         legislative intent with respect to the corporation;
   45         reducing the value of residential structures that can
   46         be covered by the corporation; revising the
   47         corporation’s eligibility criteria for structures
   48         located seaward of the coastal construction control
   49         line; requiring the corporation’s board of governors
   50         to concur with certain decisions by the executive
   51         director; providing for risk-sharing agreements
   52         between the corporation and other insurers and
   53         specifying the requirements and limitations of such
   54         agreements; revising provisions relating to the
   55         appointment of the board of governors and the
   56         executive director; deleting provisions allowing a
   57         policyholder removed from the corporation to remain
   58         eligible for coverage regardless of an offer of
   59         coverage from an authorized insurer; revising
   60         corporation criteria for appointing agents; requiring
   61         disclosure of potential corporation surcharges and
   62         policyholder obligations to try and obtain private
   63         market coverage; revising provisions relating to the
   64         Auditor General’s review of the corporation; requiring
   65         the board to contract with an independent auditing
   66         firm to conduct performance audits; authorizing the
   67         corporation to adopt programs that encourage insurers
   68         to remove policies from the corporation through a loan
   69         secured by a surplus note; requiring the corporation
   70         to have an inspector general; providing for
   71         appointment; providing duties; requiring an annual
   72         report to the Legislature; revising provisions
   73         relating to purchases by the corporation; providing
   74         that the corporation is subject to state agency
   75         purchasing requirements; requiring the corporation to
   76         provide notice of purchasing decisions; providing
   77         procedures for protesting such decisions; providing
   78         applicability; revising the corporation’s rate
   79         standards; requiring that corporation rates be
   80         competitive with approved rates charged in the
   81         admitted market, actuarially sound, and include a
   82         catastrophe risk load factor; providing exceptions;
   83         limiting rate increases for specified personal and
   84         commercial lines residential policies and allowing an
   85         additional rate increase; requiring the corporation to
   86         annually certify its rates; requiring the board of
   87         directors to provide recommendations to the
   88         Legislature on ways of providing rate relief to those
   89         who demonstrate a financial need; deleting obsolete
   90         provisions; creating s. 627.3518, F.S.; establishing a
   91         clearinghouse within the corporation for identifying
   92         and diverting insurance coverage to private insurers;
   93         providing definitions; providing requirements and
   94         duties of the corporation, insurers, and agents;
   95         providing for an alternative to submitting risks to
   96         the corporation; establishing a temporary keepout
   97         program that allows authorized insurers to provide
   98         coverage to applicants for coverage through the
   99         corporation through the market assistance program
  100         until the clearinghouse is operational; providing
  101         program components; providing for expiration; amending
  102         s. 627.405, F.S.; authorizing policyholders to assign
  103         benefits subject to conditions in the policy; amending
  104         s. 627.410, F.S.; conforming provisions to changes
  105         made by the act; providing effective dates.
  106  
  107  Be It Enacted by the Legislature of the State of Florida:
  108  
  109         Section 1. Paragraph (n) of subsection (2) and paragraph
  110  (d) of subsection (6) of section 215.555, Florida Statutes, are
  111  amended to read:
  112         215.555 Florida Hurricane Catastrophe Fund.—
  113         (2) DEFINITIONS.—As used in this section:
  114         (n) “Corporation” means the State Board of Administration
  115  Florida Hurricane Catastrophe Fund Finance Corporation created
  116  in paragraph (6)(d).
  117         (6) REVENUE BONDS.—
  118         (d) State Board of Administration Florida Hurricane
  119  Catastrophe Fund Finance Corporation.—
  120         1. In addition to the findings and declarations in
  121  subsection (1), the Legislature also finds and declares that:
  122         a. The public benefits corporation created under this
  123  paragraph will provide a mechanism necessary for the cost
  124  effective and efficient issuance of bonds. This mechanism will
  125  eliminate unnecessary costs in the bond issuance process,
  126  thereby increasing the amounts available for to pay
  127  reimbursement for losses to property sustained as a result of
  128  hurricane damage.
  129         b. The purpose of such bonds is to fund reimbursements
  130  through the Florida Hurricane Catastrophe Fund to pay for the
  131  costs of construction, reconstruction, repair, restoration, and
  132  other costs associated with damage to properties of
  133  policyholders of covered policies due to the occurrence of a
  134  hurricane.
  135         c. The efficacy of the financing mechanism will be enhanced
  136  by the corporation’s ownership of the assessments, by the
  137  insulation of the assessments from possible bankruptcy
  138  proceedings, and by covenants of the state with the
  139  corporation’s bondholders.
  140         2.a.The State Board of Administration Finance Corporation
  141  There is created, which is a public benefits corporation and,
  142  which is an instrumentality of the state, to be known as the
  143  Florida Hurricane Catastrophe Fund Finance Corporation. The
  144  State Board of Administration Finance Corporation is for all
  145  purposes the successor to the Florida Hurricane Catastrophe Fund
  146  Finance Corporation.
  147         a.b. The corporation shall operate under a five-member
  148  board of directors consisting of the Governor or a designee, the
  149  Chief Financial Officer or a designee, the Attorney General or a
  150  designee, the director of the Division of Bond Finance of the
  151  State Board of Administration, and the Chief Operating Officer
  152  senior employee of the State Board of Administration responsible
  153  for operations of the Florida Hurricane Catastrophe Fund.
  154         b.c. The corporation has all of the powers of corporations
  155  under chapter 607 and under chapter 617, subject only to the
  156  provisions of this subsection.
  157         c.d. The corporation may issue bonds and engage in such
  158  other financial transactions as are necessary to provide
  159  sufficient funds to achieve the purposes of this section.
  160         d.e. The corporation may invest in any of the investments
  161  authorized under s. 215.47.
  162         e.f. There is shall be no liability on the part of, and no
  163  cause of action shall arise against, any board members or
  164  employees of the corporation for any actions taken by them in
  165  the performance of their duties under this paragraph.
  166         3.a. In actions under chapter 75 to validate any bonds
  167  issued by the corporation, the notice required by s. 75.06 must
  168  shall be published in two newspapers of general circulation in
  169  the state, and the complaint and order of the court shall be
  170  served only on the State Attorney of the Second Judicial
  171  Circuit.
  172         b. The state hereby covenants with holders of bonds of the
  173  corporation that the state will not repeal or abrogate the power
  174  of the board to direct the Office of Insurance Regulation to
  175  levy the assessments and to collect the proceeds of the revenues
  176  pledged to the payment of such bonds as long as any such bonds
  177  remain outstanding unless adequate provision has been made for
  178  the payment of such bonds pursuant to the documents authorizing
  179  the issuance of the such bonds.
  180         c.4. The bonds of the corporation are not a debt of the
  181  state or of any political subdivision, and neither the state nor
  182  any political subdivision is liable on such bonds. The
  183  corporation may not does not have the power to pledge the
  184  credit, the revenues, or the taxing power of the state or of any
  185  political subdivision. The credit, revenues, or taxing power of
  186  the state or of any political subdivision may shall not be
  187  deemed to be pledged to the payment of any bonds of the
  188  corporation.
  189         d.5.a. The property, revenues, and other assets of the
  190  corporation; the transactions and operations of the corporation
  191  and the income from such transactions and operations; and all
  192  bonds issued under this paragraph and interest on such bonds are
  193  exempt from taxation by the state and any political subdivision,
  194  including the intangibles tax under chapter 199 and the income
  195  tax under chapter 220. This exemption does not apply to any tax
  196  imposed by chapter 220 on interest, income, or profits on debt
  197  obligations owned by corporations other than the State Board of
  198  Administration Florida Hurricane Catastrophe Fund Finance
  199  Corporation.
  200         e.b. All bonds of the corporation are shall be and
  201  constitute legal investments without limitation for all public
  202  bodies of this state; for all banks, trust companies, savings
  203  banks, savings associations, savings and loan associations, and
  204  investment companies; for all administrators, executors,
  205  trustees, and other fiduciaries; for all insurance companies and
  206  associations and other persons carrying on an insurance
  207  business; and for all other persons who are now or may hereafter
  208  be authorized to invest in bonds or other obligations of the
  209  state and are shall be and constitute eligible securities to be
  210  deposited as collateral for the security of any state, county,
  211  municipal, or other public funds. This sub-subparagraph shall be
  212  considered as additional and supplemental authority and may
  213  shall not be limited without specific reference to this sub
  214  subparagraph.
  215         4.6. The corporation and its corporate existence shall
  216  continue until terminated by law; however, no such law shall
  217  take effect as long as the corporation has bonds outstanding
  218  unless adequate provision has been made for the payment of such
  219  bonds pursuant to the documents authorizing the issuance of such
  220  bonds. Upon termination of the existence of the corporation, all
  221  of its rights and properties in excess of its obligations shall
  222  pass to and be vested in the state.
  223         Section 2. Section 215.5551, Florida Statutes, is created
  224  to read:
  225         215.5551Florida Catastrophe Risk Capital Access Facility.
  226         (1) The Legislature finds that the global market for
  227  catastrophe risk has expanded dramatically, resulting in the
  228  availability of billions of dollars in additional risk capital
  229  for insurers and new and innovative alternative risk-transfer
  230  mechanisms. The Legislature also finds that having access to
  231  additional risk capital and risk-transfer mechanisms provides
  232  insurers providing coverage in this state with an opportunity to
  233  expand their capacity to write additional business and diversify
  234  their catastrophe risk. The Legislature further finds that
  235  despite an expansion in the amount of available global risk
  236  capital, small insurers, particularly smaller domestic insurers,
  237  writing property insurance in this state face substantial
  238  challenges accessing these global markets when the relatively
  239  small amount of risk finance required by any one company is not
  240  economically viable. Therefore, it is the intent of the
  241  Legislature to create a mechanism to facilitate the access of
  242  small domestic insurers to global risk capital markets and risk
  243  transfer mechanisms.
  244         (2) Effective July 1, 2013, the Florida Catastrophe Risk
  245  Capital Access Facility is created within the State Board of
  246  Administration. The facility is not defined nor may it function
  247  as an insurer, reinsurer, or other risk-bearing entity under
  248  state law.
  249         (3) The facility shall:
  250         (a) Aggregate the demand for risk finance from global
  251  capital markets among smaller volume domestic property insurance
  252  companies writing business in this state.
  253         (b) Design and execute risk-transfer tools such as
  254  insurance-linked securities and other securitization models for
  255  participating insurers, and use special purpose vehicles or
  256  protected cells, onshore or offshore, as appropriate, to
  257  increase access to risk capital.
  258         (c) Identify and coordinate appropriate risk-transfer
  259  products and opportunities, initially targeting layers of
  260  coverage below, alongside, and above the portion of the
  261  reinsurance market covered by the Florida Hurricane Catastrophe
  262  Fund.
  263         (d) Establish and maintain regular and ongoing contact with
  264  global risk capital market participants, institutions, and
  265  investors, in order to identify opportunities that satisfy and
  266  coordinate insurer demand for additional risk capital.
  267         (4) After an initial apportionment for startup purposes,
  268  the facility shall be funded entirely by participating insurers
  269  on a pro rata basis.
  270         (5) In conducting its affairs, the facility may not:
  271         (a) Take a position in, or provide financial support for,
  272  risk-transfer transactions;
  273         (b) Be a guarantor of premium or make any other financial
  274  guarantees to participating insurers;
  275         (c) Create contractual obligations on the part of the
  276  state; or
  277         (d) Levy taxes or assessments.
  278         (6) The facility shall be governed by a board of directors
  279  composed of seven members, one from the Department of Financial
  280  Services; one from the State Board of Administration; one from
  281  the Office of Insurance Regulation; three industry members
  282  representing Florida property insurance writers, the reinsurance
  283  community, and the financial securities industry; and one member
  284  appointed by a majority of the board. The board may employ or
  285  contract with such staff and professionals as the board deems
  286  necessary to accomplish its purpose.
  287         (7) There shall be no liability on the part of, and no
  288  cause of action of any nature may arise against, the facility or
  289  its agents or employees, the board of directors, or the
  290  department or office or their representatives for any action
  291  taken by them in the performance of their powers and duties
  292  under this section.
  293         (8) The facility shall submit a report to the Financial
  294  Services Commission by January 1 of each year describing
  295  facility activities and transactions undertaken by participating
  296  insurers.
  297         Section 3. Subsection (1) of section 624.155, Florida
  298  Statutes, is amended and subsection (10) is added to that
  299  section, to read:
  300         624.155 Civil remedy.—
  301         (1) Any person may bring a civil action against an insurer,
  302  including Citizens Property Insurance Corporation, if when such
  303  person is damaged:
  304         (a) By a violation of any of the following provisions by
  305  the insurer:
  306         1. Section 626.9541(1)(i), (o), or (x);
  307         2. Section 626.9551;
  308         3. Section 626.9705;
  309         4. Section 626.9706;
  310         5. Section 626.9707; or
  311         6. Section 627.7283.
  312         (b) By the commission of any of the following acts by the
  313  insurer:
  314         1. Not attempting in good faith to settle claims if when,
  315  under all the circumstances, it could and should have done so,
  316  had it acted fairly and honestly toward its insured and with due
  317  regard for her or his interests;
  318         2. Making claims payments to insureds or beneficiaries not
  319  accompanied by a statement setting forth the coverage under
  320  which payments are being made; or
  321         3. Except as to liability coverages, failing to promptly
  322  settle claims, when the obligation to settle a claim has become
  323  reasonably clear, under one portion of the insurance policy
  324  coverage in order to influence settlements under other portions
  325  of the insurance policy coverage.
  326  
  327  Notwithstanding the provisions of this subsection the above to
  328  the contrary, a person pursuing a remedy under this section need
  329  not prove that such act was committed or performed with such
  330  frequency as to indicate a general business practice.
  331         (10) For the purposes of this section, Citizens Property
  332  Insurance Corporation is an agent of the state covered under s.
  333  768.28.
  334         Section 4. Subsection (4) of section 626.752, Florida
  335  Statutes, is amended to read:
  336         626.752 Exchange of business.—
  337         (4) The foregoing limitations and restrictions do shall not
  338  be construed and shall not apply to the placing of surplus lines
  339  business under the provisions of part VIII, or to the activities
  340  of Citizens Property Insurance Corporation or private entities
  341  referenced under 627.3518(7) when placing new and renewal
  342  business with authorized insurers in accordance with s.627.3518.
  343         Section 5. Subsection (2) and paragraph (d) of subsection
  344  (3) of section 627.062, Florida Statutes, are amended to read:
  345         627.062 Rate standards.—
  346         (2) As to all such classes of insurance:
  347         (a) Insurers or rating organizations shall establish and
  348  use rates, rating schedules, or rating manuals that allow the
  349  insurer a reasonable rate of return on the classes of insurance
  350  written in this state. A copy of rates, rating schedules, rating
  351  manuals, premium credits or discount schedules, and surcharge
  352  schedules, and changes thereto, must be filed with the office in
  353  accordance with under one of the following procedures:
  354         1. If the filing is made at least 90 days before the
  355  proposed effective date and is not implemented during the
  356  office’s review of the filing and any proceeding and judicial
  357  review, such filing is considered a “file and use” filing. In
  358  such case, the office shall finalize its review by issuance of a
  359  notice of intent to approve or a notice of intent to disapprove
  360  within 90 days after receipt of the filing. The notice of intent
  361  to approve and the notice of intent to disapprove constitute
  362  agency action for purposes of the Administrative Procedure Act.
  363  Requests for supporting information, requests for mathematical
  364  or mechanical corrections, or notification to the insurer by the
  365  office of its preliminary findings does not toll the 90-day
  366  period during any such proceedings and subsequent judicial
  367  review. The rate shall be deemed approved if the office does not
  368  issue a notice of intent to approve or a notice of intent to
  369  disapprove within 90 days after receipt of the filing.
  370         2. If the filing is not made in accordance with
  371  subparagraph 1., such filing must be made as soon as
  372  practicable, but within 30 days after the effective date, and is
  373  considered a “use and file” filing. An insurer making a “use and
  374  file” filing is potentially subject to an order by the office to
  375  return to policyholders those portions of rates found to be
  376  excessive to policyholders, as provided in paragraph (i) (h).
  377         3. For all property insurance filings made or submitted
  378  after January 25, 2007, but before May 1, 2012, an insurer
  379  seeking a rate that is greater than the rate most recently
  380  approved by the office shall make a “file and use” filing. For
  381  purposes of this subparagraph, motor vehicle collision and
  382  comprehensive coverages are not considered property coverages.
  383         (b) Upon receiving a rate filing, the office shall review
  384  the filing to determine if a rate is excessive, inadequate, or
  385  unfairly discriminatory. In making that determination, the
  386  office shall, in accordance with generally accepted and
  387  reasonable actuarial techniques, consider the following factors:
  388         1. Past and prospective loss experience within and without
  389  this state.
  390         2. Past and prospective expenses.
  391         3. The degree of competition among insurers for the risk
  392  insured.
  393         4. Investment income reasonably expected by the insurer,
  394  consistent with the insurer’s investment practices, from
  395  investable premiums anticipated from in the filing, plus any
  396  other expected income from currently invested assets
  397  representing the amount expected on unearned premium reserves
  398  and loss reserves. The commission may adopt rules that use using
  399  reasonable techniques of actuarial science and economics to
  400  specify the manner in which insurers calculate investment income
  401  attributable to classes of insurance written in this state and
  402  the manner in which investment income is used to calculate
  403  insurance rates. Such rules manner must allow contemplate
  404  allowances for an underwriting profit factor and full
  405  consideration of investment income which produce a reasonable
  406  rate of return; however, investment income from invested surplus
  407  may not be considered.
  408         5. The reasonableness of the judgment reflected in the
  409  filing.
  410         6. Dividends, savings, or unabsorbed premium deposits
  411  allowed or returned to state Florida policyholders, members, or
  412  subscribers.
  413         7. The adequacy of loss reserves.
