Florida Senate - 2021 SB 1574



By Senator Brandes





24-00876F-21 20211574__
1 A bill to be entitled
2 An act relating to Citizens Property Insurance
3 Corporation; amending s. 627.021, F.S.; revising
4 applicability; amending s. 627.351, F.S.; revising the
5 method for determining the amounts of potential
6 surcharges to be levied against policyholders under
7 certain circumstances; requiring the corporation to
8 levy an annual legal expenses surcharge; revising
9 conditions for eligibility for coverage with the
10 corporation to require a certain minimum premium;
11 specifying a limit for agent commission rates;
12 revising the application of annual rate increase
13 limits to certain policies issued by the corporation;
14 requiring a property owner to provide proof of current
15 homestead exemption to remain eligible for coverage
16 subject to certain limitations on rate increases;
17 providing that eligible surplus lines insurers may
18 participate, in the same manner and on the same terms
19 as an authorized insurer, in depopulation, take-out,
20 or keep-out programs relating to policies removed from
21 Citizens Property Insurance Corporation; providing
22 certain exceptions, conditions, and requirements
23 relating to such participation by a surplus lines
24 insurer in the corporation’s depopulation, take-out,
25 or keep-out programs; providing thresholds for
26 eligibility for coverage by the corporation for risks
27 offered coverage from qualified surplus lines
28 insurers; authorizing information from underwriting
29 files and confidential claims files to be released by
30 the corporation to specified entities considering
31 writing or underwriting risks insured by the
32 corporation under certain circumstances; specifying
33 that only the corporation’s transfer of a policy file
34 to an insurer, as opposed to the transfer of any file,
35 changes the file’s public record status; making
36 technical changes; amending s. 627.3517, F.S.; making
37 technical changes; amending s. 627.3518, F.S., and
38 reenacting subsections (6) and (7), relating to the
39 Citizens Property Insurance Corporation policyholder
40 eligibility clearinghouse program, to incorporate the
41 amendments made to s. 627.351, F.S., in references
42 thereto; conforming provisions to changes made by the
43 act; providing an effective date.
44
45 Be It Enacted by the Legislature of the State of Florida:
46
47 Section 1. Subsection (2) of section 627.021, Florida
48 Statutes, is amended to read:
49 627.021 Scope of this part.—
50 (2) This part does not apply to:
51 (a) Reinsurance, except joint reinsurance as provided in s.
52 627.311.
53 (b) Insurance against loss of or damage to aircraft, their
54 hulls, accessories, or equipment, or against liability, other
55 than workers’ compensation and employer’s liability, arising out
56 of the ownership, maintenance, or use of aircraft.
57 (c) Insurance of vessels or craft, their cargoes, marine
58 builders’ risks, marine protection and indemnity, or other risks
59 commonly insured under marine insurance policies.
60 (d) Commercial inland marine insurance.
61 (e) Except as may be specifically stated to apply, surplus
62 lines insurance placed under the provisions of ss. 626.913
63 626.937.
64 Section 2. Paragraphs (b), (c), (n), (q), and (x) of
65 subsection (6) of section 627.351, Florida Statutes, are amended
66 to read:
67 627.351 Insurance risk apportionment plans.—
68 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
69 (b)1. All insurers authorized to write one or more subject
70 lines of business in this state are subject to assessment by the
71 corporation and, for the purposes of this subsection, are
72 referred to collectively as “assessable insurers.” Insurers
73 writing one or more subject lines of business in this state
74 pursuant to part VIII of chapter 626 are not assessable
75 insurers; however, insureds who procure one or more subject
76 lines of business in this state pursuant to part VIII of chapter
77 626 are subject to assessment by the corporation and are
78 referred to collectively as “assessable insureds.” An insurer’s
79 assessment liability begins on the first day of the calendar
80 year following the year in which the insurer was issued a
81 certificate of authority to transact insurance for subject lines
82 of business in this state and terminates 1 year after the end of
83 the first calendar year during which the insurer no longer holds
84 a certificate of authority to transact insurance for subject
85 lines of business in this state.
