Bill Summary – FastDemocracy

       Florida Senate - 2024                                    SB 1428
       
       
        
       By Senator DiCeglie
       
       
       
       
       
       18-01005A-24                                          20241428__
                      A bill to be entitled                      
       An act relating to coverage by the Citizens Property
       Insurance Corporation; amending s. 627.351, F.S.;
       revising the types of policies included in specified
       accounts of the Citizens Property Insurance
       Corporation; revising the requirements for areas that
       are eligible for certain personal residential and
       commercial residential and commercial nonresidential
       policy coverages by the corporation; authorizing the
       corporation to amend wind-eligible areas under certain
       circumstances; authorizing the corporation to consider
       certain factors in developing new eligibility criteria
       and rates for policies that provide wind-only
       coverage; providing that such rates are subject to
       specified provisions; requiring that such eligibility
       criteria and rates be submitted to the Legislature for
       review and approval; providing that the Office of
       Insurance Regulation may implement eligibility
       criteria and rates only upon approval by the
       Legislature; defining the term “wind-eligible area”;
       providing an effective date.
        
Be It Enacted by the Legislature of the State of Florida:

       Section 1. Present subsection (7) of section 627.351,
Florida Statutes, is redesignated as subsection (8), a new
subsection (7) is added to that section, and paragraph (b) of
subsection (6) and present subsection (7) are amended, to read
       627.351 Insurance risk apportionment plans.—
       (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
       (b)1. All insurers authorized to write one or more subject
lines of business in this state are subject to assessment by the
corporation and, for the purposes of this subsection, are
referred to collectively as “assessable insurers.” Insurers
writing one or more subject lines of business in this state
pursuant to part VIII of chapter 626 are not assessable
insurers; however, insureds who procure one or more subject
lines of business in this state pursuant to part VIII of chapter
626 are subject to assessment by the corporation and are
referred to collectively as “assessable insureds.” An insurer’s
assessment liability begins on the first day of the calendar
year following the year in which the insurer was issued a
certificate of authority to transact insurance for subject lines
of business in this state and terminates 1 year after the end of
the first calendar year during which the insurer no longer holds
a certificate of authority to transact insurance for subject
lines of business in this state.
       2.a. All revenues, assets, liabilities, losses, and
expenses of the corporation shall be divided into three separate
accounts as follows:
       (I) A personal lines account for personal residential
policies issued by the corporation which provides comprehensive,
multiperil coverage on risks that are not located in areas
eligible for coverage by the Florida Windstorm Underwriting
Association as those areas were defined on January 1, 2002, or
included as eligible for coverage by the corporation and for
policies that do not provide coverage for the peril of wind on
risks that are located in such areas;
       (II) A commercial lines account for commercial residential
and commercial nonresidential policies issued by the corporation
which provides coverage for basic property perils on risks that
are not located in areas eligible for coverage by the Florida
Windstorm Underwriting Association as those areas were defined
on January 1, 2002, or included as eligible for coverage by the
corporation and for policies that do not provide coverage for
the peril of wind on risks that are located in such areas; and
       (III) A coastal account for personal residential policies
and commercial residential and commercial nonresidential
property policies issued by the corporation which provides
coverage for the peril of wind on risks that are located in
areas eligible for coverage by the Florida Windstorm
Underwriting Association as those areas were defined on January
1, 2002, or included as eligible for coverage by the
corporation. The corporation may offer policies that provide
multiperil coverage and shall offer policies that provide
coverage only for the peril of wind for risks located in areas
eligible for coverage in the coastal account. Effective July 1,
2014, the corporation shall cease offering new commercial
residential policies providing multiperil coverage and shall
instead continue to offer commercial residential wind-only
policies, and may offer commercial residential policies
excluding wind. The corporation may, however, continue to renew
a commercial residential multiperil policy on a building that is
insured by the corporation on June 30, 2014, under a multiperil
policy. In issuing multiperil coverage, the corporation may use
its approved policy forms and rates for the personal lines
account. An applicant or insured who is eligible to purchase a
multiperil policy from the corporation may purchase a multiperil
policy from an authorized insurer without prejudice to the