  414         8. The cost of reinsurance. The office may not disapprove a
  415  rate as excessive solely due solely to the insurer having
  416  obtained catastrophic reinsurance to cover the insurer’s
  417  estimated 250-year probable maximum loss or any lower level of
  418  loss, or due solely to an admitted carrier purchasing private
  419  reinsurance that would insure against potential deficits within
  420  the Florida Hurricane Catastrophe Fund which the most recent
  421  estimate made pursuant to s. 215.555(4)(c)2. predicts would be
  422  funded through revenue bonds issued under s. 215.555(6).
  423         9. Trend factors, including trends in actual losses per
  424  insured unit for the insurer making the filing.
  425         10. Conflagration and catastrophe hazards, if applicable.
  426         11. Projected hurricane losses, if applicable, which must
  427  be estimated using a model or method found to be acceptable or
  428  reliable by the Florida Commission on Hurricane Loss Projection
  429  Methodology, and as further provided in s. 627.0628.
  430         12. A reasonable margin for underwriting profit and
  431  contingencies.
  432         13. The cost of medical services, if applicable.
  433         14. Other relevant factors that affect the frequency or
  434  severity of claims or expenses.
  435         (c) The office shall calculate and publish insurance
  436  inflation factors based on noncatastrophe direct loss costs for
  437  use in residential property insurance filings. The office shall
  438  update the published factors at least annually and make them
  439  available on its website. The calculation of insurance inflation
  440  factors are not subject to rulemaking under chapter 120.
  441         1. An insurer making a residential property insurance rate
  442  filing that proposes a change in noncatastrophe base rates by a
  443  uniform factor equal to or less than the applicable published
  444  insurance inflation factor, may make a rate filing under s.
  445  627.0645 which consists of a rate certification in lieu of a
  446  full rate filing under paragraph (a). The office shall verify
  447  insurer use of the appropriate published inflation factor and,
  448  if the inflation factor is used appropriately, the filed rates
  449  shall be deemed not excessive.
  450         2. An insurer filing under this paragraph may make a
  451  separate filing pursuant to paragraph (l) to adjust its rates
  452  for reinsurance rates, reinsurance financing costs and products,
  453  and cash buildup factor costs. The insurance inflation factors
  454  do not apply to these filings.
  455         3. This paragraph does not apply to filings made by
  456  Citizens Property Insurance Corporation.
  457         (d)(c) In the case of fire insurance rates, consideration
  458  must be given to the availability of water supplies and the
  459  experience of the fire insurance business during a period of not
  460  less than the most recent 5-year or longer period for which such
  461  experience is available.
  462         (e)(d) If conflagration or catastrophe hazards are
  463  considered by an insurer in its rates or rating plan, including
  464  surcharges and discounts, the insurer must shall establish a
  465  reserve for that portion of the premium allocated to such hazard
  466  and maintain the premium in a catastrophe reserve. Removal of
  467  such premiums from the reserve for purposes other than paying
  468  claims associated with a catastrophe or purchasing reinsurance
  469  for catastrophes must be approved by the office. Any ceding
  470  commission received by an insurer purchasing reinsurance for
  471  catastrophes must be placed in the catastrophe reserve.
  472         (f)(e) After consideration of the rate factors provided in
  473  paragraphs (b), (c), and (d), and (e) the office may find a rate
  474  to be excessive, inadequate, or unfairly discriminatory based
  475  upon the following standards:
  476         1. Rates shall be deemed excessive if they are likely to
  477  produce a profit from Florida business which is unreasonably
  478  high in relation to the risk involved in the class of business
  479  or if expenses are unreasonably high in relation to services
  480  rendered.
  481         2. Rates shall be deemed excessive if, among other things,
  482  the rate structure established by a stock insurance company
  483  provides for replenishment of surpluses from premiums, if the
  484  such replenishment is attributable to investment losses.
  485         3. Rates shall be deemed inadequate if they are clearly
  486  insufficient, together with the investment income attributable
  487  to them, they are clearly insufficient to sustain projected
  488  losses and expenses in the class of business to which they
  489  apply.
  490         4. A rating plan, including discounts, credits, or
  491  surcharges, shall be deemed unfairly discriminatory if it fails
  492  to clearly and equitably reflect consideration of the
  493  policyholder’s participation in a risk management program
  494  adopted pursuant to s. 627.0625.
  495         5. A rate shall be deemed inadequate as to the premium
  496  charged to a risk or group of risks if discounts or credits are
  497  allowed which exceed a reasonable reflection of expense savings
  498  and reasonably expected loss experience from the risk or group
  499  of risks.
  500         6. A rate shall be deemed unfairly discriminatory as to a
  501  risk or group of risks if the application of premium discounts,
  502  credits, or surcharges among such risks does not bear a
  503  reasonable relationship to the expected loss and expense
  504  experience among the various risks.
  505         (g)(f) In reviewing a rate filing, the office may require
  506  the insurer to provide, at the insurer’s expense, all
  507  information necessary to evaluate the condition of the company
  508  and the reasonableness of the filing according to the criteria
  509  enumerated in this section.
  510         (h)(g) The office may at any time review a rate, rating
  511  schedule, rating manual, or rate change; the pertinent records
  512  of the insurer; and market conditions. If the office finds on a
  513  preliminary basis that a rate may be excessive, inadequate, or
  514  unfairly discriminatory, the office shall initiate proceedings
  515  to disapprove the rate and shall so notify the insurer. However,
  516  the office may not disapprove as excessive any rate for which it
  517  has given final approval or which has been deemed approved for 1
  518  year after the effective date of the filing unless the office
  519  finds that a material misrepresentation or material error was
  520  made by the insurer or was contained in the filing. Upon
  521  notification being notified, the insurer or rating organization
  522  shall, within 60 days, file with the office all information
  523  that, in the belief of the insurer or organization, proves the
  524  reasonableness, adequacy, and fairness of the rate or rate
  525  change. The office shall issue a notice of intent to approve or
  526  a notice of intent to disapprove pursuant to paragraph (a)
  527  within 90 days after receipt of the insurer’s initial response.
  528  In such instances and in any administrative proceeding relating
  529  to the legality of the rate, the insurer or rating organization
  530  shall carry the burden of proof of showing, by a preponderance
  531  of the evidence, to show that the rate is not excessive,
  532  inadequate, or unfairly discriminatory. After the office
  533  notifies an insurer that a rate may be excessive, inadequate, or
  534  unfairly discriminatory, unless the office withdraws the
  535  notification, the insurer may not alter the rate except to
  536  conform to the office’s notice until the earlier of 120 days
  537  after the date the notification was provided or 180 days after
  538  the date of implementing the rate. The office, Subject to
  539  chapter 120, the office may disapprove without the 60-day
  540  notification any rate increase filed by an insurer within the
  541  prohibited time period or during the time that the legality of
  542  the increased rate is being contested.
  543         (i)(h) If the office finds that a rate or rate change is
  544  excessive, inadequate, or unfairly discriminatory, the office
  545  shall issue an order of disapproval requiring specifying that a
  546  new rate or rate schedule, which responds to the findings of the
  547  office, be filed by the insurer. The office shall further order,
  548  for any “use and file” filing made in accordance with
  549  subparagraph (a)2., that the portion of premiums charged which
  550  constitute each policyholder constituting the portion of the
  551  rate above that which was actuarially justified be returned to
  552  the policyholder in the form of a credit or refund. If the
  553  office finds that an insurer’s rate or rate change is
  554  inadequate, the new rate or rate schedule filed with the office
  555  in response to such a finding applies is applicable only to new
  556  or renewal business of the insurer written by the insurer on or
  557  after the effective date of the responsive filing.
  558         (j)(i) Except as otherwise specifically provided in this
  559  chapter, for property and casualty insurance the office may not
  560  directly or indirectly:
  561         1. Prohibit an any insurer, including any residual market
  562  plan or joint underwriting association, from paying acquisition
  563  costs based on the full amount of premium, as defined in s.
  564  627.403, applicable to any policy, or prohibit any such insurer
  565  from including the full amount of acquisition costs in a rate
  566  filing; or
  567         2. Impede, abridge, or otherwise compromise an insurer’s
  568  right to acquire policyholders, advertise, or appoint agents,
  569  including the calculation, manner, or amount of such agent
  570  commissions, if any.
  571         (k)(j) With respect to residential property insurance rate
  572  filings, the rate filing must account for mitigation measures
  573  undertaken by policyholders to reduce hurricane losses.
  574         (l)(k)1. A residential property insurer may make a separate
  575  filing limited solely to an adjustment of its rates for
  576  reinsurance, the cost of financing products used as a
  577  replacement for reinsurance, financing costs incurred in the
  578  purchase of reinsurance, and the actual cost paid due to the
  579  application of the cash build-up factor pursuant to s.
  580  215.555(5)(b) if the insurer:
  581         a. Elects to purchase financing products, such as a
  582  liquidity instrument or line of credit, in which case the cost
  583  included in filing for the liquidity instrument or line of
  584  credit may not result in a premium increase exceeding 3 percent
  585  for any individual policyholder. All costs contained in the
  586  filing may not result in an overall premium increase of more
  587  than 15 percent for any individual policyholder.
  588         b. Includes in the filing a copy of all of its reinsurance,
  589  liquidity instrument, or line of credit contracts; proof of the
  590  billing or payment for the contracts; and the calculation upon
  591  which the proposed rate change is based demonstrating that the
  592  costs meet the criteria of this section.
  593         2. An insurer that purchases reinsurance or financing
  594  products from an affiliated company may make a separate filing
  595  only if the costs for such reinsurance or financing products are
  596  charged at or below charges made for comparable coverage by
  597  nonaffiliated reinsurers or financial entities making such
  598  coverage or financing products available in this state.
  599         3. An insurer may make only one filing per 12-month period
  600  under this paragraph.
  601         4. An insurer that elects to implement a rate change under
  602  this paragraph must file its rate filing with the office at
  603  least 45 days before the effective date of the rate change.
  604  After an insurer submits a complete filing that meets all of the
  605  requirements of this paragraph, the office has 45 days after the
  606  date of the filing to review the rate filing and determine if
  607  the rate is excessive, inadequate, or unfairly discriminatory.
  608  
  609  The provisions of this subsection do not apply to workers’
  610  compensation, employer’s liability insurance, and motor vehicle
  611  insurance.
  612         (3)
  613         (d)1. The following categories or kinds of insurance and
  614  types of commercial lines risks are not subject to paragraph
  615  (2)(a) or paragraph (2)(g) (2)(f):
  616         a. Excess or umbrella.
  617         b. Surety and fidelity.
  618         c. Boiler and machinery and leakage and fire extinguishing
  619  equipment.
  620         d. Errors and omissions.
  621         e. Directors and officers, employment practices, fiduciary
  622  liability, and management liability.
  623         f. Intellectual property and patent infringement liability.
  624         g. Advertising injury and Internet liability insurance.
  625         h. Property risks rated under a highly protected risks
  626  rating plan.
  627         i. General liability.
  628         j. Nonresidential property, except for collateral
  629  protection insurance as defined in s. 624.6085.
  630         k. Nonresidential multiperil.
  631         l. Excess property.
  632         m. Burglary and theft.
  633         n. Any other commercial lines categories or kinds of
  634  insurance or types of commercial lines risks that the office
  635  determines should not be subject to paragraph (2)(a) or
  636  paragraph (2)(g) (2)(f) because of the existence of a
  637  competitive market for such insurance, similarity of such
  638  insurance to other categories or kinds of insurance not subject
  639  to paragraph (2)(a) or paragraph (2)(g) (2)(f), or to improve
  640  the general operational efficiency of the office.
  641         2. Insurers or rating organizations shall establish and use
  642  rates, rating schedules, or rating manuals that to allow the
  643  insurer a reasonable rate of return on insurance and risks
  644  described in subparagraph 1. which are written in this state.
  645         3. An insurer must notify the office of any changes to
  646  rates for insurance and risks described in subparagraph 1.
  647  within 30 days after the effective date of the change. The
  648  notice must include the name of the insurer, the type or kind of
  649  insurance subject to rate change, total premium written during
  650  the immediately preceding year by the insurer for the type or
  651  kind of insurance subject to the rate change, and the average
  652  statewide percentage change in rates. Underwriting files,
  653  premiums, losses, and expense statistics relating with regard to
  654  such insurance and risks written by an insurer must be
  655  maintained by the insurer and subject to examination by the
  656  office. Upon examination, the office, in accordance with
  657  generally accepted and reasonable actuarial techniques, shall
  658  consider the rate factors in paragraphs (2)(b), (d) (c), and (e)
  659  (d) and the standards in paragraph (2)(f) (2)(e) to determine if
  660  the rate is excessive, inadequate, or unfairly discriminatory.
  661         4. A rating organization must notify the office of any
  662  changes to loss cost for insurance and risks described in
  663  subparagraph 1. within 30 days after the effective date of the
  664  change. The notice must include the name of the rating
  665  organization, the type or kind of insurance subject to a loss
  666  cost change, loss costs during the immediately preceding year
  667  for the type or kind of insurance subject to the loss cost
  668  change, and the average statewide percentage change in loss
  669  cost. Actuarial data relating with regard to changes to loss
  670  cost for risks not subject to paragraph (2)(a) or paragraph
  671  (2)(g) (2)(f) must be maintained by the rating organization for
  672  2 years after the effective date of the change and are subject
  673  to examination by the office. The office may require the rating
  674  organization to incur the costs associated with an examination.
  675  Upon examination, the office, in accordance with generally
  676  accepted and reasonable actuarial techniques, shall consider the
  677  rate factors in paragraphs (2)(b), (d), and (e) (2)(b)-(d) and
  678  the standards in paragraph (2)(f) (2)(e) to determine if the
  679  rate is excessive, inadequate, or unfairly discriminatory.
  680         Section 6. Paragraphs (a) and (b) of subsection (3) of
  681  section 627.0628, Florida Statutes, are amended to read:
  682         627.0628 Florida Commission on Hurricane Loss Projection
  683  Methodology; public records exemption; public meetings
  684  exemption.—
  685         (3) ADOPTION AND EFFECT OF STANDARDS AND GUIDELINES.—
  686         (a) The commission shall consider any actuarial methods,
  687  principles, standards, models, or output ranges that have the
  688  potential for improving the accuracy of or reliability of the
  689  hurricane loss projections and wind mitigation discounts used in
  690  residential property insurance rate filings. The commission
  691  shall, from time to time, adopt findings as to the accuracy or
  692  reliability of particular methods, principles, standards,
  693  models, or output ranges.
  694         (b) The commission shall consider any actuarial methods,
  695  principles, standards, or models that have the potential for
  696  improving the accuracy of or reliability of projecting probable
  697  maximum loss levels. The commission shall adopt findings as to
  698  the accuracy or reliability of particular methods, principles,
  699  standards, or models related to probable maximum loss
  700  calculations. The commission shall review models for accuracy of
  701  use when establishing wind mitigation discounts.
  702         Section 7. Subsections (1) and (6) of section 627.0629,
  703  Florida Statutes, are amended to read:
  704         627.0629 Residential property insurance; rate filings.—
  705         (1) It is the intent of the Legislature that insurers
  706  provide savings to consumers who install or implement windstorm
  707  damage mitigation techniques, alterations, or solutions to their
  708  properties to prevent windstorm losses. A rate filing for
  709  residential property insurance must include notice of the
  710  mitigation discounts offered by the insurer, which must be
  711  actuarially reasonable discounts, credits, or other rate
  712  differentials, or appropriate reductions in deductibles, for
  713  properties on which fixtures or construction techniques
  714  demonstrated to reduce the amount of loss in a windstorm have
  715  been installed or implemented. The fixtures or construction
  716  techniques must include, but are not limited to, fixtures or
  717  construction techniques that enhance roof strength, roof
  718  covering performance, roof-to-wall strength, wall-to-floor-to
  719  foundation strength, opening protection, and the impact
  720  resistance of window, door, and skylight openings strength.
  721  Credits, discounts, or other rate differentials, or appropriate
  722  reductions in deductibles, for fixtures and construction
  723  techniques that meet the minimum requirements of the Florida
  724  Building Code must be included in the rate filing. The office
  725  shall determine the discounts, credits, other rate
  726  differentials, and appropriate reductions in deductibles that
  727  reflect the full actuarial value of such revaluation, which may
  728  be used by insurers in rate filings.
  729         (6) The office may hold a public hearing for a any rate
  730  filing that is based in whole or in part on data from a computer
  731  model which exceeds may not exceed 15 percent in counties the
  732  office determines do not have a reasonable degree of competition
  733  unless there is a public hearing.
  734         Section 8. Section 627.171, Florida Statutes, is amended to
  735  read:
  736         627.171 Excess rates.—
  737         (1) With the written consent of the insured signed before
  738  prior to the policy inception date and filed with the insurer,
  739  the insurer may use a rate in excess of the otherwise applicable
  740  filed rate on any specific risk. The signed consent form is
  741  valid for subsequent renewals and must include the filed rate as
  742  well as the excess rate for the risk insured., and A copy of the
  743  form must be maintained by the insurer for 3 years and be
  744  available for review by the office.
  745         (2) In those counties in which the office has determined
  746  there is not a reasonable degree of competition, an insurer may
  747  not use excess rates authorized under pursuant to this section
  748  for more than 10 percent of its commercial insurance policies
  749  written or renewed in each calendar year for any line of
  750  commercial insurance or for more than 5 percent of its personal
  751  lines insurance policies written or renewed in each calendar
  752  year for any line of personal insurance. In determining the 10
  753  percent limitation for commercial insurance policies, the
  754  insurer shall exclude a any workers’ compensation policy that
  755  was written for an employer who had coverage in the joint
  756  underwriting plan created by s. 627.311(5) immediately before
  757  prior to the writing of the policy by the insurer and a any
  758  workers’ compensation policy that was written for an employer
  759  who had been offered coverage in the joint underwriting plan but
  760  who was written a policy by the insurer in lieu of accepting the
  761  joint underwriting plan policy. Such These workers’ compensation
  762  policies shall be excluded from the 10-percent limitation for
  763  the first 3 years of coverage.
