Bill Summary – FastDemocracy

       Florida Senate - 2024                                     SB 604
       
       
        
       By Senator Rodriguez
       
       
       
       
       
       40-00577B-24                                           2024604__
                      A bill to be entitled                      
       An act relating to the Citizens Property Insurance
       Corporation; amending s. 627.351, F.S.; revising
       eligibility for coverage by the corporation in certain
       counties to include personal lines residential
       structures that have a dwelling replacement cost of
       less than a specified amount; requiring the
       corporation to annually implement a rate increase up
       to a specified percentage for any single policy issued
       by the corporation, excluding increases associated
       with coverage changes and surcharges; adding policies
       for specified structures to the list of policies that
       do not require the purchase of flood insurance for
       their maintenance; making a technical change;
       providing an effective date.
        
Be It Enacted by the Legislature of the State of Florida:

       Section 1.âParagraphs (a), (n), and (aa) of subsection (6)
of section 627.351, Florida Statutes, are amended to read:
       627.351âInsurance risk apportionment plans.â
       (6)âCITIZENS PROPERTY INSURANCE CORPORATION.â
       (a)âThe public purpose of this subsection is to ensure that
there is an orderly market for property insurance for residents
and businesses of this state.
       1.âThe Legislature finds that private insurers are
unwilling or unable to provide affordable property insurance
coverage in this state to the extent sought and needed. The
absence of affordable property insurance threatens the public
health, safety, and welfare and likewise threatens the economic
health of the state. The state therefore has a compelling public
interest and a public purpose to assist in assuring that
property in the state is insured and that it is insured at
affordable rates so as to facilitate the remediation,
reconstruction, and replacement of damaged or destroyed property
in order to reduce or avoid the negative effects otherwise
resulting to the public health, safety, and welfare, to the
economy of the state, and to the revenues of the state and local
governments which are needed to provide for the public welfare.
It is necessary, therefore, to provide affordable property
insurance to applicants who are in good faith entitled to
procure insurance through the voluntary market but are unable to
do so. The Legislature intends, therefore, that affordable
property insurance be provided and that it continue to be
provided, as long as necessary, through Citizens Property
Insurance Corporation, a government entity that is an integral
part of the state, and that is not a private insurance company.
To that end, the corporation shall strive to increase the
availability of affordable property insurance in this state,
while achieving efficiencies and economies, and while providing
service to policyholders, applicants, and agents which is no
less than the quality generally provided in the voluntary
market, for the achievement of the foregoing public purposes.
Because it is essential for this government entity to have the
maximum financial resources to pay claims following a
catastrophic hurricane, it is the intent of the Legislature that
the corporation continue to be an integral part of the state and
that the income of the corporation be exempt from federal income
taxation and that interest on the debt obligations issued by the
corporation be exempt from federal income taxation.
       2.âThe Residential Property and Casualty Joint Underwriting
Association originally created by this statute shall be known as
the Citizens Property Insurance Corporation. The corporation
shall provide insurance for residential and commercial property,
for applicants who are entitled, but, in good faith, are unable
to procure insurance through the voluntary market. The
corporation shall operate pursuant to a plan of operation
approved by order of the Financial Services Commission. The plan
is subject to continuous review by the commission. The
commission may, by order, withdraw approval of all or part of a
plan if the commission determines that conditions have changed
since approval was granted and that the purposes of the plan
require changes in the plan. For the purposes of this
subsection, residential coverage includes both personal lines
residential coverage, which consists of the type of coverage
provided by homeowner, mobile home owner, dwelling, tenant,
condominium unit owner, and similar policies; and commercial
lines residential coverage, which consists of the type of
coverage provided by condominium association, apartment
building, and similar policies.
       3.âWith respect to coverage for personal lines residential
structures:
       a.âEffective January 1, 2014, a structure that has a
dwelling replacement cost of $1 million or more, or a single
condominium unit that has a combined dwelling and contents
replacement cost of $1 million or more, is not eligible for
coverage by the corporation. Such dwellings insured by the
corporation on December 31, 2013, may continue to be covered by
the corporation until the end of the policy term. The office
shall approve the method used by the corporation for valuing the
dwelling replacement cost for the purposes of this subparagraph.
If a policyholder is insured by the corporation before being
determined to be ineligible pursuant to this subparagraph and
such policyholder files a lawsuit challenging the determination,
the policyholder may remain insured by the corporation until the
conclusion of the litigation.
       b.âEffective January 1, 2015, a structure that has a
dwelling replacement cost of $900,000 or more, or a single
condominium unit that has a combined dwelling and contents
replacement cost of $900,000 or more, is not eligible for
coverage by the corporation. Such dwellings insured by the
corporation on December 31, 2014, may continue to be covered by
the corporation only until the end of the policy term.
       c.âEffective January 1, 2016, a structure that has a
dwelling replacement cost of $800,000 or more, or a single
condominium unit that has a combined dwelling and contents
replacement cost of $800,000 or more, is not eligible for
coverage by the corporation. Such dwellings insured by the
corporation on December 31, 2015, may continue to be covered by
the corporation until the end of the policy term.
       d.âEffective January 1, 2017, a structure that has a
dwelling replacement cost of $700,000 or more, or a single
condominium unit that has a combined dwelling and contents
replacement cost of $700,000 or more, is not eligible for
coverage by the corporation. Such dwellings insured by the
corporation on December 31, 2016, may continue to be covered by
the corporation until the end of the policy term.