applicant’s or insured’s eligibility to prospectively purchase a
policy that provides coverage only for the peril of wind from
the corporation. An applicant or insured who is eligible for a
corporation policy that provides coverage only for the peril of
wind may elect to purchase or retain such policy and also
purchase or retain coverage excluding wind from an authorized
insurer without prejudice to the applicant’s or insured’s
eligibility to prospectively purchase a policy that provides
multiperil coverage from the corporation. It is the goal of the
Legislature that there be an overall average savings of 10
percent or more for a policyholder who currently has a wind-only
policy with the corporation, and an ex-wind policy with a
voluntary insurer or the corporation, and who obtains a
multiperil policy from the corporation. It is the intent of the
Legislature that the offer of multiperil coverage in the coastal
account be made and implemented in a manner that does not
adversely affect the tax-exempt status of the corporation or
creditworthiness of or security for currently outstanding
financing obligations or credit facilities of the coastal
account, the personal lines account, or the commercial lines
account. The coastal account must also include quota share
primary insurance under subparagraph (c)2. The area eligible for
coverage under the coastal account also includes the area within
Port Canaveral, which is bordered on the south by the City of
Cape Canaveral, bordered on the west by the Banana River, and
bordered on the north by Federal Government property.
       b. The three separate accounts must be maintained as long
as financing obligations entered into by the Florida Windstorm
Underwriting Association or Residential Property and Casualty
Joint Underwriting Association are outstanding, in accordance
with the terms of the corresponding financing documents. If no
such financing obligations remain outstanding or if the
financing documents allow for combining of accounts, the
corporation may consolidate the three separate accounts into a
new account, to be known as the Citizens account, for all
revenues, assets, liabilities, losses, and expenses of the
corporation. The Citizens account, if established by the
corporation, is authorized to provide coverage to the same
extent as provided under each of the three separate accounts.
The authority to provide coverage under the Citizens account is
set forth in subparagraph 4. Consistent with this subparagraph
and prudent investment policies that minimize the cost of
carrying debt, the board shall exercise its best efforts to
retire existing debt or obtain the approval of necessary parties
to amend the terms of existing debt, so as to structure the most
efficient plan for consolidating the three separate accounts
into a single account. Once the accounts are combined into one
account, this subparagraph and subparagraph 3. shall be replaced
in their entirety by subparagraphs 4. and 5.
       c. Creditors of the Residential Property and Casualty Joint
Underwriting Association and the accounts specified in sub-sub
subparagraphs a.(I) and (II) may have a claim against, and
recourse to, those accounts and no claim against, or recourse
to, the account referred to in sub-sub-subparagraph a.(III).
Creditors of the Florida Windstorm Underwriting Association have
a claim against, and recourse to, the account referred to in
sub-sub-subparagraph a.(III) and no claim against, or recourse
to, the accounts referred to in sub-sub-subparagraphs a.(I) and
(II).
       d. Revenues, assets, liabilities, losses, and expenses not
attributable to particular accounts shall be prorated among the
accounts.
       e. The Legislature finds that the revenues of the
corporation are revenues that are necessary to meet the
requirements set forth in documents authorizing the issuance of
bonds under this subsection.
       f. The income of the corporation may not inure to the
benefit of any private person.
       3. With respect to a deficit in an account:
       a. After accounting for the Citizens policyholder surcharge
imposed under sub-subparagraph j., if the remaining projected
deficit incurred in the coastal account in a particular calendar
year:
       (I) Is not greater than 2 percent of the aggregate
statewide direct written premium for the subject lines of
business for the prior calendar year, the entire deficit shall
be recovered through regular assessments of assessable insurers
under paragraph (q) and assessable insureds.
       (II) Exceeds 2 percent of the aggregate statewide direct
written premium for the subject lines of business for the prior
calendar year, the corporation shall levy regular assessments on
assessable insurers under paragraph (q) and on assessable
insureds in an amount equal to the greater of 2 percent of the
projected deficit or 2 percent of the aggregate statewide direct
written premium for the subject lines of business for the prior
calendar year. Any remaining projected deficit shall be
recovered through emergency assessments under sub-subparagraph
e.
       b. Each assessable insurer’s share of the amount being
assessed under sub-subparagraph a. must be in the proportion
that the assessable insurer’s direct written premium for the
subject lines of business for the year preceding the assessment
bears to the aggregate statewide direct written premium for the
subject lines of business for that year. The assessment
percentage applicable to each assessable insured is the ratio of