  764         Section 9. Paragraphs (a), (b), (c), (g), (i), (m), (q),
  765  and (z) of subsection (6) of section 627.351, Florida Statutes,
  766  are amended, and paragraph (gg) is added to that subsection, to
  767  read:
  768         627.351 Insurance risk apportionment plans.—
  769         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
  770         (a) The public purpose of this subsection is to ensure that
  771  there is an orderly market for property insurance for residents
  772  and businesses of this state.
  773         1. The Legislature finds that private insurers are entering
  774  the Florida property insurance market unwilling or unable to
  775  provide affordable property insurance coverage in many regions
  776  of the state. The Legislature further finds that when Citizens
  777  Property Insurance Corporation offers rates that are not
  778  adequate to cover the average costs that are generated from the
  779  claims filed by its policyholders, the deficiency may create a
  780  financial burden on all other state policyholders who must
  781  purchase their own insurance from private insurers at full
  782  actuarial cost and pay an added fee to cover a portion of the
  783  cost for claims filed by policyholders of the corporation. The
  784  Legislature intends that the corporation not act as a barrier or
  785  competitor to the private insurance market but be available to
  786  residents of in this state only if there is no private market
  787  coverage available at rates determined reasonable by the Office
  788  of Insurance Regulation to the extent sought and needed. The
  789  absence of affordable property insurance threatens the public
  790  health, safety, and welfare and likewise threatens the economic
  791  health of the state. As the corporation has continued its rapid
  792  growth and exposure, it increasingly threatens state residents
  793  with having to absorb an even greater financial burden than they
  794  are currently bearing. The state, therefore, has a compelling
  795  public interest and a public purpose to assist in assuring that
  796  property in the state is insured and that it is insured at
  797  affordable, actuarially sound, noncompetitive rates so as to
  798  facilitate the remediation, reconstruction, and replacement of
  799  damaged or destroyed property without overburdening the
  800  policyholders of this state in order to reduce or avoid the
  801  negative effects on otherwise resulting to the public health,
  802  safety, and welfare; on, to the economy of the state; and on,
  803  and to the revenues of the state and local governments which are
  804  needed to provide for the public welfare. It is necessary,
  805  therefore, to make provide affordable, actuarially sound,
  806  noncompetitive property insurance available to applicants who
  807  are, in good faith, entitled to procure insurance through the
  808  voluntary market but are unable to do so. The Legislature
  809  intends, therefore, that affordable, actuarially sound,
  810  noncompetitive property insurance be provided and that it
  811  continue to be provided, as long as necessary, through Citizens
  812  Property Insurance Corporation, a government entity that is an
  813  integral part of the state, and that is not a private insurance
  814  company, or through referrals to private insurers participating
  815  in a clearinghouse established by the corporation. To that end,
  816  the corporation shall strive to promote increase the
  817  availability of affordable and actuarially sound private
  818  property insurance in this state, supplemented by coverage
  819  provided by the corporation if appropriate, while achieving
  820  efficiencies and economies, and while providing service to
  821  policyholders, applicants, and agents which is no less than the
  822  quality generally provided in the voluntary market, for the
  823  achievement of the foregoing public purposes. Because it is
  824  essential for this government entity to have the maximum
  825  financial resources to pay claims following a catastrophic
  826  hurricane, it is further the intent of the Legislature that the
  827  corporation continue to be an integral part of the state and not
  828  a private insurance company, and that the income of the
  829  corporation be exempt from federal income taxation, and that
  830  interest on the debt obligations issued by the corporation be
  831  exempt from federal income taxation.
  832         2. The Residential Property and Casualty Joint Underwriting
  833  Association originally created by this statute shall be known as
  834  the Citizens Property Insurance Corporation. The corporation
  835  shall provide insurance for residential and commercial property
  836  insurance, for applicants who are eligible entitled, but, in
  837  good faith, are unable to procure insurance through the
  838  voluntary market. The corporation shall operate pursuant to a
  839  plan of operation approved by order of the Financial Services
  840  Commission. The plan is subject to continuous review by the
  841  commission, and. the commission may, by order, withdraw approval
  842  of all or part of a plan if the commission determines that
  843  conditions have changed since approval was granted and that the
  844  purposes of the plan require changes in the plan. For the
  845  purposes of this subsection, residential coverage includes both
  846  personal lines residential coverage, which consists of the type
  847  of coverage provided by homeowner’s, mobile home owner’s,
  848  dwelling, tenant’s, condominium unit owner’s, and similar
  849  policies; and commercial lines residential coverage, which
  850  consists of the type of coverage provided by condominium
  851  association, apartment building, and similar policies.
  852         3. With respect to coverage for personal lines residential
  853  structures:
  854         a. Effective January 1, 2014 2009, a personal lines
  855  residential structure that has a dwelling replacement cost of $1
  856  $2 million or more, or a single condominium unit that has a
  857  combined dwelling and contents replacement cost of $1 $2 million
  858  or more is not eligible for coverage by the corporation. Such
  859  dwellings insured by the corporation on December 31, 2013 2008,
  860  may continue to be covered by the corporation until the end of
  861  the policy term. However, such dwellings may reapply and obtain
  862  coverage if the property owner provides the corporation with a
  863  sworn affidavit from one or more insurance agents, on a form
  864  provided by the corporation, stating that the agents have made
  865  their best efforts to obtain coverage and that the property has
  866  been rejected for coverage by at least one authorized insurer
  867  and at least three surplus lines insurers. If such conditions
  868  are met, the dwelling may be insured by the corporation for up
  869  to 3 years, after which time the dwelling is ineligible for
  870  coverage. The office shall approve the method used by the
  871  corporation for valuing the dwelling replacement costs under
  872  cost for the purposes of this subparagraph. If a policyholder is
  873  insured by the corporation before prior to being determined to
  874  be ineligible pursuant to this subparagraph and such
  875  policyholder files a lawsuit challenging the determination, the
  876  policyholder may remain insured by the corporation until the
  877  conclusion of the litigation.
  878         b. Effective January 1, 2015, a structure that has a
  879  dwelling replacement cost of $900,000 or more, or a single
  880  condominium unit that has a combined dwelling and contents
  881  replacement cost of $900,000 or more, is not eligible for
  882  coverage by the corporation. Such dwellings insured by the
  883  corporation on December 31, 2014, may continue to be covered by
  884  the corporation until the end of the policy term.
  885         c. Effective January 1, 2016, a structure that has a
  886  dwelling replacement cost of $800,000 or more, or a single
  887  condominium unit that has a combined dwelling and contents
  888  replacement cost of $800,000 or more, is not eligible for
  889  coverage by the corporation. Such dwellings insured by the
  890  corporation on December 31, 2015, may continue to be covered by
  891  the corporation until the end of the policy term.
  892         d. Effective January 1, 2017, a structure that has a
  893  dwelling replacement cost of $700,000 or more, or a single
  894  condominium unit that has a combined dwelling and contents
  895  replacement cost of $700,000 or more, is not eligible for
  896  coverage by the corporation. Such dwellings insured by the
  897  corporation on December 31, 2016, may continue to be covered by
  898  the corporation until the end of the policy term.
  899         e. Effective January 1, 2018, a structure that has a
  900  dwelling replacement cost of $600,000 or more, or a single
  901  condominium unit that has a combined dwelling and contents
  902  replacement cost of $600,000 or more, is not eligible for
  903  coverage by the corporation. Such dwellings insured by the
  904  corporation on December 31, 2017, may continue to be covered by
  905  the corporation until the end of the policy term.
  906         f. Effective January 1, 2019, a structure that has a
  907  dwelling replacement cost of $500,000 or more, or a single
  908  condominium unit that has a combined dwelling and contents
  909  replacement cost of $500,000 or more, is not eligible for
  910  coverage by the corporation. Such dwellings insured by the
  911  corporation on December 31, 2018, may continue to be covered by
  912  the corporation until the end of the policy term.
  913  
  914  The requirements of sub-subparagraphs b.-f. do not apply in
  915  counties where the office determines there is not a reasonable
  916  degree of competition. In such counties the eligibility
  917  requirements of sub-subparagraph a. apply.
  918         4. It is the intent of the Legislature that policyholders,
  919  applicants, and agents of the corporation receive service and
  920  treatment of the highest possible level but never less than that
  921  generally provided in the voluntary market. It is also intended
  922  that the corporation be held to service standards no less than
  923  those applied to insurers in the voluntary market by the office
  924  with respect to responsiveness, timeliness, customer courtesy,
  925  and overall dealings with policyholders, applicants, or agents
  926  of the corporation.
  927         5. A new structure for which a notice of commencement has
  928  been issued on or after July 1, 2013, pursuant to s. 713.135,
  929  which is located seaward of the coastal construction control
  930  line created pursuant to s. 161.053, is ineligible for coverage
  931  through the corporation unless the structure meets the coastal
  932  code-plus building code criteria developed and recommended by
  933  the Florida Building Commission. Filing a notice of commencement
  934  for an addition to an existing structure that was built before
  935  July 1, 2013, requires that the addition be built according to
  936  the code-plus building criteria but does not require that the
  937  existing structure meet the code-plus criteria in order to be
  938  eligible for coverage through the corporation. Effective January
  939  1, 2009, a personal lines residential structure that is located
  940  in the “wind-borne debris region,” as defined in s. 1609.2,
  941  International Building Code (2006), and that has an insured
  942  value on the structure of $750,000 or more is not eligible for
  943  coverage by the corporation unless the structure has opening
  944  protections as required under the Florida Building Code for a
  945  newly constructed residential structure in that area. A
  946  residential structure shall be deemed to comply with this
  947  subparagraph if it has shutters or opening protections on all
  948  openings and if such opening protections complied with the
  949  Florida Building Code at the time they were installed.
  950         6. For any claim filed under any policy of the corporation,
  951  a public adjuster may not charge, agree to, or accept any
  952  compensation, payment, commission, fee, or other thing of value
  953  greater than 10 percent of the additional amount actually paid
  954  over the amount that was originally offered by the corporation
  955  for any one claim.
  956         (b)1. All insurers authorized to write one or more subject
  957  lines of business in this state are subject to assessment by the
  958  corporation and, for the purposes of this subsection, are
  959  referred to collectively as “assessable insurers.” Insurers
  960  writing one or more subject lines of business in this state
  961  pursuant to part VIII of chapter 626 are not assessable
  962  insurers; however, but insureds who procure one or more subject
  963  lines of business in this state pursuant to part VIII of chapter
  964  626 are subject to assessment by the corporation and are
  965  referred to collectively as “assessable insureds.” An insurer’s
  966  assessment liability begins on the first day of the calendar
  967  year following the year in which the insurer was issued a
  968  certificate of authority to transact insurance for subject lines
  969  of business in this state and terminates 1 year after the end of
  970  the first calendar year during which the insurer no longer holds
  971  a certificate of authority to transact insurance for subject
  972  lines of business in this state.
  973         2.a. All revenues, assets, liabilities, losses, and
  974  expenses of the corporation shall be divided into three separate
  975  accounts as follows:
  976         (I) A personal lines account for personal residential
  977  policies issued by the corporation, or issued by the Residential
  978  Property and Casualty Joint Underwriting Association and renewed
  979  by the corporation, which provides comprehensive, multiperil
  980  coverage on risks that are not located in areas eligible for
  981  coverage by the Florida Windstorm Underwriting Association as
  982  those areas were defined on January 1, 2002, and for policies
  983  that do not provide coverage for the peril of wind on risks that
  984  are located in such areas;
  985         (II) A commercial lines account for commercial residential
  986  and commercial nonresidential policies issued by the
  987  corporation, or issued by the Residential Property and Casualty
  988  Joint Underwriting Association and renewed by the corporation,
  989  which provides coverage for basic property perils on risks that
  990  are not located in areas eligible for coverage by the Florida
  991  Windstorm Underwriting Association as those areas were defined
  992  on January 1, 2002, and for policies that do not provide
  993  coverage for the peril of wind on risks that are located in such
  994  areas; and
  995         (III) A coastal account for personal residential policies
  996  and commercial residential and commercial nonresidential
  997  property policies issued by the corporation, or transferred to
  998  the corporation, which provides coverage for the peril of wind
  999  on risks that are located in areas eligible for coverage by the
 1000  Florida Windstorm Underwriting Association as those areas were
 1001  defined on January 1, 2002. The corporation may offer policies
 1002  that provide multiperil coverage and the corporation shall
 1003  continue to offer policies that provide coverage only for the
 1004  peril of wind for risks located in areas eligible for coverage
 1005  in the coastal account. In issuing multiperil coverage, the
 1006  corporation may use its approved policy forms and rates for the
 1007  personal lines account. An applicant or insured who is eligible
 1008  to purchase a multiperil policy from the corporation may
 1009  purchase a multiperil policy from an authorized insurer without
 1010  prejudice to the applicant’s or insured’s eligibility to
 1011  prospectively purchase a policy that provides coverage only for
 1012  the peril of wind from the corporation. An applicant or insured
 1013  who is eligible for a corporation policy that provides coverage
 1014  only for the peril of wind may elect to purchase or retain such
 1015  policy and also purchase or retain coverage excluding wind from
 1016  an authorized insurer without prejudice to the applicant’s or
 1017  insured’s eligibility to prospectively purchase a policy that
 1018  provides multiperil coverage from the corporation. It is the
 1019  goal of the Legislature that there be an overall average savings
 1020  of 10 percent or more for a policyholder who currently has a
 1021  wind-only policy with the corporation, and an ex-wind policy
 1022  with a voluntary insurer or the corporation, and who obtains a
 1023  multiperil policy from the corporation. It is the intent of the
 1024  Legislature that the offer of multiperil coverage in the coastal
 1025  account be made and implemented in a manner that does not
 1026  adversely affect the tax-exempt status of the corporation or
 1027  creditworthiness of or security for currently outstanding
 1028  financing obligations or credit facilities of the coastal
 1029  account, the personal lines account, or the commercial lines
 1030  account. The coastal account must also include quota share
 1031  primary insurance under subparagraph (c)2. The area eligible for
 1032  coverage under the coastal account also includes the area within
 1033  Port Canaveral, which is bordered on the south by the City of
 1034  Cape Canaveral, bordered on the west by the Banana River, and
 1035  bordered on the north by Federal Government property.
 1036         b. The three separate accounts must be maintained as long
 1037  as financing obligations entered into by the Florida Windstorm
 1038  Underwriting Association or Residential Property and Casualty
 1039  Joint Underwriting Association are outstanding, in accordance
 1040  with the terms of the corresponding financing documents. If the
 1041  financing obligations are no longer outstanding, the corporation
 1042  may use a single account for all revenues, assets, liabilities,
 1043  losses, and expenses of the corporation. Consistent with this
 1044  subparagraph and prudent investment policies that minimize the
 1045  cost of carrying debt, the board shall exercise its best efforts
 1046  to retire existing debt or obtain the approval of necessary
 1047  parties to amend the terms of existing debt, in order so as to
 1048  structure the most efficient plan for consolidating to
 1049  consolidate the three separate accounts into a single account.
 1050         c. Creditors of the Residential Property and Casualty Joint
 1051  Underwriting Association and the accounts specified in sub-sub
 1052  subparagraphs a.(I) and (II) may have a claim against, and
 1053  recourse to, those accounts and no claim against, or recourse
 1054  to, the account referred to in sub-sub-subparagraph a.(III).
 1055  Creditors of the Florida Windstorm Underwriting Association have
 1056  a claim against, and recourse to, the account referred to in
 1057  sub-sub-subparagraph a.(III) and no claim against, or recourse
 1058  to, the accounts referred to in sub-sub-subparagraphs a.(I) and
 1059  (II).
 1060         d. Revenues, assets, liabilities, losses, and expenses not
 1061  attributable to particular accounts shall be prorated among the
 1062  accounts.
 1063         e. The Legislature finds that the revenues of the
 1064  corporation are revenues that are necessary to meet the
 1065  requirements set forth in documents authorizing the issuance of
 1066  bonds under this subsection.
 1067         f. The income of the corporation may not inure to the
 1068  benefit of any private person.
 1069         3. With respect to a deficit in an account:
 1070         a. After accounting for the Citizens policyholder surcharge
 1071  imposed under sub-subparagraph i., if the remaining projected
 1072  deficit incurred in the coastal account in a particular calendar
 1073  year:
 1074         (I) Is not greater than 2 percent of the aggregate
 1075  statewide direct written premium for the subject lines of
 1076  business for the prior calendar year, the entire deficit shall
 1077  be recovered through regular assessments of assessable insurers
 1078  under paragraph (q) and assessable insureds.
 1079         (II) Exceeds 2 percent of the aggregate statewide direct
 1080  written premium for the subject lines of business for the prior
 1081  calendar year, the corporation shall levy regular assessments on
 1082  assessable insurers under paragraph (q) and on assessable
 1083  insureds in an amount equal to the greater of 2 percent of the
 1084  projected deficit or 2 percent of the aggregate statewide direct
 1085  written premium for the subject lines of business for the prior
 1086  calendar year. Any remaining projected deficit shall be
 1087  recovered through emergency assessments under sub-subparagraph
 1088  d.
 1089         b. Each assessable insurer’s share of the amount being
 1090  assessed under sub-subparagraph a. must be in the proportion
 1091  that the assessable insurer’s direct written premium for the
 1092  subject lines of business for the year preceding the assessment
 1093  bears to the aggregate statewide direct written premium for the
 1094  subject lines of business for that year. The assessment
 1095  percentage applicable to each assessable insured is the ratio of
 1096  the amount being assessed under sub-subparagraph a. to the
 1097  aggregate statewide direct written premium for the subject lines
 1098  of business for the prior year. Assessments levied by the
 1099  corporation on assessable insurers under sub-subparagraph a.