The requirements of sub-subparagraphs b.-d. do not apply in
counties where the office determines there is not a reasonable
degree of competition. In such counties a personal lines
residential structure that has a dwelling replacement cost of
less than $1.5 $1 million, or a single condominium unit that has
a combined dwelling and contents replacement cost of less than
$1 million, is eligible for coverage by the corporation.
       4.âIt is the intent of the Legislature that policyholders,
applicants, and agents of the corporation receive service and
treatment of the highest possible level but never less than that
generally provided in the voluntary market. It is also intended
that the corporation be held to service standards no less than
those applied to insurers in the voluntary market by the office
with respect to responsiveness, timeliness, customer courtesy,
and overall dealings with policyholders, applicants, or agents
of the corporation.
       5.a.âEffective January 1, 2009, a personal lines
residential structure that is located in the âwind-borne debris
region,â as defined in s. 1609.2, International Building Code
(2006), and that has an insured value on the structure of
$750,000 or more is not eligible for coverage by the corporation
unless the structure has opening protections as required under
the Florida Building Code for a newly constructed residential
structure in that area. A residential structure is deemed to
comply with this sub-subparagraph if it has shutters or opening
protections on all openings and if such opening protections
complied with the Florida Building Code at the time they were
installed.
       b.âAny major structure, as defined in s. 161.54(6)(a), that
is newly constructed, or rebuilt, repaired, restored, or
remodeled to increase the total square footage of finished area
by more than 25 percent, pursuant to a permit applied for after
July 1, 2015, is not eligible for coverage by the corporation if
the structure is seaward of the coastal construction control
line established pursuant to s. 161.053 or is within the Coastal
Barrier Resources System as designated by 16 U.S.C. ss. 3501
3510.
       6.âWith respect to wind-only coverage for commercial lines
residential condominiums, effective July 1, 2014, a condominium
shall be deemed ineligible for coverage if 50 percent or more of
the units are rented more than eight times in a calendar year
for a rental agreement period of less than 30 days.
       (n)1.âRates for coverage provided by the corporation must
be actuarially sound pursuant to s. 627.062 and not competitive
with approved rates charged in the admitted voluntary market so
that the corporation functions as a residual market mechanism to
provide insurance only when insurance cannot be procured in the
voluntary market, except as otherwise provided in this
paragraph. The office shall provide the corporation such
information as would be necessary to determine whether rates are
competitive. The corporation shall file its recommended rates
with the office at least annually. The corporation shall provide
any additional information regarding the rates which the office
requires. The office shall consider the recommendations of the
board and issue a final order establishing the rates for the
corporation within 45 days after the recommended rates are
filed. The corporation may not pursue an administrative
challenge or judicial review of the final order of the office.
       2.âIn addition to the rates otherwise determined pursuant
to this paragraph, the corporation shall impose and collect an
amount equal to the premium tax provided in s. 624.509 to
augment the financial resources of the corporation.
       3.âAfter the public hurricane loss-projection model under
s. 627.06281 has been found to be accurate and reliable by the
Florida Commission on Hurricane Loss Projection Methodology, the
model shall be considered when establishing the windstorm
portion of the corporationâs rates. The corporation may use the
public model results in combination with the results of private
models to calculate rates for the windstorm portion of the
corporationâs rates. This subparagraph does not require or allow
the corporation to adopt rates lower than the rates otherwise
required or allowed by this paragraph.
       4.âThe corporation must make a recommended actuarially
sound rate filing for each personal and commercial line of
business it writes.
       5.âNotwithstanding the boardâs recommended rates and the
officeâs final order regarding the corporationâs filed rates