the amount being assessed under sub-subparagraph a. to the
aggregate statewide direct written premium for the subject lines
of business for the prior year. Assessments levied by the
corporation on assessable insurers under sub-subparagraph a.
must be paid as required by the corporation’s plan of operation
and paragraph (q). Assessments levied by the corporation on
assessable insureds under sub-subparagraph a. shall be collected
by the surplus lines agent at the time the surplus lines agent
collects the surplus lines tax required by s. 626.932, and paid
to the Florida Surplus Lines Service Office at the time the
surplus lines agent pays the surplus lines tax to that office.
Upon receipt of regular assessments from surplus lines agents,
the Florida Surplus Lines Service Office shall transfer the
assessments directly to the corporation as determined by the
corporation.
       c. The corporation may not levy regular assessments under
paragraph (q) pursuant to sub-subparagraph a. or sub
subparagraph b. if the three separate accounts in sub-sub
subparagraphs 2.a.(I)-(III) have been consolidated into the
Citizens account pursuant to sub-subparagraph 2.b. However, the
outstanding balance of any regular assessment levied by the
corporation before establishment of the Citizens account remains
payable to the corporation.
       d. After accounting for the Citizens policyholder surcharge
imposed under sub-subparagraph j., the remaining projected
deficits in the personal lines account and in the commercial
lines account in a particular calendar year shall be recovered
through emergency assessments under sub-subparagraph e.
       e. Upon a determination by the board of governors that a
projected deficit in an account exceeds the amount that is
expected to be recovered through regular assessments under sub
subparagraph a., plus the amount that is expected to be
recovered through surcharges under sub-subparagraph j., the
board, after verification by the office, shall levy emergency
assessments for as many years as necessary to cover the
deficits, to be collected by assessable insurers and the
corporation and collected from assessable insureds upon issuance
or renewal of policies for subject lines of business, excluding
National Flood Insurance policies. The amount collected in a
particular year must be a uniform percentage of that year’s
direct written premium for subject lines of business and all
accounts of the corporation, excluding National Flood Insurance
Program policy premiums, as annually determined by the board and
verified by the office. The office shall verify the arithmetic
calculations involved in the board’s determination within 30
days after receipt of the information on which the determination
was based. The office shall notify assessable insurers and the
Florida Surplus Lines Service Office of the date on which
assessable insurers shall begin to collect and assessable
insureds shall begin to pay such assessment. The date must be at
least 90 days after the date the corporation levies emergency
assessments pursuant to this sub-subparagraph. Notwithstanding
any other provision of law, the corporation and each assessable
insurer that writes subject lines of business shall collect
emergency assessments from its policyholders without such
obligation being affected by any credit, limitation, exemption,
or deferment. Emergency assessments levied by the corporation on
assessable insureds shall be collected by the surplus lines
agent at the time the surplus lines agent collects the surplus
lines tax required by s. 626.932 and paid to the Florida Surplus
Lines Service Office at the time the surplus lines agent pays
the surplus lines tax to that office. The emergency assessments
collected shall be transferred directly to the corporation on a
periodic basis as determined by the corporation and held by the
corporation solely in the applicable account. The aggregate
amount of emergency assessments levied for an account in any
calendar year may be less than but may not exceed the greater of
10 percent of the amount needed to cover the deficit, plus
interest, fees, commissions, required reserves, and other costs
associated with financing the original deficit, or 10 percent of
the aggregate statewide direct written premium for subject lines
of business and all accounts of the corporation for the prior
year, plus interest, fees, commissions, required reserves, and
other costs associated with financing the deficit.
       f. The corporation may pledge the proceeds of assessments,
projected recoveries from the Florida Hurricane Catastrophe
Fund, other insurance and reinsurance recoverables, policyholder
surcharges and other surcharges, and other funds available to
the corporation as the source of revenue for and to secure bonds
issued under paragraph (q), bonds or other indebtedness issued
under subparagraph (c)3., or lines of credit or other financing
mechanisms issued or created under this subsection, or to retire
any other debt incurred as a result of deficits or events giving
rise to deficits, or in any other way that the board determines
will efficiently recover such deficits. The purpose of the lines
of credit or other financing mechanisms is to provide additional
resources to assist the corporation in covering claims and
expenses attributable to a catastrophe. As used in this
subsection, the term “assessments” includes regular assessments
under sub-su