 1100  must be paid as required by the corporation’s plan of operation
 1101  and paragraph (q). Assessments levied by the corporation on
 1102  assessable insureds under sub-subparagraph a. shall be collected
 1103  by the surplus lines agent at the time the surplus lines agent
 1104  collects the surplus lines tax required by s. 626.932, and paid
 1105  to the Florida Surplus Lines Service Office at the time the
 1106  surplus lines agent pays the surplus lines tax to that office.
 1107  Upon receipt of regular assessments from surplus lines agents,
 1108  the Florida Surplus Lines Service Office shall transfer the
 1109  assessments directly to the corporation as determined by the
 1110  corporation.
 1111         c. After accounting for the Citizens policyholder surcharge
 1112  imposed under sub-subparagraph i., the remaining projected
 1113  deficits in the personal lines account and in the commercial
 1114  lines account in a particular calendar year shall be recovered
 1115  through emergency assessments under sub-subparagraph d.
 1116         d. Upon a determination by the executive director, with the
 1117  concurrence of the board of governors, that a projected deficit
 1118  in an account exceeds the amount that is expected to be
 1119  recovered through regular assessments under sub-subparagraph a.,
 1120  plus the amount that is expected to be recovered through
 1121  policyholder surcharges under sub-subparagraph i., the executive
 1122  director, with concurrence by the board, after verification by
 1123  the office, shall levy emergency assessments for as many years
 1124  as necessary to cover the deficits, to be collected by
 1125  assessable insurers and the corporation and collected from
 1126  assessable insureds upon issuance or renewal of policies for
 1127  subject lines of business, excluding National Flood Insurance
 1128  policies. The executive director shall notify the Financial
 1129  Services Commission of the emergency assessments within 5 days
 1130  after the board’s concurrence with the executive director’s
 1131  determination that such assessments are necessary. The amount
 1132  collected in a particular year must be a uniform percentage of
 1133  that year’s direct written premium for subject lines of business
 1134  and all accounts of the corporation, excluding National Flood
 1135  Insurance Program policy premiums, as annually determined by the
 1136  executive director, with concurrence by the board, and verified
 1137  by the office. The office shall verify the arithmetic
 1138  calculations involved in the board’s determination within 30
 1139  days after receipt of the information on which the determination
 1140  was based. The office shall notify assessable insurers and the
 1141  Florida Surplus Lines Service Office of the date on which
 1142  assessable insurers shall begin to collect and assessable
 1143  insureds shall begin to pay such assessment. The date must be at
 1144  least may be not less than 90 days after the date the
 1145  corporation levies emergency assessments pursuant to this sub
 1146  subparagraph. Notwithstanding any other provision of law, the
 1147  corporation and each assessable insurer that writes subject
 1148  lines of business shall collect emergency assessments from its
 1149  policyholders without such obligation being affected by any
 1150  credit, limitation, exemption, or deferment. Emergency
 1151  assessments levied by the corporation on assessable insureds
 1152  shall be collected by the surplus lines agent at the time the
 1153  surplus lines agent collects the surplus lines tax required by
 1154  s. 626.932 and paid to the Florida Surplus Lines Service Office
 1155  at the time the surplus lines agent pays the surplus lines tax
 1156  to that office. The emergency assessments collected shall be
 1157  transferred directly to the corporation on a periodic basis as
 1158  determined by the corporation and held by the corporation solely
 1159  in the applicable account. The aggregate amount of emergency
 1160  assessments levied for an account under this sub-subparagraph in
 1161  any calendar year may be less than but not exceed the greater of
 1162  10 percent of the amount needed to cover the deficit, plus
 1163  interest, fees, commissions, required reserves, and other costs
 1164  associated with financing the original deficit, or 10 percent of
 1165  the aggregate statewide direct written premium for subject lines
 1166  of business and all accounts of the corporation for the prior
 1167  year, plus interest, fees, commissions, required reserves, and
 1168  other costs associated with financing the deficit.
 1169         e. The corporation may pledge the proceeds of assessments,
 1170  projected recoveries from the Florida Hurricane Catastrophe
 1171  Fund, other insurance and reinsurance recoverables, policyholder
 1172  surcharges and other surcharges, and other funds available to
 1173  the corporation as the source of revenue for and to secure bonds
 1174  issued under paragraph (q), bonds or other indebtedness issued
 1175  under subparagraph (c)3., or lines of credit or other financing
 1176  mechanisms issued or created under this subsection, or to retire
 1177  any other debt incurred as a result of deficits or events giving
 1178  rise to deficits, or in any other way that the executive
 1179  director, with the concurrence of the board, determines will
 1180  efficiently recover such deficits. The purpose of the lines of
 1181  credit or other financing mechanisms is to provide additional
 1182  resources to assist the corporation in covering claims and
 1183  expenses attributable to a catastrophe. As used in this
 1184  subsection, the term “assessments” includes regular assessments
 1185  under sub-subparagraph a. or subparagraph (q)1. and emergency
 1186  assessments under sub-subparagraph d. Emergency assessments
 1187  collected under sub-subparagraph d. are not part of an insurer’s
 1188  rates, are not premium, and are not subject to premium tax,
 1189  fees, or commissions; however, failure to pay the emergency
 1190  assessment shall be treated as failure to pay premium. The
 1191  emergency assessments under sub-subparagraph d. shall continue
 1192  as long as any bonds issued or other indebtedness incurred with
 1193  respect to a deficit for which the assessment was imposed remain
 1194  outstanding, unless adequate provision has been made for the
 1195  payment of such bonds or other indebtedness pursuant to the
 1196  documents governing such bonds or indebtedness.
 1197         f. As used in this subsection for purposes of any deficit
 1198  incurred on or after January 25, 2007, the term “subject lines
 1199  of business” means insurance written by assessable insurers or
 1200  procured by assessable insureds for all property and casualty
 1201  lines of business in this state, but not including workers’
 1202  compensation or medical malpractice. As used in this sub
 1203  subparagraph, the term “property and casualty lines of business”
 1204  includes all lines of business identified on Form 2, Exhibit of
 1205  Premiums and Losses, in the annual statement required of
 1206  authorized insurers under s. 624.424 and any rule adopted under
 1207  this section, except for those lines identified as accident and
 1208  health insurance and except for policies written under the
 1209  National Flood Insurance Program or the Federal Crop Insurance
 1210  Program. For purposes of this sub-subparagraph, the term
 1211  “workers’ compensation” includes both workers’ compensation
 1212  insurance and excess workers’ compensation insurance.
 1213         g. The Florida Surplus Lines Service Office shall annually
 1214  determine annually the aggregate statewide written premium in
 1215  subject lines of business procured by assessable insureds and
 1216  report that information to the corporation in a form and at a
 1217  time the corporation specifies to ensure that the corporation
 1218  can meet the requirements of this subsection and the
 1219  corporation’s financing obligations.
 1220         h. The Florida Surplus Lines Service Office shall verify
 1221  the proper application by surplus lines agents of assessment
 1222  percentages for regular assessments and emergency assessments
 1223  levied under this subparagraph on assessable insureds and assist
 1224  the corporation in ensuring the accurate, timely collection and
 1225  payment of assessments by surplus lines agents as required by
 1226  the corporation.
 1227         i. In 2008 or thereafter, Upon a determination by the board
 1228  of governors that an account has a projected deficit, the board
 1229  shall levy a Citizens policyholder surcharge against all
 1230  policyholders of the corporation.
 1231         (I) The surcharge shall be levied as a uniform percentage
 1232  of the premium for the policy of up to 15 percent of the policy
 1233  such premium, which funds shall be used to offset the deficit.
 1234         (II) The surcharge is payable upon cancellation or
 1235  termination of the policy, upon renewal of the policy, or upon
 1236  issuance of a new policy by the corporation within the first 12
 1237  months after the date of the levy or the period of time
 1238  necessary to fully collect the surcharge amount.
 1239         (III) The corporation may not levy any regular assessments
 1240  under paragraph (q) pursuant to sub-subparagraph a. or sub
 1241  subparagraph b. with respect to a particular year’s deficit
 1242  until the corporation has first levied the full amount of the
 1243  surcharge authorized by this sub-subparagraph.
 1244         (IV) The surcharge is not considered premium and is not
 1245  subject to commissions, fees, or premium taxes. However, failure
 1246  to pay the surcharge shall be treated as failure to pay premium.
 1247         j. If the amount of any assessments or surcharges collected
 1248  from corporation policyholders, assessable insurers or their
 1249  policyholders, or assessable insureds exceeds the amount of the
 1250  deficits, such excess amounts shall be remitted to and retained
 1251  by the corporation in a reserve to be used by the corporation,
 1252  as determined by the executive director, with the concurrence of
 1253  the board of governors, and approved by the office, to pay
 1254  claims or reduce any past, present, or future plan-year deficits
 1255  or to reduce outstanding debt.
 1256         (c) The corporation’s plan of operation:
 1257         1. Must provide for adoption of residential property and
 1258  casualty insurance policy forms and commercial residential and
 1259  nonresidential property insurance forms, which must be approved
 1260  by the office before use. The corporation shall adopt the
 1261  following policy forms:
 1262         a. Standard personal lines policy forms that are
 1263  comprehensive multiperil policies providing full coverage of a
 1264  residential property equivalent to the coverage provided in the
 1265  private insurance market under an HO-3, HO-4, or HO-6 policy.
 1266         b. Basic personal lines policy forms that are policies
 1267  similar to an HO-8 policy or a dwelling fire policy that provide
 1268  coverage meeting the requirements of the secondary mortgage
 1269  market, but which is more limited than the coverage under a
 1270  standard policy.
 1271         c. Commercial lines residential and nonresidential policy
 1272  forms that are generally similar to the basic perils of full
 1273  coverage obtainable for commercial residential structures and
 1274  commercial nonresidential structures in the admitted voluntary
 1275  market.
 1276         d. Personal lines and commercial lines residential property
 1277  insurance forms that cover the peril of wind only. Such The
 1278  forms are applicable only to residential properties located in
 1279  areas eligible for coverage under the coastal account referred
 1280  to in sub-subparagraph (b)2.a.
 1281         e. Commercial lines nonresidential property insurance forms
 1282  that cover the peril of wind only. Such The forms are applicable
 1283  only to nonresidential properties located in areas eligible for
 1284  coverage under the coastal account referred to in sub
 1285  subparagraph (b)2.a.
 1286         f. The corporation may adopt variations of the policy forms
 1287  listed in sub-subparagraphs a.-e. which contain more restrictive
 1288  coverage.
 1289         g. Effective January 1, 2013, the corporation shall offer a
 1290  basic personal lines policy similar to an HO-8 policy with
 1291  dwelling repair based on common construction materials and
 1292  methods.
 1293         2. Must provide that the corporation and an authorized
 1294  insurer may enter into a risk-sharing agreement for the purpose
 1295  of reducing the corporation’s exposure. As used in this
 1296  subparagraph, the term “risk-sharing agreement” means an
 1297  agreement between the corporation and an authorized insurer for
 1298  the corporation to retain part, but not all, of the risk for a
 1299  specified group of policies or specified perils within a group
 1300  of policies, as part of the terms for removal of policies from
 1301  the corporation.
 1302         a. Entering into a risk-sharing agreement is voluntary and
 1303  at the discretion of the corporation and the authorized insurer.
 1304  To avoid unnecessary expense, the executive director, with
 1305  concurrence of the board of governors, may limit the
 1306  corporation’s participation in risk-sharing agreements to those
 1307  participants capable and willing to assume a minimum of 25
 1308  percent of the exposure on at least 100,000 policies and may
 1309  specify other limitations. A risk-sharing agreement in which the
 1310  corporation retains part of the risk may not exceed 5 years.
 1311         b. The risk-sharing agreement may cover policies in any
 1312  account and may cover any perils. The corporation may act as a
 1313  reinsurer or a cedent under a risk sharing agreement or an
 1314  excess of loss agreement. If the corporation is the reinsurer,
 1315  the insurance policy forms and endorsements must be approved by
 1316  the office, cover all perils that are the subject of the risk
 1317  sharing agreement, and cover at least the same limits as the
 1318  corporation policies being replaced.
 1319         c. The terms of each risk-sharing agreement must ensure
 1320  that the consideration received by the corporation is
 1321  commensurate with the risk retained by the corporation and the
 1322  risk assumed by the authorized insurer. The corporation may not
 1323  share risk for bad faith.
 1324         d. The risk-sharing agreement must specify the proportion
 1325  of exposure that the authorized insurer reports to the Florida
 1326  Hurricane Catastrophe Fund and the exposure retained by the
 1327  corporation. Each shall pay premium and receive reimbursements
 1328  from the fund for the exposure that they retain or assume as
 1329  provided in the risk-sharing agreement. The risk retained or
 1330  assumed is eligible for coverage by the fund and is not
 1331  considered reinsurance for purposes of coverage by the fund.
 1332  However, the authorized insurer and the corporation may report
 1333  participation in the risk sharing agreement on their financial
 1334  statements as reinsurance if appropriate according to the
 1335  characteristics of the agreement based on statutory accounting
 1336  rules and instructions.
 1337         e. Notwithstanding any other provision of law:
 1338         (I) Policies offered coverage by the corporation or an
 1339  authorized insurer through a risk-sharing agreement are not
 1340  eligible for coverage by the corporation outside of the
 1341  agreement; and
 1342         (II) A risk-sharing agreement between the corporation and
 1343  an authorized insurer is not subject to the requirements of a
 1344  take-out or keep-out program under ss. 627.3517 and this
 1345  subsection, except that the agreement must be filed by the
 1346  authorized insurer with the office for review and approval
 1347  before the execution of the agreement by the insurer.
 1348         f. To ensure that exposures are accurately reported to the
 1349  Florida Hurricane Catastrophe Fund, the corporation and each
 1350  insurer participating in a risk-sharing agreement under this
 1351  subparagraph must report its exposure under covered policies to
 1352  the fund as required under s. 215.555(5)(c), including the
 1353  requirement that, by September 1 of each year, each insurer
 1354  notify the board of its insured values under covered policies as
 1355  of June 30 of that year. Each report must also specify the
 1356  percentage of liability applicable to the corporation and the
 1357  percentage applicable to the insurer. Pursuant to its authority
 1358  under s. 215.555, the State Board of Administration shall adopt
 1359  rules to administer this sub-subparagraph.
 1360         2. Must provide that the corporation adopt a program in
 1361  which the corporation and authorized insurers enter into quota
 1362  share primary insurance agreements for hurricane coverage, as
 1363  defined in s. 627.4025(2)(a), for eligible risks, and adopt
 1364  property insurance forms for eligible risks which cover the
 1365  peril of wind only.
 1366         a. As used in this subsection, the term:
 1367         (I) “Quota share primary insurance” means an arrangement in
 1368  which the primary hurricane coverage of an eligible risk is
 1369  provided in specified percentages by the corporation and an
 1370  authorized insurer. The corporation and authorized insurer are
 1371  each solely responsible for a specified percentage of hurricane
 1372  coverage of an eligible risk as set forth in a quota share
 1373  primary insurance agreement between the corporation and an
 1374  authorized insurer and the insurance contract. The
 1375  responsibility of the corporation or authorized insurer to pay
 1376  its specified percentage of hurricane losses of an eligible
 1377  risk, as set forth in the agreement, may not be altered by the
 1378  inability of the other party to pay its specified percentage of
 1379  losses. Eligible risks that are provided hurricane coverage
 1380  through a quota share primary insurance arrangement must be
 1381  provided policy forms that set forth the obligations of the
 1382  corporation and authorized insurer under the arrangement,
 1383  clearly specify the percentages of quota share primary insurance
 1384  provided by the corporation and authorized insurer, and
 1385  conspicuously and clearly state that the authorized insurer and
 1386  the corporation may not be held responsible beyond their
 1387  specified percentage of coverage of hurricane losses.
 1388         (II) “Eligible risks” means personal lines residential and
 1389  commercial lines residential risks that meet the underwriting
 1390  criteria of the corporation and are located in areas that were
 1391  eligible for coverage by the Florida Windstorm Underwriting
 1392  Association on January 1, 2002.
 1393         b. The corporation may enter into quota share primary
 1394  insurance agreements with authorized insurers at corporation
 1395  coverage levels of 90 percent and 50 percent.
 1396         c. If the corporation determines that additional coverage
 1397  levels are necessary to maximize participation in quota share
 1398  primary insurance agreements by authorized insurers, the
 1399  corporation may establish additional coverage levels. However,
 1400  the corporation’s quota share primary insurance coverage level
 1401  may not exceed 90 percent.
 1402         d. Any quota share primary insurance agreement entered into
 1403  between an authorized insurer and the corporation must provide
 1404  for a uniform specified percentage of coverage of hurricane
 1405  losses, by county or territory as set forth by the corporation
 1406  board, for all eligible risks of the authorized insurer covered
 1407  under the agreement.
 1408         e. Any quota share primary insurance agreement entered into
 1409  between an authorized insurer and the corporation is subject to
 1410  review and approval by the office. However, such agreement shall
 1411  be authorized only as to insurance contracts entered into
 1412  between an authorized insurer and an insured who is already
 1413  insured by the corporation for wind coverage.
 1414         f. For all eligible risks covered under quota share primary
 1415  insurance agreements, the exposure and coverage levels for both
 1416  the corporation and authorized insurers shall be reported by the
 1417  corporation to the Florida Hurricane Catastrophe Fund. For all
 1418  policies of eligible risks covered under such agreements, the
 1419  corporation and the authorized insurer must maintain complete
 1420  and accurate records for the purpose of exposure and loss
 1421  reimbursement audits as required by fund rules. The corporation
 1422  and the authorized insurer shall each maintain duplicate copies
 1423  of policy declaration pages and supporting claims documents.
 1424         g. The corporation board shall establish in its plan of
 1425  operation standards for quota share agreements which ensure that
 1426  there is no discriminatory application among insurers as to the
 1427  terms of the agreements, pricing of the agreements, incentive
 1428  provisions if any, and consideration paid for servicing policies
 1429  or adjusting claims.