under subparagraph 1., the corporation shall annually implement
a rate increase which, except for sinkhole coverage, does not
exceed the following for any single policy issued by the
corporation, excluding coverage changes and surcharges:
       a.âTwelve percent for 2023.
       b.âThirteen percent for 2024.
       c.âFourteen percent for 2025.
       d.âFifteen percent for 2026 and all subsequent years.
       6.âIn a county in which the office has determined that
there is not a reasonable degree of competition, the corporation
shall annually implement a rate increase that does not exceed 10
percent for any single policy issued by the corporation,
excluding increases associated with coverage changes and
surcharges.
       7.âThe corporation may also implement an increase to
reflect the effect on the corporation of the cash buildup factor
pursuant to s. 215.555(5)(b).
       8.7.âThe corporationâs implementation of rates as
prescribed in subparagraphs 5. and 9. must 8. shall cease for
any line of business written by the corporation upon the
corporationâs implementation of actuarially sound rates.
Thereafter, the corporation shall annually make a recommended
actuarially sound rate filing that is not competitive with
approved rates in the admitted voluntary market for each
commercial and personal line of business the corporation writes.
       9.8.âThe following new or renewal personal lines policies
written on or after November 1, 2023, are not subject to the
rate increase limitations in subparagraph 5., but may not be
charged more than 50 percent above, nor less than, the prior
yearâs established rate for the corporation:
       a.âPolicies that do not cover a primary residence;
       b.âNew policies under which the coverage for the insured
risk, before the date of application with the corporation, was
last provided by an insurer determined by the office to be
unsound or an insurer placed in receivership under chapter 631;
or
       c.âSubsequent renewals of those policies, including the new
policies in sub-subparagraph b., under which the coverage for
the insured risk, before the date of application with the
corporation, was last provided by an insurer determined by the
office to be unsound or an insurer placed in receivership under
chapter 631.
       10.9.âAs used in this paragraph, the term âprimary
residenceâ means the dwelling that is the policyholderâs primary
home or is a rental property that is the primary home of the
tenant, and which the policyholder or tenant occupies for more
than 9 months of each year.
       (aa)âExcept as otherwise provided in this paragraph, the
corporation shall require the securing and maintaining of flood
insurance as a condition of coverage of a personal lines
residential risk. The insured or applicant must execute a form
approved by the office affirming that flood insurance is not
provided by the corporation and that if flood insurance is not
secured by the applicant or insured from an insurer other than
the corporation and in addition to coverage by the corporation,
the risk will not be eligible for coverage by the corporation.
The corporation may deny coverage of a personal lines
residential risk to an applicant or insured who refuses to
secure and maintain flood insurance. The requirement to purchase
flood insurance shall be implemented as follows:
       1.âExcept as provided in subparagraphs 2. and 3., all
personal lines residential policyholders must have flood
coverage in place for policies effective on or after:
       a.âJanuary 1, 2024, for a structure that has a dwelling
replacement cost of $600,000 or more.
       b.âJanuary 1, 2025, for a structure that has a dwelling
replacement cost of $500,000 or more.
       c.âJanuary 1, 2026, for a structure that has a dwelling
replacement cost of $400,000 or more.
       d.âJanuary 1, 2027, for all other personal lines
residential property insured by the corporation.
       2.âAll personal lines residential policyholders whose
property insured by the corporation is located within the
special flood hazard area defined by the Federal Emergency
Management Agency must have flood coverage in place:
       a.âAt the time of initial policy issuance for all new
personal lines residential policies issued by the corporation on
or after April 1, 2023.
       b.âBy the time of the policy renewal for all personal lines
residential policies renewing on or after July 1, 2023.
       3.âPolicyholders are not required to purchase flood
insurance as a condition for maintaining any of the following
policies issued by the corporation:
       a.âPolici