 1430         h. The quota share primary insurance agreement between the
 1431  corporation and an authorized insurer must set forth the
 1432  specific terms under which coverage is provided, including, but
 1433  not limited to, the sale and servicing of policies issued under
 1434  the agreement by the insurance agent of the authorized insurer
 1435  producing the business, the reporting of information concerning
 1436  eligible risks, the payment of premium to the corporation, and
 1437  arrangements for the adjustment and payment of hurricane claims
 1438  incurred on eligible risks by the claims adjuster and personnel
 1439  of the authorized insurer. Entering into a quota sharing
 1440  insurance agreement between the corporation and an authorized
 1441  insurer is voluntary and at the discretion of the authorized
 1442  insurer.
 1443         3.a. May provide that the corporation may employ or
 1444  otherwise contract with individuals or other entities to provide
 1445  administrative or professional services that may be appropriate
 1446  to effectuate the plan. The corporation may borrow funds by
 1447  issuing bonds or by incurring other indebtedness, and shall have
 1448  other powers reasonably necessary to effectuate the requirements
 1449  of this subsection, including, without limitation, the power to
 1450  issue bonds and incur other indebtedness in order to refinance
 1451  outstanding bonds or other indebtedness. The corporation may
 1452  seek judicial validation of its bonds or other indebtedness
 1453  under chapter 75. The corporation may issue bonds or incur other
 1454  indebtedness, or have bonds issued on its behalf by a unit of
 1455  local government pursuant to subparagraph (q)2. in the absence
 1456  of a hurricane or other weather-related event, upon a
 1457  determination by the corporation, subject to approval by the
 1458  office, that such action would enable it to efficiently meet the
 1459  financial obligations of the corporation and that such
 1460  financings are reasonably necessary to effectuate the
 1461  requirements of this subsection. The corporation may take all
 1462  actions needed to facilitate tax-free status for such bonds or
 1463  indebtedness, including formation of trusts or other affiliated
 1464  entities. The corporation may pledge assessments, projected
 1465  recoveries from the Florida Hurricane Catastrophe Fund, other
 1466  reinsurance recoverables, Citizens policyholder surcharges and
 1467  other surcharges, and other funds available to the corporation
 1468  as security for bonds or other indebtedness. In recognition of
 1469  s. 10, Art. I of the State Constitution, prohibiting the
 1470  impairment of obligations of contracts, it is the intent of the
 1471  Legislature that no action not be taken whose purpose is to
 1472  impair any bond indenture or financing agreement or any revenue
 1473  source committed by contract to such bond or other indebtedness.
 1474         b. May provide that the corporation employ or otherwise
 1475  contract with individuals or other entities to provide
 1476  administrative or professional services that may be appropriate
 1477  to effectuate the plan. To ensure that the corporation is
 1478  operating in an efficient and economic manner while providing
 1479  quality service to policyholders, applicants, and agents, the
 1480  board shall commission an independent third-party consultant
 1481  having expertise in insurance company management or insurance
 1482  company management consulting to prepare a report and make
 1483  recommendations on the relative costs and benefits of
 1484  outsourcing various policy issuance and service functions to
 1485  private servicing carriers or entities performing similar
 1486  functions in the private market for a fee, rather than
 1487  performing such functions in-house. In making such
 1488  recommendations, the consultant shall consider how other
 1489  residual markets, both in this state and around the country,
 1490  outsource appropriate functions or use servicing carriers to
 1491  better match expenses with revenues that fluctuate based on a
 1492  widely varying policy count. The report must be completed by
 1493  July 1, 2012. Upon receiving the report, the executive director,
 1494  with the concurrence of the board, shall develop a plan to
 1495  implement the report and submit the plan for review,
 1496  modification, and approval to the Financial Services Commission.
 1497  Upon the commission’s approval of the plan, the board shall
 1498  begin implementing the plan by January 1, 2013.
 1499         4. Must require that the corporation operate subject to the
 1500  supervision and approval of a board of governors consisting of
 1501  eight individuals who are residents of this state and who are,
 1502  from different geographical areas of the this state.
 1503         a. The Governor, the Chief Financial Officer, the President
 1504  of the Senate, and the Speaker of the House of Representatives
 1505  shall each appoint two members of the board. All board members,
 1506  except those appointed by the speaker, must be confirmed by the
 1507  Senate during the legislative session following their
 1508  appointment. At least one of the two members appointed by each
 1509  appointing officer must have demonstrated expertise in insurance
 1510  and must be is deemed to be within the scope of the exemption
 1511  provided under in s. 112.313(7)(b). The Chief Financial Officer
 1512  shall designate one of the appointees as chair for the purpose
 1513  of presiding over the orderly conduct of meetings. An appointee
 1514  serves as chair for no more than one term. All board members
 1515  serve at the pleasure of the appointing officer. All members of
 1516  the board are subject to removal at will by the officers who
 1517  appointed them. All board members, including the chair, shall
 1518  must be appointed to serve for 3-year terms beginning annually
 1519  on a date designated by the plan. However, for the first term
 1520  beginning on or after July 1, 2009, each appointing officer
 1521  shall appoint one member of the board for a 2-year term and one
 1522  member for a 3-year term. A board vacancy shall be filled for
 1523  the unexpired term by the appointing officer. A board member may
 1524  not serve for more than two terms, except that a board member
 1525  appointed to fill an unexpired term created by a vacancy may be
 1526  appointed for two subsequent terms. The Chief Financial Officer
 1527  shall appoint a technical advisory group to provide information
 1528  and advice to the executive director and the board in connection
 1529  with the corporation’s board’s duties under this subsection. The
 1530  executive director shall be appointed by and serve at the
 1531  pleasure of the Governor and the Chief Financial Officer. and
 1532  Senior managers of the corporation shall be appointed by the
 1533  executive director, with the concurrence of engaged by the
 1534  board, and serve at the pleasure of the executive director
 1535  board. Appointment of the Any executive director appointed on or
 1536  after July 1, 2006, is subject to confirmation by the Senate
 1537  upon original appointment and upon the election or reelection of
 1538  the Governor and Chief Financial Officer if retained. The
 1539  executive director is responsible for employing other staff as
 1540  the corporation may require, subject to review and concurrence
 1541  by the board.
 1542         b. The board shall create a Market Accountability Advisory
 1543  Committee to assist the corporation in developing awareness of
 1544  its rates and its customer and agent service levels in
 1545  relationship to the voluntary market insurers writing similar
 1546  coverage.
 1547         (I) The members of the advisory committee consist of the
 1548  following 11 persons, one of whom must be elected chair by the
 1549  members of the committee: four representatives, one appointed by
 1550  the Florida Association of Insurance Agents, one by the Florida
 1551  Association of Insurance and Financial Advisors, one by the
 1552  Professional Insurance Agents of Florida, and one by the Latin
 1553  American Association of Insurance Agencies; three
 1554  representatives appointed by the insurers with the three highest
 1555  voluntary market share of residential property insurance
 1556  business in the state; one representative from the Office of
 1557  Insurance Regulation; one consumer appointed by the board who is
 1558  insured by the corporation at the time of appointment to the
 1559  committee; one representative appointed by the Florida
 1560  Association of Realtors; and one representative appointed by the
 1561  Florida Bankers Association. All members shall be appointed to
 1562  3-year terms, serve at the pleasure of the board of governors,
 1563  and may serve for consecutive terms.
 1564         (II) The committee shall report to the corporation at each
 1565  board meeting on insurance market issues that which may include
 1566  rates and rate competition within with the voluntary market;
 1567  service, including policy issuance, claims processing, and
 1568  general responsiveness to policyholders, applicants, and agents;
 1569  and matters relating to depopulation.
 1570         5. Must provide a procedure for determining the eligibility
 1571  of a risk for coverage by the corporation which applies to both
 1572  new and renewal policies, as follows:
 1573         a. Subject to s. 627.3517, with respect to personal lines
 1574  residential risks, if the risk is offered coverage from an
 1575  authorized insurer at the insurer’s approved rate under a
 1576  standard policy including wind coverage or, if consistent with
 1577  the insurer’s underwriting rules as filed with the office, a
 1578  basic policy including wind coverage, for a new application to
 1579  the corporation for coverage, the risk is not eligible for any
 1580  policy issued by the corporation unless the premium for coverage
 1581  from the authorized insurer is more than 15 percent greater than
 1582  the premium for comparable coverage from the corporation. If the
 1583  risk is not able to obtain such offer, the risk is eligible for
 1584  a standard policy including wind coverage or a basic policy
 1585  including wind coverage issued by the corporation; however, if
 1586  the risk could not be insured under a standard policy including
 1587  wind coverage regardless of market conditions, the risk is
 1588  eligible for a basic policy including wind coverage unless
 1589  rejected under subparagraph 8. However, a policyholder of the
 1590  corporation or a policyholder removed from the corporation
 1591  through an assumption agreement until the end of the assumption
 1592  period remains eligible for coverage from the corporation
 1593  regardless of any offer of coverage from an authorized insurer
 1594  or surplus lines insurer. The corporation shall determine the
 1595  type of policy to be provided on the basis of objective
 1596  standards specified in the underwriting manual and based on
 1597  generally accepted underwriting practices.
 1598         (I) If the risk accepts an offer of coverage through the
 1599  market assistance plan or through a mechanism established by the
 1600  corporation before a policy is issued to the risk by the
 1601  corporation or during the first 30 days of coverage by the
 1602  corporation, and the producing agent who submitted the
 1603  application to the plan or to the corporation is not currently
 1604  appointed by the insurer, the insurer shall:
 1605         (A) Pay to the producing agent of record of the policy for
 1606  the first year, an amount that is the greater of the insurer’s
 1607  usual and customary commission for the type of policy written or
 1608  a fee equal to the usual and customary commission of the
 1609  corporation; or
 1610         (B) Offer to allow the producing agent of record of the
 1611  policy to continue servicing the policy for at least 1 year and
 1612  offer to pay the agent the greater of the insurer’s or the
 1613  corporation’s usual and customary commission for the type of
 1614  policy written.
 1615  
 1616  If the producing agent is unwilling or unable to accept
 1617  appointment, the new insurer shall pay the agent in accordance
 1618  with sub-sub-sub-subparagraph (A).
 1619         (II) If the corporation enters into a contractual agreement
 1620  for a take-out plan, the producing agent of record of the
 1621  corporation policy is entitled to retain any unearned commission
 1622  on the policy, and the insurer shall:
 1623         (A) Pay to the producing agent of record, for the first
 1624  year, an amount that is the greater of the insurer’s usual and
 1625  customary commission for the type of policy written or a fee
 1626  equal to the usual and customary commission of the corporation;
 1627  or
 1628         (B) Offer to allow the producing agent of record to
 1629  continue servicing the policy for at least 1 year and offer to
 1630  pay the agent the greater of the insurer’s or the corporation’s
 1631  usual and customary commission for the type of policy written.
 1632  
 1633  If the producing agent is unwilling or unable to accept
 1634  appointment, the new insurer shall pay the agent in accordance
 1635  with sub-sub-sub-subparagraph (A).
 1636         b. With respect to commercial lines residential risks, for
 1637  a new application to the corporation for coverage, if the risk
 1638  is offered coverage under a policy including wind coverage from
 1639  an authorized insurer at its approved rate, the risk is not
 1640  eligible for a policy issued by the corporation unless the
 1641  premium for coverage from the authorized insurer is more than 15
 1642  percent greater than the premium for comparable coverage from
 1643  the corporation. If the risk is not able to obtain any such
 1644  offer, the risk is eligible for a policy including wind coverage
 1645  issued by the corporation. However, a policyholder of the
 1646  corporation or a policyholder removed from the corporation
 1647  through an assumption agreement until the end of the assumption
 1648  period remains eligible for coverage from the corporation
 1649  regardless of an offer of coverage from an authorized insurer or
 1650  surplus lines insurer.
 1651         (I) If the risk accepts an offer of coverage through the
 1652  market assistance plan or through a mechanism established by the
 1653  corporation before a policy is issued to the risk by the
 1654  corporation or during the first 30 days of coverage by the
 1655  corporation, and the producing agent who submitted the
 1656  application to the plan or the corporation is not currently
 1657  appointed by the insurer, the insurer shall:
 1658         (A) Pay to the producing agent of record of the policy, for
 1659  the first year, an amount that is the greater of the insurer’s
 1660  usual and customary commission for the type of policy written or
 1661  a fee equal to the usual and customary commission of the
 1662  corporation; or
 1663         (B) Offer to allow the producing agent of record of the
 1664  policy to continue servicing the policy for at least 1 year and
 1665  offer to pay the agent the greater of the insurer’s or the
 1666  corporation’s usual and customary commission for the type of
 1667  policy written.
 1668  
 1669  If the producing agent is unwilling or unable to accept
 1670  appointment, the new insurer shall pay the agent in accordance
 1671  with sub-sub-sub-subparagraph (A).
 1672         (II) If the corporation enters into a contractual agreement
 1673  for a take-out plan, the producing agent of record of the
 1674  corporation policy is entitled to retain any unearned commission
 1675  on the policy, and the insurer shall:
 1676         (A) Pay to the producing agent of record, for the first
 1677  year, an amount that is the greater of the insurer’s usual and
 1678  customary commission for the type of policy written or a fee
 1679  equal to the usual and customary commission of the corporation;
 1680  or
 1681         (B) Offer to allow the producing agent of record to
 1682  continue servicing the policy for at least 1 year and offer to
 1683  pay the agent the greater of the insurer’s or the corporation’s
 1684  usual and customary commission for the type of policy written.
 1685  
 1686  If the producing agent is unwilling or unable to accept
 1687  appointment, the new insurer shall pay the agent in accordance
 1688  with sub-sub-sub-subparagraph (A).
 1689         c. For purposes of determining comparable coverage under
 1690  sub-subparagraphs a. and b., the comparison must be based on
 1691  those forms and coverages that are reasonably comparable. The
 1692  corporation may rely on a determination of comparable coverage
 1693  and premium made by the producing agent who submits the
 1694  application to the corporation, made in the agent’s capacity as
 1695  the corporation’s agent. A comparison may be made solely of the
 1696  premium with respect to the main building or structure only on
 1697  the following basis: the same coverage A or other building
 1698  limits; the same percentage hurricane deductible that applies on
 1699  an annual basis or that applies to each hurricane for commercial
 1700  residential property; the same percentage of ordinance and law
 1701  coverage, if the same limit is offered by both the corporation
 1702  and the authorized insurer; the same mitigation credits, to the
 1703  extent the same types of credits are offered both by the
 1704  corporation and the authorized insurer; the same method for loss
 1705  payment, such as replacement cost or actual cash value, if the
 1706  same method is offered both by the corporation and the
 1707  authorized insurer in accordance with underwriting rules; and
 1708  any other form or coverage that is reasonably comparable as
 1709  determined by the board. If an application is submitted to the
 1710  corporation for wind-only coverage in the coastal account, the
 1711  premium for the corporation’s wind-only policy plus the premium
 1712  for the ex-wind policy that is offered by an authorized insurer
 1713  to the applicant must be compared to the premium for multiperil
 1714  coverage offered by an authorized insurer, subject to the
 1715  standards for comparison specified in this subparagraph. If the
 1716  corporation or the applicant requests from the authorized
 1717  insurer a breakdown of the premium of the offer by types of
 1718  coverage so that a comparison may be made by the corporation or
 1719  its agent and the authorized insurer refuses or is unable to
 1720  provide such information, the corporation may treat the offer as
 1721  not being an offer of coverage from an authorized insurer at the
 1722  insurer’s approved rate.
 1723         6. Must include rules for classifications of risks and
 1724  rates.
 1725         7. Must provide that if premium and investment income for
 1726  an account attributable to a particular calendar year are in
 1727  excess of projected losses and expenses for the account
 1728  attributable to that year, such excess must shall be held in
 1729  surplus in the account. Such surplus must be available to defray
 1730  deficits in that account as to future years and used for that
 1731  purpose before assessing assessable insurers and assessable
 1732  insureds as to any calendar year.
 1733         8. Must provide objective criteria and procedures that are
 1734  to be uniformly applied to all applicants in determining whether
 1735  an individual risk is so hazardous as to be uninsurable. In
 1736  making this determination and in establishing the criteria and
 1737  procedures, the following must be considered:
 1738         a. Whether the likelihood of a loss for the individual risk
 1739  is substantially higher than for other risks of the same class;
 1740  and
 1741         b. Whether the uncertainty associated with the individual
 1742  risk is such that an appropriate premium cannot be determined.
 1743  
 1744  The acceptance or rejection of a risk by the corporation shall
 1745  be construed as the private placement of insurance, and the
 1746  provisions of chapter 120 do not apply.
 1747         9. Must provide that the corporation make its best efforts
 1748  to procure catastrophe reinsurance at reasonable rates, to cover
 1749  its projected 100-year probable maximum loss as determined by
 1750  the board of governors.
 1751         10. Must provide that the policies issued by the
 1752  corporation must provide that if the corporation or the market
 1753  assistance plan obtains an offer from an authorized insurer to
 1754  cover the risk at its approved rates, the risk is no longer
 1755  eligible for renewal through the corporation, except as
 1756  otherwise provided in this subsection.
 1757         11. Must provide that corporation policies and applications
 1758  must include a notice that the corporation policy could, under
 1759  this section, be replaced with a policy issued by an authorized
 1760  insurer which does not provide coverage identical to the
 1761  coverage provided by the corporation. The notice must also
 1762  specify that acceptance of corporation coverage creates a
 1763  conclusive presumption that the applicant or policyholder is
 1764  aware of this potential.
 1765         12. May establish, subject to approval by the office,
 1766  different eligibility requirements and operational procedures
 1767  for any line or type of coverage for any specified county or
 1768  area if the board determines that such changes are justified due
 1769  to the voluntary market being sufficiently stable and
 1770  competitive in such area or for such line or type of coverage
 1771  and that consumers who, in good faith, are unable to obtain
 1772  insurance through the voluntary market through ordinary methods
 1773  continue to have access to coverage from the corporation. If
 1774  coverage is sought in connection with a real property transfer,
 1775  the requirements and procedures may not provide an effective
 1776  date of coverage later than the date of the closing of the
 1777  transfer as established by the transferor, the transferee, and,
 1778  if applicable, the lender.
 1779         13. Must provide that, with respect to the coastal account,
 1780  any assessable insurer that has with a surplus as to
 1781  policyholders of $25 million or less writing 25 percent or more
 1782  of its total countrywide property insurance premiums in this
 1783  state may petition the office, within the first 90 days of each
 1784  calendar year, petition the office to qualify as a limited
 1785  apportionment company. A regular assessment levied by the
 1786  corporation on a limited apportionment company for a deficit
 1787  incurred by the corporation for the coastal account may be paid
 1788  to the corporation on a monthly basis as the assessments are
 1789  collected by the limited apportionment company from its
 1790  insureds. The, but a limited apportionment company must begin
 1791  collecting the regular assessments within not later than 90 days
 1792  after the regular assessments are levied by the corporation, and
 1793  the regular assessments must be paid in full within 15 months
 1794  after being levied by the corporation. A limited apportionment
 1795  company shall collect from its policyholders any emergency
 1796  assessment imposed under sub-subparagraph (b)3.d. The plan must
 1797  provide that, if the office determines that any regular
 1798  assessment will result in an impairment of the surplus of a
 1799  limited apportionment company, the office may direct that all or
 1800  part of such assessment be deferred as provided in subparagraph
 1801  (q)4. However, an emergency assessment to be collected from
 1802  policyholders under sub-subparagraph (b)3.d. may not be limited
 1803  or deferred.
 1804         14. Must provide that the corporation appoint as its
 1805  licensed agents only those agents who at the time of initial
 1806  appointment also hold an appointment as defined in s. 626.015(3)
 1807  with an insurer who at the time of the agent’s initial
 1808  appointment by the corporation is authorized to write and is
 1809  actually writing personal lines residential property coverage,
 1810  commercial residential property coverage, or commercial
 1811  nonresidential property coverage within the state. As a
 1812  condition of continued appointment, agents of the corporation
 1813  must maintain appropriate documentation specified by the
 1814  corporation which warrants and certifies that alternative
 1815  coverage was annually sought for each risk placed by that agent
 1816  with the corporation in accordance with s. 627.3518. After
 1817  January 1, 2014, if an agent places a policy with the
 1818  corporation which was ineligible for coverage based on
 1819  eligibility standards at the time of placement, agent
 1820  commissions may not be paid on that policy.
 1821         15. Must provide a premium payment plan option to its
 1822  policyholders which, at a minimum, allows for quarterly and
 1823  semiannual payment of premiums. A monthly payment plan may, but
 1824  is not required to, be offered.
 1825         16. Must limit coverage on mobile homes or manufactured
 1826  homes built before 1994 to actual cash value of the dwelling
 1827  rather than replacement costs of the dwelling.
 1828         17. May provide such limits of coverage as the board
 1829  determines, consistent with the requirements of this subsection.
 1830         18. May require commercial property to meet specified
 1831  hurricane mitigation construction features as a condition of
 1832  eligibility for coverage.
 1833         19. Must provide that new or renewal policies issued by the
 1834  corporation on or after January 1, 2012, which cover sinkhole
 1835  loss do not include coverage for any loss to appurtenant
 1836  structures, driveways, sidewalks, decks, or patios that are
 1837  directly or indirectly caused by sinkhole activity. The
 1838  corporation shall exclude such coverage using a notice of
 1839  coverage change, which may be included with the policy renewal,
 1840  and not by issuance of a notice of nonrenewal of the excluded
 1841  coverage upon renewal of the current policy.
 1842         20. Must, as of July January 1, 2014 2012, must require
 1843  that the agent obtain from an applicant for coverage from the
 1844  corporation an acknowledgment signed by the applicant, which
 1845  includes, at a minimum, the following statement:
 1846  
 1847   ACKNOWLEDGMENT OF POTENTIAL SURCHARGEAND ASSESSMENT LIABILITY:  
 1848  
 1849         1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
 1850  CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
 1851  DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
 1852  MY POLICY COULD BE SUBJECT TO SURCHARGES, WHICH WILL BE DUE AND
 1853  PAYABLE UPON RENEWAL, CANCELLATION, OR TERMINATION OF THE
 1854  POLICY, AND THAT THE SURCHARGES COULD BE AS HIGH AS 45 PERCENT
 1855  OF MY PREMIUM, OR A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA
 1856  LEGISLATURE.
 1857         2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
 1858  SURCHARGE, WHICH COULD BE AS HIGH AS 45 PERCENT OF MY PREMIUM,
 1859  BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
 1860  BE ELIGIBLE FOR COVERAGE BY CITIZENS I MUST FIRST TRY TO OBTAIN
 1861  PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
 1862  WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
 1863  ARE REGULATED AND APPROVED BY THE STATE.
 1864         3.2. I ALSO UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
 1865  ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
 1866  INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
 1867  FLORIDA LEGISLATURE.
 1868         4.3. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
 1869  CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
 1870  STATE OF FLORIDA.
 1871         a. The corporation shall maintain, in electronic format or
 1872  otherwise, a copy of the applicant’s signed acknowledgment and
 1873  provide a copy of the statement to the policyholder as part of
 1874  his or her the first renewal after the effective date of this
 1875  subparagraph.
 1876         b. The signed acknowledgment form creates a conclusive
 1877  presumption that the policyholder understood and accepted his or
 1878  her potential surcharge and assessment liability as a
 1879  policyholder of the corporation.
 1880         (g) The executive director, with the concurrence of the
 1881  board, shall determine whether it is more cost-effective and in
 1882  the best interests of the corporation to use legal services
 1883  provided by in-house attorneys employed by the corporation
 1884  rather than contracting with outside counsel. In making such
 1885  determination, the board shall document its findings and shall
 1886  consider: the expertise needed; whether time commitments exceed
 1887  in-house staff resources; whether local representation is
 1888  needed; the travel, lodging and other costs associated with in
 1889  house representation; and such other factors that the board
 1890  determines are relevant.
 1891         (i)1. The Office of the Internal Auditor is established
 1892  within the corporation to provide a central point for
 1893  coordination of and responsibility for activities that promote
 1894  accountability, integrity, and efficiency to the policyholders
 1895  and to the taxpayers of this state. The internal auditor shall
 1896  be appointed by the board of governors, shall report to and be
 1897  under the general supervision of the board of governors, and is
 1898  not subject to supervision by an any employee of the
 1899  corporation. Administrative staff and support shall be provided
 1900  by the corporation. The internal auditor shall be appointed
 1901  without regard to political affiliation. It is the duty and
 1902  responsibility of the internal auditor to:
 1903         a. Provide direction for, supervise, conduct, and
 1904  coordinate audits, investigations, and management reviews
 1905  relating to the programs and operations of the corporation.
 1906         b. Conduct, supervise, or coordinate other activities
 1907  carried out or financed by the corporation for the purpose of
 1908  promoting efficiency in the administration of, or preventing and
 1909  detecting fraud, abuse, and mismanagement in, its programs and
 1910  operations.
 1911         c. Submit final audit reports, reviews, or investigative
 1912  reports to the board of governors, the executive director, the
 1913  members of the Financial Services Commission, and the President
 1914  of the Senate and the Speaker of the House of Representatives.
 1915         d. Keep the executive director and the board of governors
 1916  informed concerning fraud, abuses, and internal control
 1917  deficiencies relating to programs and operations administered or
 1918  financed by the corporation, recommend corrective action, and
 1919  report on the progress made in implementing corrective action.
 1920         e. Report expeditiously to the Department of Law
 1921  Enforcement or other law enforcement agencies, as appropriate,
 1922  whenever the internal auditor has reasonable grounds to believe
 1923  there has been a violation of criminal law.
 1924         f. Cooperate and coordinate activities with the
 1925  corporation’s inspector general.
 1926         2. On or before February 15, the internal auditor shall
 1927  prepare an annual report evaluating the effectiveness of the
 1928  internal controls of the corporation and providing
 1929  recommendations for corrective action, if necessary, and
 1930  summarizing the audits, reviews, and investigations conducted by
 1931  the office during the preceding fiscal year. The final report
 1932  shall be furnished to the board of governors and the executive
 1933  director, the President of the Senate, the Speaker of the House
 1934  of Representatives, and the Financial Services Commission.
 1935         (m)1. The Auditor General shall conduct an operational
 1936  audit of the corporation annually every 3 years to evaluate
 1937  management’s performance in administering laws, policies, and
 1938  procedures governing the operations of the corporation in an
 1939  efficient and effective manner. The scope of the review must
 1940  shall include, but is not limited to, evaluating claims
 1941  handling, customer service, take-out programs and bonuses;,
 1942  financing arrangements made to address a 100-year probable
 1943  maximum loss; personnel costs and administration; underwriting,
 1944  including processes designed to ensure compliance with policy
 1945  eligibility requirements of law;, procurement of goods and
 1946  services;, internal controls;, and the internal audit function;
 1947  and related internal controls. A copy of the report shall be
 1948  provided to the corporation’s board, the President of the
 1949  Senate, the Speaker of the House of Representatives, each member
 1950  of the Financial Services Commission, and the Office of
 1951  Insurance Regulation. The initial audit must be completed by
 1952  February 1, 2009.
 1953         2. The executive director, with the concurrence of the
 1954  board, shall contract with an independent auditing firm to
 1955  conduct a performance audit of the corporation every 2 years.
 1956  The objectives of the audit include, but are not limited to, an
 1957  evaluation, within the context of insurance industry best
 1958  practices, of the corporation’s strategic planning processes,
 1959  the functionality of the corporation’s organizational structure,
 1960  the compensation levels of senior management, and the overall
 1961  management and operations of the corporation. A copy of the
 1962  audit report shall be provided to the corporation’s board, the
 1963  President of the Senate, the Speaker of the House of
 1964  Representatives, each member of the Financial Services
 1965  Commission, the Office of Insurance Regulation, and the Auditor
 1966  General. The initial audit must be completed by June 1, 2014.
 1967         (q)1. The corporation shall certify to the office its needs
 1968  for annual assessments as to a particular calendar year, and for
 1969  any interim assessments that it deems to be necessary to sustain
 1970  operations as to a particular year pending the receipt of annual
 1971  assessments. Upon verification, the office shall approve such
 1972  certification, and the corporation shall levy such annual or
 1973  interim assessments. Such assessments shall be prorated as
 1974  provided in paragraph (b). The corporation shall take all
 1975  reasonable and prudent steps necessary to collect the amount of
 1976  assessments due from each assessable insurer, including, if
 1977  prudent, filing suit to collect the assessments, and the office
 1978  may provide such assistance to the corporation it deems
 1979  appropriate. If the corporation is unable to collect an
 1980  assessment from any assessable insurer, the uncollected
 1981  assessments shall be levied as an additional assessment against
 1982  the assessable insurers and any assessable insurer required to
 1983  pay an additional assessment as a result of such failure to pay
 1984  shall have a cause of action against the such nonpaying
 1985  assessable insurer. Assessments must shall be included as an
 1986  appropriate factor in the making of rates. The failure of a
 1987  surplus lines agent to collect and remit any regular or
 1988  emergency assessment levied by the corporation is considered to
 1989  be a violation of s. 626.936 and subjects the surplus lines
 1990  agent to the penalties provided in that section.
 1991         2. The governing body of any unit of local government, any
 1992  residents of which are insured by the corporation, may issue
 1993  bonds as defined in s. 125.013 or s. 166.101 from time to time
 1994  to fund an assistance program, in conjunction with the
 1995  corporation, for the purpose of defraying deficits of the
 1996  corporation. In order to avoid needless and indiscriminate
 1997  proliferation, duplication, and fragmentation of such assistance
 1998  programs, the any unit of local government, any residents of
 1999  which are insured by the corporation, may provide for the
 2000  payment of losses, regardless of whether or not the losses
 2001  occurred within or outside of the territorial jurisdiction of
 2002  the local government. Revenue bonds under this subparagraph may
 2003  not be issued until validated pursuant to chapter 75, unless a
 2004  state of emergency is declared by executive order or
 2005  proclamation of the Governor pursuant to s. 252.36 which makes
 2006  making such findings as are necessary to determine that it is in
 2007  the best interests of, and necessary for, the protection of the
 2008  public health, safety, and general welfare of residents of this
 2009  state and declaring it an essential public purpose to permit
 2010  certain municipalities or counties to issue such bonds as will
 2011  permit relief to claimants and policyholders of the corporation.
 2012  Any such unit of local government may enter into such contracts
 2013  with the corporation and with any other entity created pursuant
 2014  to this subsection as are necessary to carry out this paragraph.
 2015  Any bonds issued are under this subparagraph shall be payable
 2016  from and secured by moneys received by the corporation from
 2017  emergency assessments under sub-subparagraph (b)3.d., and
 2018  assigned and pledged to or on behalf of the unit of local
 2019  government for the benefit of the holders of such bonds. The
 2020  funds, credit, property, and taxing power of the state or of the
 2021  unit of local government may shall not be pledged for the
 2022  payment of such bonds.
 2023         3.a. The corporation shall adopt one or more programs
 2024  subject to approval by the office for the reduction of both new
 2025  and renewal writings by in the corporation. The corporation may
 2026  consider any prudent and not unfairly discriminatory approach to
 2027  reducing corporation writings.
 2028         a. The corporation may adopt a credit against assessment
 2029  liability or other liability which provides an incentive for
 2030  insurers to take and keep risks out of the corporation by
 2031  maintaining or increasing voluntary writings in counties or
 2032  areas in which corporation risks are highly concentrated, and a
 2033  program to provide a formula under which an insurer voluntarily
 2034  taking risks out of the corporation by maintaining or increasing
 2035  voluntary writings is relieved, wholly or partially, from
 2036  assessments under sub-subparagraph (b)3.a.
 2037         b.Beginning January 1, 2008, Any program the corporation
 2038  adopts for the payment of bonuses to an insurer for each risk
 2039  the insurer removes from the corporation must shall comply with
 2040  s. 627.3511(2) and may not exceed the amount referenced in s.
 2041  627.3511(2) for each risk removed. The corporation may consider
 2042  any prudent and not unfairly discriminatory approach to reducing
 2043  corporation writings, and may adopt a credit against assessment
 2044  liability or other liability that provides an incentive for
 2045  insurers to take risks out of the corporation and to keep risks
 2046  out of the corporation by maintaining or increasing voluntary
 2047  writings in counties or areas in which corporation risks are
 2048  highly concentrated and a program to provide a formula under
 2049  which an insurer voluntarily taking risks out of the corporation
 2050  by maintaining or increasing voluntary writings will be relieved
 2051  wholly or partially from assessments under sub-subparagraph
 2052  (b)3.a. However, Any “take-out bonus” or payment to an insurer
 2053  must be conditioned on the property being insured for at least 5
 2054  years by the insurer, unless canceled or nonrenewed by the
 2055  policyholder. If the policy is canceled or nonrenewed by the
 2056  policyholder before the end of the 5-year period, the amount of
 2057  the take-out bonus must be prorated for the time period the
 2058  policy was insured. If When the corporation enters into a
 2059  contractual agreement for a take-out plan, the producing agent
 2060  of record of the corporation policy is entitled to retain any
 2061  unearned commission on such policy, and the insurer shall
 2062  either:
 2063         (I) Pay to the producing agent of record of the policy, for
 2064  the first year, an amount which is the greater of the insurer’s
 2065  usual and customary commission for the type of policy written or
 2066  a policy fee equal to the usual and customary commission of the
 2067  corporation; or
 2068         (II) Offer to allow the producing agent of record of the
 2069  policy to continue servicing the policy for at least a period of
 2070  not less than 1 year and offer to pay the agent the insurer’s
 2071  usual and customary commission for the type of policy written.
 2072  If the producing agent is unwilling or unable to accept
 2073  appointment by the new insurer, the new insurer shall pay the
 2074  agent in accordance with sub-sub-subparagraph (I).
 2075         c.b. Any credit or exemption from regular assessments
 2076  adopted under this subparagraph shall last up to no longer than
 2077  the 3 years after following the cancellation or expiration of
 2078  the policy by the corporation. With the approval of the office,
 2079  the board may extend such credits for an additional year if the
 2080  insurer guarantees an additional year of renewability for all
 2081  policies removed from the corporation, or for 2 additional years
 2082  if the insurer guarantees 2 additional years of renewability for
 2083  all policies so removed.
 2084         d.c.A There shall be no credit, limitation, exemption, or
 2085  deferment from emergency assessments to be collected from
 2086  policyholders pursuant to sub-subparagraph (b)3.d. is
 2087  prohibited.
 2088         4. The corporation plan shall provide for the deferment, in
 2089  whole or in part, of the assessment of an assessable insurer,
 2090  other than an emergency assessment collected from policyholders
 2091  pursuant to sub-subparagraph (b)3.d., if the office finds that
 2092  payment of the assessment would endanger or impair the solvency
 2093  of the insurer. If In the event an assessment against an
 2094  assessable insurer is deferred in whole or in part, the amount
 2095  by which such assessment is deferred may be assessed against the
 2096  other assessable insurers in a manner consistent with the basis
 2097  for assessments set forth in paragraph (b).
 2098         5. Effective July 1, 2007, In order to evaluate the costs
 2099  and benefits of approved take-out plans, if the corporation pays
 2100  a bonus or other payment to an insurer for an approved take-out
 2101  plan, it shall maintain a record of the address or such other
 2102  identifying information on the property or risk removed in order
 2103  to track if and when the property or risk is later insured by
 2104  the corporation.
 2105         6. Any policy taken out, assumed, or removed from the
 2106  corporation is, as of the effective date of the take-out,
 2107  assumption, or removal, direct insurance issued by the insurer
 2108  and not by the corporation, even if the corporation continues to
 2109  service the policies. This subparagraph applies to policies of
 2110  the corporation and not policies taken out, assumed, or removed
 2111  from any other entity.
 2112         6. The corporation may adopt one or more programs to
 2113  encourage authorized insurers to remove policies from the
 2114  corporation through a loan from the corporation to an insurer
 2115  secured by a surplus note that contains such necessary and
 2116  reasonable provisions as the corporation requires. Such surplus
 2117  note is subject to the review and approval of the office
 2118  pursuant to s. 628.401. The corporation may include, but is not
 2119  limited to, provisions regarding the maximum size of a loan to
 2120  an insurer, capital matching requirements, the relationship
 2121  between the aggregate number of policies or amount of loss
 2122  exposure removed from the association and the amount of a loan,
 2123  retention requirements related to policies removed from the
 2124  corporation, and limitations on the number of insurers receiving
 2125  loans from the corporation under any one management group in
 2126  whatever form or arrangement. If a loan secured by a surplus
 2127  note is provided to a new mutual insurance company, the
 2128  corporation may require the board of the new mutual insurer to
 2129  have a majority of independent board members, may restrict the
 2130  ability of the new mutual insurer to convert to a stock insurer
 2131  while the mutual insurer owes any principal or interest under
 2132  the surplus note to the corporation, establish a capital match
 2133  requirement of up to $1 of private capital for each $4 of the
 2134  corporation’s loan to a new mutual insurer, and limit the
 2135  eligibility of a new mutual insurer for a waiver of the ceding
 2136  commission traditionally associated with take-out programs from
 2137  the corporation to those new mutual insurers that agree
 2138  contractually to maintain an expense ratio below 20 per cent of
 2139  written premium. For this purpose, the term “expense ratio”
 2140  means the sum of agent commissions and other acquisition
 2141  expenses; general and administrative expenses; and premium
 2142  taxes, licenses, and fees, divided by the gross written premium.
 2143         (z) In enacting the provisions of this section, the
 2144  Legislature recognizes that both the Florida Windstorm
 2145  Underwriting Association and the Residential Property and
 2146  Casualty Joint Underwriting Association have entered into
 2147  financing arrangements that obligate each entity to service its
 2148  debts and maintain the capacity to repay funds secured under
 2149  these financing arrangements. It is the intent of the
 2150  Legislature that nothing in this section not be construed to
 2151  compromise, diminish, or interfere with the rights of creditors
 2152  under such financing arrangements. It is further the intent of
 2153  the Legislature to preserve the obligations of the Florida
 2154  Windstorm Underwriting Association and Residential Property and
 2155  Casualty Joint Underwriting Association with regard to
 2156  outstanding financing arrangements, with such obligations
 2157  passing entirely and unchanged to the corporation and,
 2158  specifically, to the applicable account of the corporation. So
 2159  long as any bonds, notes, indebtedness, or other financing
 2160  obligations of the Florida Windstorm Underwriting Association or
 2161  the Residential Property and Casualty Joint Underwriting
 2162  Association are outstanding, under the terms of the financing
 2163  documents pertaining to them, the executive director of the
 2164  corporation, with the concurrence of the governing board, of the
 2165  corporation shall have and shall exercise the authority to levy,
 2166  charge, collect, and receive all premiums, assessments,
 2167  surcharges, charges, revenues, and receipts that the
 2168  associations had authority to levy, charge, collect, or receive
 2169  under the provisions of subsection (2) and this subsection,
 2170  respectively, as they existed on January 1, 2002, to provide
 2171  moneys, without exercise of the authority provided by this
 2172  subsection, in at least the amounts, and by the times, as would
 2173  be provided under those former provisions of subsection (2) or
 2174  this subsection, respectively, so that the value, amount, and
 2175  collectability of any assets, revenues, or revenue source
 2176  pledged or committed to, or any lien thereon securing such
 2177  outstanding bonds, notes, indebtedness, or other financing
 2178  obligations is will not be diminished, impaired, or adversely
 2179  affected by the amendments made by this section act and to
 2180  permit compliance with all provisions of financing documents
 2181  pertaining to such bonds, notes, indebtedness, or other
 2182  financing obligations, or the security or credit enhancement for
 2183  them, and any reference in this subsection to bonds, notes,
 2184  indebtedness, financing obligations, or similar obligations, of
 2185  the corporation must shall include like instruments or contracts
 2186  of the Florida Windstorm Underwriting Association and the
 2187  Residential Property and Casualty Joint Underwriting Association
 2188  to the extent not inconsistent with the provisions of the
 2189  financing documents pertaining to them.
 2190         (gg) The Office of Inspector General is established within
 2191  the corporation to provide a central point for coordination of
 2192  and responsibility for activities that promote accountability,
 2193  integrity, and efficiency. The office shall be headed by an
 2194  inspector general, which is a senior management position that
 2195  involves planning, coordinating, and performing activities
 2196  assigned to and assumed by the inspector general for the
 2197  corporation.
 2198         1. The inspector general shall be appointed by the
 2199  Financial Services Commission and may be removed from office
 2200  only by the commission. The inspector general shall be appointed
 2201  without regard to political affiliation.
 2202         a. At a minimum, the inspector general must possess a
 2203  bachelor’s degree from an accredited college or university and 8
 2204  years of professional experience related to the duties of an
 2205  inspector general as described in this paragraph, of which 5
 2206  years must have been at a supervisory level.
 2207         b. Until June 30, 2014, the inspector general shall be
 2208  under the general supervision of the Financial Services
 2209  Commission and not subject to the supervision of any employee of
 2210  the corporation. Beginning July 1, 2014, the inspector general
 2211  shall report to, and be under the supervision of, the chair of
 2212  the board of governors. The executive director or corporation
 2213  staff may not prevent or prohibit the inspector general from
 2214  initiating, carrying out, or completing any review, evaluation,
 2215  or investigation.
 2216         2. The inspector general shall initiate, direct,
 2217  coordinate, participate in, and perform studies, reviews,
 2218  evaluations, and investigations designed to assess management
 2219  practices; compliance with laws, rules, and policies; and
 2220  program effectiveness and efficiency. This includes:
 2221         a. Conducting internal examinations; investigating
 2222  allegations of fraud, waste, abuse, malfeasance, mismanagement,
 2223  employee misconduct, or violations of corporation policies; and
 2224  conducting any other investigations as directed by the Financial
 2225  Services Commission or as independently determined.
 2226         b. Evaluating and recommending actions regarding security,
 2227  the ethical behavior of personnel and vendors, and compliance
 2228  with rules, laws, policies, and personnel matters; and rendering
 2229  ethics opinions.
 2230         c. Overseeing or participating in personnel and
 2231  administrative policy compliance and management, operational
 2232  reviews, and conducting and selecting human resources-related
 2233  advice and consultation.
 2234         d. In conjunction with the ethics and compliance officer,
 2235  evaluating the application of a corporation code of ethics,
 2236  providing input on the design and content of ethics-related
 2237  policy training courses, educating employees on the code and on
 2238  appropriate conduct, and checking for compliance.
 2239         e. Participating in policy development and review. This
 2240  includes working collaboratively with the ethics and compliance
 2241  officer in the creation, modification, and maintenance of
 2242  personnel and administrative services policies and in the
 2243  identification of policy enhancements; and researching policy
 2244  related issues.
 2245         f. Participating in the activities of the senior management
 2246  team and evaluating the management’s compliance with recommended
 2247  solutions.
 2248         g. Cooperating and coordinating activities with the chief
 2249  of internal audit, but not conducting internal audits.
 2250         h. Maintaining records of investigations and discipline in
 2251  accordance with established policies.
 2252         i. Supervising and directing the tasks and assignments of
 2253  the staff assigned to assist with the inspector general’s
 2254  projects. This includes regular review and feedback regarding
 2255  work in progress and upon completion and providing input
 2256  regarding relevant training and staff development activities as
 2257  warranted.
 2258         j. Directing, planning, preparing, and presenting interim
 2259  and final reports and oral briefings to the Financial Services
 2260  Commission and the executive director which communicate the
 2261  results of studies, reviews, and investigations.
 2262         k. Providing the executive director with independent and
 2263  objective assessments of programs and activities.
 2264         l. Completing special projects and assignments as directed
 2265  by the Financial Services Commission and performing other duties
 2266  as requested by the commission.
 2267         3. At least annually, the inspector general shall provide a
 2268  report to the President of the Senate and the Speaker of the
 2269  House of Representatives regarding the corporation’s
 2270  clearinghouse and the extent to which policies are being
 2271  returned to the voluntary market. This report must include an
 2272  analysis regarding the effectiveness of the clearinghouse in
 2273  encouraging voluntary market participation in depopulation.
 2274         Section 10. Effective October 1, 2013, paragraph (e) of
 2275  subsection (6) of section 627.351, Florida Statutes, is amended
 2276  to read
 2277         627.351 Insurance risk apportionment plans.—
 2278         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 2279         (e) The corporation is subject to s. 287.057 for the
 2280  purchase of commodities and contractual services except as
 2281  otherwise provided in this paragraph. Services provided by
 2282  tradepersons or technical experts to assist a licensed adjuster
 2283  in the evaluation of individual claims are not subject to the
 2284  procurement requirements of this section. Additionally, the
 2285  procurement of financial services providers and underwriters
 2286  must be made pursuant to s. 627.3513 Purchases that equal or
 2287  exceed $2,500, but are less than $25,000, shall be made by
 2288  receipt of written quotes, written record of telephone quotes,
 2289  or informal bids, whenever practical. The procurement of goods
 2290  or services valued at or over $25,000 shall be subject to
 2291  competitive solicitation, except in situations where the goods
 2292  or services are provided by a sole source or are deemed an
 2293  emergency purchase; the services are exempted from competitive
 2294  solicitation requirements under s. 287.057(3)(f); or the
 2295  procurement of services is subject to s. 627.3513. Justification
 2296  for the sole-sourcing or emergency procurement must be
 2297  documented. Contracts for goods or services valued at or more
 2298  than over $100,000 are subject to approval by the board.
 2299         1. The corporation is an agency for the purposes of s.
 2300  287.057, except for subsection (22) of that section for which
 2301  the corporation is an eligible user.
 2302         a. The authority of the Department of Management Services
 2303  and the Chief Financial Officer under s. 287.057 extends to the
 2304  corporation as if the corporation were an agency.
 2305         b. The executive director of the corporation is the agency
 2306  head under s. 287.057, except for resolution of bid protests for
 2307  which the board would serve as the agency head.
 2308         2. The corporation must provide notice of a decision or
 2309  intended decision concerning a solicitation, contract award, or
 2310  exceptional purchase by electronic posting. Such notice must
 2311  contain the following statement: “Failure to file a protest
 2312  within the time prescribed in this section constitutes a waiver
 2313  of proceedings.”
 2314         a. A person adversely affected by the corporation’s
 2315  decision or intended decision to award a contract pursuant to s.
 2316  287.057(1) or s. 287.057(3)(c) who elects to challenge the
 2317  decision must file a written notice of protest with the
 2318  executive director of the corporation within 72 hours after the
 2319  corporation posts a notice of its decision or intended decision.
 2320  For a protest of the terms, conditions, and specifications
 2321  contained in a solicitation, including any provisions governing
 2322  the methods for ranking bids, proposals, replies, awarding
 2323  contracts, reserving rights of further negotiation, or modifying
 2324  or amending any contract, the notice of protest must be filed in
 2325  writing within 72 hours after the posting of the solicitation.
 2326  Saturdays, Sundays, and state holidays are excluded in the
 2327  computation of the 72-hour time period.
 2328         b. A formal written protest must be filed within 10 days
 2329  after the date the notice of protest is filed. The formal
 2330  written protest must state with particularity the facts and law
 2331  upon which the protest is based. Upon receipt of a formal
 2332  written protest that has been timely filed, the corporation must
 2333  stop the solicitation or contract award process until the
 2334  subject of the protest is resolved by final board action unless
 2335  the executive director sets forth in writing particular facts
 2336  and circumstances that require the continuance of the
 2337  solicitation or contract award process without delay in order to
 2338  avoid an immediate and serious danger to the public health,
 2339  safety, or welfare. The corporation must provide an opportunity
 2340  to resolve the protest by mutual agreement between the parties
 2341  within 7 business days after receipt of the formal written
 2342  protest. If the subject of a protest is not resolved by mutual
 2343  agreement within 7 business days, the corporation’s board must
 2344  place the protest on the agenda and resolve it at its next
 2345  regularly scheduled meeting. The protest must be heard by the
 2346  board at a publicly noticed meeting in accordance with
 2347  procedures established by the board.
 2348         c. In a protest of an invitation-to-bid or request-for
 2349  proposals procurement, submissions made after the bid or
 2350  proposal opening which amend or supplement the bid or proposal
 2351  may not be considered. In protesting an invitation-to-negotiate
 2352  procurement, submissions made after the corporation announces
 2353  its intent to award a contract, reject all replies, or withdraw
 2354  the solicitation that amends or supplements the reply may not be
 2355  considered. Unless otherwise provided by law, the burden of
 2356  proof rests with the party protesting the corporation’s action.
 2357  In a competitive-procurement protest, other than a rejection of
 2358  all bids, proposals, or replies, the corporation’s board must
 2359  conduct a de novo proceeding to determine whether the
 2360  corporation’s proposed action is contrary to the corporation’s
 2361  governing statutes, the corporation’s rules or policies, or the
 2362  solicitation specifications. The standard of proof for the
 2363  proceeding is whether the corporation’s action was clearly
 2364  erroneous, contrary to competition, arbitrary, or capricious. In
 2365  any bid-protest proceeding contesting an intended corporation
 2366  action to reject all bids, proposals, or replies, the standard
 2367  of review by the board is whether the corporation’s intended
 2368  action is illegal, arbitrary, dishonest, or fraudulent.
 2369         d. Failure to file a notice of protest or failure to file a
 2370  formal written protest constitutes a waiver of proceedings.
 2371         3. Contract actions and decisions by the board under this
 2372  paragraph are final. Any further legal remedy must be made in
 2373  the Circuit Court of Leon County.
 2374         Section 11. The purchase of commodities and contractual
 2375  services by Citizens Property Insurance Corporation commenced
 2376  before October 1, 2013, is governed by the law in effect on
 2377  September 30, 2013.
 2378         Section 12. Effective January 1, 2014, paragraph (n) of
 2379  subsection (6) of section 627.351, Florida Statutes, is amended
 2380  to read:
 2381         627.351 Insurance risk apportionment plans.—
 2382         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
 2383         (n)1. Rates for coverage provided by the corporation must
 2384  be actuarially sound and subject to s. 627.062, Except as
 2385  otherwise provided in this paragraph, rates for coverage
 2386  provided by the corporation must be actuarially sound and not
 2387  competitive with approved rates charged in the admitted
 2388  voluntary market in order for the corporation to function as a
 2389  residual market mechanism that provides insurance only if
 2390  insurance cannot be procured in the voluntary market.
 2391         a. In establishing actuarially sound rates the corporation
 2392  shall include an appropriate catastrophe risk load factor that
 2393  reflects the actual catastrophic risk exposure retained by the
 2394  corporation.
 2395         b. In establishing noncompetitive rates for personal and
 2396  commercial lines residential policies, the average rates of the
 2397  corporation for each rating territory may not be less than the
 2398  average rates charged by the insurer that had the highest
 2399  average rate in that rating territory among the 20 voluntary
 2400  admitted insurers with the greatest total direct written premium
 2401  in the state for that line of business in the preceding year.
 2402         c. In establishing noncompetitive rates for mobile home
 2403  coverage, the average rates of the corporation may not be less
 2404  than the average rates charged by the insurer that had the
 2405  highest average rate in that rating territory among the five
 2406  voluntary admitted insurers with the greatest total written
 2407  premium for mobile home owner’s policies in the state in the
 2408  preceding year. The corporation shall file its recommended rates
 2409  with the office at least annually. The corporation shall provide
 2410  any additional information regarding the rates which the office
 2411  requires. The office shall consider the recommendations of the
 2412  board and issue a final order establishing the rates for the
 2413  corporation within 45 days after the recommended rates are
 2414  filed. The corporation may not pursue an administrative
 2415  challenge or judicial review of the final order of the office.
 2416         d. Rates for commercial nonresidential policies must be
 2417  actuarially sound in accordance with sub-subparagraph a.
 2418         e. The requirements of sub-subparagraphs b. and c. do not
 2419  apply to rates in territories where the office determines there
 2420  is not a reasonable degree of competition. In such territories
 2421  the corporation’s rates must be actuarially sound in accordance
 2422  with sub-subparagraph a.
 2423         2. In addition to the rates otherwise determined pursuant
 2424  to this paragraph, the corporation shall impose and collect an
 2425  amount equal to the premium tax provided in s. 624.509 to
 2426  augment the financial resources of the corporation.
 2427         3. After the public hurricane loss-projection model under
 2428  s. 627.06281 has been found to be accurate and reliable by the
 2429  Florida Commission on Hurricane Loss Projection Methodology, the
 2430  model shall serve as the minimum benchmark for determining the
 2431  windstorm portion of the corporation’s rates. This subparagraph
 2432  does not require or allow the corporation to adopt rates lower
 2433  than the rates otherwise required or allowed by this paragraph.
 2434         4. The rate filings for the corporation which were approved
 2435  by the office and took effect January 1, 2007, are rescinded,
 2436  except for those rates that were lowered. As soon as possible,
 2437  the corporation shall begin using the lower rates that were in
 2438  effect on December 31, 2006, and provide refunds to
 2439  policyholders who paid higher rates as a result of that rate
 2440  filing. The rates in effect on December 31, 2006, remain in
 2441  effect for the 2007 and 2008 calendar years except for any rate
 2442  change that results in a lower rate. The next rate change that
 2443  may increase rates shall take effect pursuant to a new rate
 2444  filing recommended by the corporation and established by the
 2445  office, subject to this paragraph.
 2446         5. Beginning on July 15, 2009, and annually thereafter, the
 2447  corporation must make a recommended actuarially sound rate
 2448  filing for each personal and commercial line of business it
 2449  writes, to be effective no earlier than January 1, 2010.
 2450         3.6.For policies initially insured by the corporation
 2451  before July 1, 2013, and which have continuously been insured by
 2452  the corporation since that date, Beginning on or after January
 2453  1, 2010, and notwithstanding the board’s recommended rates and
 2454  the office’s final order regarding the corporation’s filed rates
 2455  under subparagraph 1., the corporation shall annually implement
 2456  a rate increase that which, except for sinkhole coverage, does
 2457  not exceed 10 percent for any territory single policy issued by
 2458  the corporation, excluding coverage changes and surcharges. This
 2459  subparagraph is limited to:
 2460         a. Personal lines residential policies that have a dwelling
 2461  replacement cost of less than $300,000 and that cover homestead
 2462  personal residential properties or occupied permanent
 2463  residencies having a written rental agreement for at least 12
 2464  months.
 2465         b. Personal lines residential wind-only policies that cover
 2466  homestead personal residential properties, or that are occupied
 2467  permanent residencies that have a written rental agreement for
 2468  no less than 12 months, and have a dwelling replacement cost of
 2469  less than:
 2470         (1) $1 million on July 1, 2013.
 2471         (II) $800,000 on January 1, 2014.
 2472         (III) $600,000 on January 1, 2015.
 2473         c. Commercial lines residential properties.
 2474         4. The corporation shall also implement the following:
 2475         a.7.The corporation may also implement An increase to
 2476  reflect the effect on the corporation of the cash buildup factor
 2477  pursuant to s. 215.555(5)(b).
 2478         b. An increase of up to 3 percent, which shall only be used
 2479  to purchase catastrophe reinsurance or other risk transfer
 2480  mechanisms for purposes of protecting the corporation and its
 2481  policyholders from potential shortfalls and assessments. In any
 2482  year for which the full 3 percent increase is imposed, there
 2483  must also be a corresponding 3 percent decrease, 1 percent per
 2484  account, from the Citizens policyholder surcharge in (b)3.i.,
 2485  for that year.
 2486         5.8. The corporation’s implementation of rates as
 2487  prescribed in subparagraph 3. 6. shall cease for any line of
 2488  business written by the corporation upon the corporation’s
 2489  implementation of the rates described in subparagraph 1.
 2490  actuarially sound rates. Thereafter, the corporation shall
 2491  annually make a recommended actuarially sound rate filing
 2492  implementing such rates for each commercial and personal line of
 2493  business the corporation writes.
 2494         6. The corporation shall annually certify to the office
 2495  that its rates comply with the requirements of this paragraph.
 2496  If any adjustment in the rates or rating factors of the
 2497  corporation is necessary to ensure such compliance, the
 2498  corporation shall make and implement such adjustments and file
 2499  its revised rates and rating factors with the office. If the
 2500  office thereafter determines that the revised rates and rating
 2501  factors fail to comply with this paragraph, it shall notify the
 2502  corporation and require the corporation to amend its rates or
 2503  rating factors in conjunction with its next rate filing. The
 2504  office must notify the corporation by electronic means of any
 2505  rate filing it approves for any insurer among the insurers
 2506  referred to in this paragraph.
 2507         7. By January 1, 2014, the board shall provide
 2508  recommendations to the Legislature on how to provide relief to a
 2509  policyholder whose premium reflects the full rate required under
 2510  subparagraph 1. and who demonstrates a financial need at the
 2511  time of application or renewal.
 2512         Section 13. Section 627.3518, Florida Statutes, is created
 2513  to read:
 2514         627.3518Citizens Property Insurance Corporation
 2515  clearinghouse.—The Legislature recognizes that Citizens Property
 2516  Insurance Corporation has authority to establish a clearinghouse
 2517  as a separate organizational unit within the corporation for the
 2518  purpose of determining the eligibility of new and renewal risks,
 2519  excluding commercial residential, seeking coverage through the
 2520  corporation and facilitating the identification and diversion of
 2521  ineligible applicants and current policyholders from the
 2522  corporation into the voluntary insurance market. The purpose of
 2523  this section is to augment that authority by providing a
 2524  framework for the corporation to implement such program by July
 2525  1, 2013.
 2526         (1) As used in this section, the term:
 2527         (a) “Clearinghouse” means the clearinghouse diversion
 2528  program created under this section.
 2529         (b) “Corporation” means Citizens Property Insurance
 2530  Corporation.
 2531         (c) “Exclusive agent” means a licensed insurance agent who
 2532  has agreed, by contract, to act exclusively for one company or
 2533  group of affiliated insurance companies and is disallowed by the
 2534  provisions of that contract to directly write for any other
 2535  unaffiliated insurer absent express consent from the company or
 2536  group of affiliated insurance companies.
 2537         (d) “Independent agent” means a licensed insurance agent
 2538  not described in paragraph (c).
 2539         (2) In order to confirm eligibility with the corporation
 2540  and to enhance the access of new applicants for coverage and
 2541  existing policyholders of the corporation to offers of coverage
 2542  from authorized and eligible insurers, the corporation shall
 2543  establish a clearinghouse to facilitate the diversion of
 2544  ineligible applicants and existing policyholders from the
 2545  corporation into the voluntary insurance market.
 2546         (3) The clearinghouse shall have the same rights and
 2547  responsibilities in carrying out its duties as a licensed
 2548  general lines agent, but is not required to employ or engage a
 2549  licensed general lines agent or to maintain an insurance agency
 2550  license in order to solicit and place insurance coverage. In
 2551  establishing the clearinghouse, the corporation may:
 2552         (a) Require all new applications and all policies due for
 2553  renewal to be submitted to the clearinghouse or a private
 2554  alternative in order to facilitate obtaining an offer of
 2555  coverage from an authorized insurer before binding or renewing
 2556  coverage by the corporation.
 2557         (b) Employ or otherwise contract with individuals or other
 2558  entities to provide administrative or professional services in
 2559  order to effectuate the plan within the corporation in
 2560  accordance with the applicable purchasing requirements under s.
 2561  627.351.
 2562         (c) Enter into contracts with an authorized or eligible
 2563  insurer participating in the clearinghouse and accept an
 2564  appointment by such insurer.
 2565         (d) Provide funds to operate the clearinghouse, or charge
 2566  agents and insurers a reasonable fee to offset, or partially
 2567  offset, the costs of the clearinghouse. Insurers participating
 2568  in the clearinghouse are not required to use the clearinghouse
 2569  for the renewal of policies initially written through the
 2570  clearinghouse.
 2571         (e) Develop an enhanced application for obtaining
 2572  information that will assist private insurers in determining
 2573  whether to make an offer of coverage through the clearinghouse.
 2574         (f) Before approving new applications for coverage by the
 2575  corporation, require every application to be subject to a 48
 2576  hour period that allows an insurer participating in the
 2577  clearinghouse to select the application for coverage. The
 2578  insurer may issue a binder on any policy selected for coverage
 2579  for a period of at least 30 days, but not more than 60 days.
 2580         (4) An authorized or eligible insurer may participate in
 2581  the clearinghouse; however, participation is not mandatory.
 2582  Insurers making offers of coverage to new applicants or renewing
 2583  policyholders through the clearinghouse:
 2584         (a) Are not required to individually appoint an agent whose
 2585  customer is underwritten and bound through the clearinghouse.
 2586  Notwithstanding s. 626.112, insurers are not required to appoint
 2587  an agent on a policy underwritten through the clearinghouse as
 2588  long as that policy remains with the insurer. Insurers may
 2589  appoint an agent whose customer is initially underwritten and
 2590  bound through the clearinghouse. If an insurer accepts a policy
 2591  from an agent who is not appointed pursuant to this paragraph
 2592  and thereafter accepts a policy from such agent, the provisions
 2593  of s. 626.112 requiring appointment apply to the agent.
 2594         (b) Must enter into a limited agency agreement with each
 2595  agent who is not appointed in accordance with paragraph (a) and
 2596  whose customer is underwritten and bound through the
 2597  clearinghouse.
 2598         (c) Must enter into its standard agency agreement with each
 2599  agent whose customer is underwritten and bound through the
 2600  clearinghouse if that agent has been appointed by the insurer
 2601  pursuant to s. 626.112.
 2602         (d) Must comply with s. 627.4133(2).
 2603         (e) Must allow authorized or eligible insurers
 2604  participating in the clearinghouse to participate through their
 2605  single, designated managing general agent or broker; however the
 2606  provisions of paragraph (6)(a) regarding ownership, control, and
 2607  use of the expirations apply.
 2608         (5)(a) Notwithstanding s. 627.3517, an applicant for new
 2609  coverage is not eligible for coverage from the corporation if
 2610  the applicant is offered coverage from an authorized insurer
 2611  through the clearinghouse at a premium that is at or below the
 2612  eligibility threshold established under s. 627.351(6)(c)5.a.
 2613         (b) Notwithstanding any other provisions of law, if a
 2614  renewing policyholder of the corporation is offered coverage
 2615  from an authorized insurer for a personal lines or commercial
 2616  lines risk at a premium that is no more than 15 percent above
 2617  the corporation’s renewal premium for comparable coverage, the
 2618  risk is not eligible for coverage with the corporation.
 2619         (c) Notwithstanding s. 626.916(1), if an applicant for new
 2620  or renewal coverage from the corporation does not receive an
 2621  offer of coverage from an authorized insurer, the applicant may
 2622  choose to accept an offer of coverage from an eligible insurer
 2623  or their broker under ss. 626.913-626.937. Such offers of
 2624  coverage from an eligible insurer do not make the risk
 2625  ineligible for coverage with the corporation.
 2626         (d) An applicant for new or renewal coverage from the
 2627  corporation may choose to accept any offers of coverage received
 2628  through the clearinghouse from an authorized insurer that is
 2629  greater than 15 percent of the corporation’s renewal premium.
 2630         (e) Sections 627.351(6)(c)5.a.(I) and b.(I) do not apply to
 2631  an offer of coverage from an authorized insurer obtained through
 2632  the clearinghouse.
 2633         (6) Independent agents who submit new applications for
 2634  coverage or who are the agent of record on a renewal policy
 2635  submitted to the clearinghouse:
 2636         (a) Must maintain ownership and the exclusive use of
 2637  expirations, records, or other written or electronic information
 2638  directly related to such applications or renewals written
 2639  through the corporation or through an insurer participating in
 2640  the clearinghouse, notwithstanding s. 627.351(6)(c)5.a.(I)(B)
 2641  and (II)(B). Contracts with the corporation or required by the
 2642  corporation may not amend, modify, interfere with, or limit such
 2643  rights of ownership. Such expirations, records, or other written
 2644  or electronic information may be used to review an application,
 2645  issue a policy, or for any other purpose necessary for placing
 2646  business through the clearinghouse.
 2647         (b) Are not required to be appointed by an insurer
 2648  participating in the clearinghouse for policies written solely
 2649  through the clearinghouse, notwithstanding s. 626.112.
 2650         (c) May accept an appointment from an insurer participating
 2651  in the clearinghouse.
 2652         (d) Must enter into a standard or limited agency agreement
 2653  with the insurer, at the insurer’s option.
 2654  
 2655         Applicants ineligible for coverage under paragraph (5)
 2656  remain ineligible if their independent agent is unwilling or
 2657  unable to enter into a standard or limited agency agreement with
 2658  an insurer participating in the clearinghouse.
 2659         (7) Exclusive agents submitting new applications for
 2660  coverage or who are the agent of record on a renewal policy
 2661  submitted to the clearinghouse:
 2662         (a) Must maintain ownership and the exclusive use of
 2663  expirations, records, or other written or electronic information
 2664  directly related to such applications or renewals written
 2665  through the corporation or through an insurer participating in
 2666  the clearinghouse, notwithstanding s. 627.351(6)(c)5.a.(I)(B)
 2667  and (II)(B). Contracts with the corporation or required by the
 2668  corporation may not amend, modify, interfere with, or limit such
 2669  rights of ownership. Such expirations, records, or other written
 2670  or electronic information may be used to review an application,
 2671  issue a policy, or for any other purpose necessary for placing
 2672  business through the clearinghouse.
 2673         (b) Are not required to be appointed by an insurer
 2674  participating in the clearinghouse for policies written solely
 2675  through the clearinghouse, notwithstanding s. 626.112.
 2676         (c) Must accept an offer of coverage from an insurer whose
 2677  limited servicing agreement is approved by that agent’s
 2678  exclusive insurer as eligible to participate in the
 2679  clearinghouse with that insurer’s exclusive agents.
 2680         (d) Must enter into a limited servicing agreement with the
 2681  insurer making an offer of coverage, and may do so only after
 2682  the exclusive agent’s insurer has approved the terms of the
 2683  agreement. The exclusive agent’s insurer must approve a limited
 2684  service agreement for the clearinghouse if the insurer has
 2685  approved a service agreement with the agent for other purposes.
 2686  
 2687         An applicant is ineligible for coverage under paragraph (5)
 2688  if the applicant’s exclusive agent is unwilling or unable to
 2689  enter into a standard or limited agency agreement with a
 2690  participating insurer making an offer of coverage to that
 2691  applicant.
 2692         (8) To promote private market initiatives that provide
 2693  offers of coverage from authorized and eligible insurers to
 2694  applicants for coverage by the corporation and to the
 2695  corporation’s policyholders on renewal, the corporation shall
 2696  publish, by January 1, 2014, reasonable standards for private
 2697  alternatives to the submission of a risk to the clearinghouse.
 2698  Such private alternatives may act in a master agency arrangement
 2699  that allows agents to be appointed as subagents of a master
 2700  agency and to use private alternatives for the submission of
 2701  risks to the clearinghouse. The alternative option allowed under
 2702  this subsection is an alternative to, and not a replacement for,
 2703  the clearinghouse. Neither the clearinghouse nor any private
 2704  entity operating under this subsection may prohibit insurers
 2705  that elect to participate from participating in more than one
 2706  clearinghouse or alternative; however, an insurer participating
 2707  in the private entity must also participate in the
 2708  clearinghouse.
 2709         (9) Submission of an application to the clearinghouse for
 2710  coverage by the corporation does not constitute the binding of
 2711  coverage, and the failure of the clearinghouse to obtain an
 2712  offer of coverage by an insurer is not considered acceptance of
 2713  coverage of the risk by the corporation.
 2714         (10) The clearinghouse does not include commercial
 2715  residential policies.
 2716         Section 14. Temporary keepout program.—Citizens Property
 2717  Corporation shall implement a temporary keepout program
 2718  beginning July 1, 2013, and ending on the date the clearinghouse
 2719  program established under s. 627.3518, Florida Statutes, is
 2720  operational.
 2721         (1) Subject to procedures adopted by the corporation, the
 2722  program shall provide an opportunity for new applicants for
 2723  personal residential multiperil coverage with the corporation to
 2724  be offered coverage with authorized insurers through the market
 2725  assistance plan established under s. 627.3515, Florida Statutes.
 2726         (2) The program is subject to all of the following:
 2727         (a) The corporation may not accept a new personal
 2728  residential multiperil application for coverage within 72 hours
 2729  after submission of the risk to the market assistance plan under
 2730  subsection (1).
 2731         (b) Section 627.3517, Florida Statutes, relating to
 2732  consumer choice of agent does not apply to applications for
 2733  coverage accepted by authorized insurers under the program.
 2734         (c) Insurers issuing policies under this section are
 2735  subject to s. 627.3518(3), Florida Statutes, relating to agent
 2736  appointment.
 2737         (d) Notwithstanding s. 626.916(1), Florida Statutes, if an
 2738  applicant for new or renewal coverage from the corporation does
 2739  not receive an offer of coverage from an eligible insurer, the
 2740  applicant may accept an offer from a designated broker of an
 2741  insurer eligible under ss. 626.913-626.937, Florida Statutes.
 2742         (3) This section expires on March 1, 2014, or when the
 2743  clearinghouse program established under s. 627.3518, Florida
 2744  Statutes, becomes operational, whichever occurs first.
 2745         Section 15. Subsection (1) of section 627.405, Florida
 2746  Statutes, is amended to read:
 2747         627.405 Insurable interest; property.—
 2748         (1) A No contract for property of insurance of property or
 2749  of any interest in property or arising from property is not
 2750  shall be enforceable as to the insurance except for the benefit
 2751  of persons having an insurable interest in the things insured as
 2752  at the time of the loss. Policyholders under a contract of
 2753  property insurance may assign benefits to be received under that
 2754  contract consistent with, and subject to, the conditions in the
 2755  policy.
 2756         Section 16. Subsection (1) of section 627.410, Florida
 2757  Statutes, is amended to read:
 2758         627.410 Filing, approval of forms.—
 2759         (1) A No basic insurance policy or annuity contract form,
 2760  or application form where written application is required and is
 2761  to be made a part of the policy or contract, or group
 2762  certificates issued under a master contract delivered in this
 2763  state, or printed rider or endorsement form or form of renewal
 2764  certificate, may not shall be delivered or issued for delivery
 2765  in this state, unless the form has been filed with the office by
 2766  or on in behalf of the insurer that which proposes to use such
 2767  form and has been approved by the office. This provision does
 2768  not apply to surety bonds or to policies, riders, endorsements,
 2769  or forms of unique character that which are designed for and
 2770  used with relation to insurance on upon a particular subject,
 2771  (other than as to health insurance), or that which relate to the
 2772  manner of distributing distribution of benefits or to the
 2773  reservation of rights and benefits under life or health
 2774  insurance policies and are used at the request of the individual
 2775  policyholder, contract holder, or certificateholder. For As to
 2776  group insurance policies effectuated and delivered outside this
 2777  state but covering persons resident in this state, the group
 2778  certificates to be delivered or issued for delivery in this
 2779  state shall be filed with the office for information purposes
 2780  only.
 2781         Section 17. Except as otherwise expressly provided in the
 2782  act, this act shall take effect July 1, 2013.

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