86 2.a. All revenues, assets, liabilities, losses, and
87 expenses of the corporation shall be divided into three separate
88 accounts as follows:
89 (I) A personal lines account for personal residential
90 policies issued by the corporation which provides comprehensive,
91 multiperil coverage on risks that are not located in areas
92 eligible for coverage by the Florida Windstorm Underwriting
93 Association as those areas were defined on January 1, 2002, and
94 for policies that do not provide coverage for the peril of wind
95 on risks that are located in such areas;
96 (II) A commercial lines account for commercial residential
97 and commercial nonresidential policies issued by the corporation
98 which provides coverage for basic property perils on risks that
99 are not located in areas eligible for coverage by the Florida
100 Windstorm Underwriting Association as those areas were defined
101 on January 1, 2002, and for policies that do not provide
102 coverage for the peril of wind on risks that are located in such
103 areas; and
104 (III) A coastal account for personal residential policies
105 and commercial residential and commercial nonresidential
106 property policies issued by the corporation which provides
107 coverage for the peril of wind on risks that are located in
108 areas eligible for coverage by the Florida Windstorm
109 Underwriting Association as those areas were defined on January
110 1, 2002. The corporation may offer policies that provide
111 multiperil coverage and shall offer policies that provide
112 coverage only for the peril of wind for risks located in areas
113 eligible for coverage in the coastal account. Effective July 1,
114 2014, the corporation shall cease offering new commercial
115 residential policies providing multiperil coverage and shall
116 instead continue to offer commercial residential wind-only
117 policies, and may offer commercial residential policies
118 excluding wind. The corporation may, however, continue to renew
119 a commercial residential multiperil policy on a building that is
120 insured by the corporation on June 30, 2014, under a multiperil
121 policy. In issuing multiperil coverage, the corporation may use
122 its approved policy forms and rates for the personal lines
123 account. An applicant or insured who is eligible to purchase a
124 multiperil policy from the corporation may purchase a multiperil
125 policy from an authorized insurer without prejudice to the
126 applicant’s or insured’s eligibility to prospectively purchase a
127 policy that provides coverage only for the peril of wind from
128 the corporation. An applicant or insured who is eligible for a
129 corporation policy that provides coverage only for the peril of
130 wind may elect to purchase or retain such policy and also
131 purchase or retain coverage excluding wind from an authorized
132 insurer without prejudice to the applicant’s or insured’s
133 eligibility to prospectively purchase a policy that provides
134 multiperil coverage from the corporation. It is the goal of the
135 Legislature that there be an overall average savings of 10
136 percent or more for a policyholder who currently has a wind-only
137 policy with the corporation, and an ex-wind policy with a
138 voluntary insurer or the corporation, and who obtains a
139 multiperil policy from the corporation. It is the intent of the
140 Legislature that the offer of multiperil coverage in the coastal
141 account be made and implemented in a manner that does not
142 adversely affect the tax-exempt status of the corporation or
143 creditworthiness of or security for currently outstanding
144 financing obligations or credit facilities of the coastal
145 account, the personal lines account, or the commercial lines
146 account. The coastal account must also include quota share
147 primary insurance under subparagraph (c)2. The area eligible for
148 coverage under the coastal account also includes the area within
149 Port Canaveral, which is bordered on the south by the City of
150 Cape Canaveral, bordered on the west by the Banana River, and
151 bordered on the north by Federal Government property.
152 b. The three separate accounts must be maintained as long
153 as financing obligations entered into by the Florida Windstorm
154 Underwriting Association or Residential Property and Casualty
155 Joint Underwriting Association are outstanding, in accordance
156 with the terms of the corresponding financing documents. If the
157 financing obligations are no longer outstanding, the corporation
158 may use a single account for all revenues, assets, liabilities,
159 losses, and expenses of the corporation. Consistent with this
160 subparagraph and prudent investment policies that minimize the
161 cost of carrying debt, the board shall exercise its best efforts
162 to retire existing debt or obtain the approval of necessary
163 parties to amend the terms of existing debt, so as to structure
164 the most efficient plan for consolidating the three separate
165 accounts into a single account.
166 c. Creditors of the Residential Property and Casualty Joint
167 Underwriting Association and the accounts specified in sub-sub
168 subparagraphs a.(I) and (II) may have a claim against, and
169 recourse to, those accounts and no claim against, or recourse
170 to, the account referred to in sub-sub-subparagraph a.(III).
171 Creditors of the Florida Windstorm Underwriting Association have
172 a claim against, and recourse to, the account referred to in
173 sub-sub-subparagraph a.(III) and no claim against, or recourse
174 to, the accounts referred to in sub-sub-subparagraphs a.(I) and
175 (II).
176 d. Revenues, assets, liabilities, losses, and expenses not
177 attributable to particular accounts shall be prorated among the
178 accounts.
179 e. The Legislature finds that the revenues of the
180 corporation are revenues that are necessary to meet the
181 requirements set forth in documents authorizing the issuance of
182 bonds under this subsection.
183 f. The income of the corporation may not inure to the
184 benefit of any private person.
185 3. With respect to a deficit in an account:
186 a. After accounting for the Citizens policyholder surcharge
187 imposed under sub-subparagraph i., if the remaining projected
188 deficit incurred in the coastal account in a particular calendar
189 year:
190 (I) Is not greater than 2 percent of the aggregate
191 statewide direct written premium for the subject lines of
192 business for the prior calendar year, the entire deficit shall
193 be recovered through regular assessments of assessable insurers
194 under paragraph (q) and assessable insureds.
195 (II) Exceeds 2 percent of the aggregate statewide direct
196 written premium for the subject lines of business for the prior
197 calendar year, the corporation shall levy regular assessments on
198 assessable insurers under paragraph (q) and on assessable
199 insureds in an amount equal to the greater of 2 percent of the
200 projected deficit or 2 percent of the aggregate statewide direct
201 written premium for the subject lines of business for the prior
202 calendar year. Any remaining projected deficit shall be
203 recovered through emergency assessments under sub-subparagraph
204 d.
205 b. Each assessable insurer’s share of the amount being
206 assessed under sub-subparagraph a. must be in the proportion
207 that the assessable insurer’s direct written premium for the
208 subject lines of business for the year preceding the assessment
209 bears to the aggregate statewide direct written premium for the
210 subject lines of business for that year. The assessment
211 percentage applicable to each assessable insured is the ratio of
212 the amount being assessed under sub-subparagraph a. to the
213 aggregate statewide direct written premium for the subject lines
214 of business for the prior year. Assessments levied by the
215 corporation on assessable insurers under sub-subparagraph a.
216 must be paid as required by the corporation’s plan of operation
217 and paragraph (q). Assessments levied by the corporation on
218 assessable insureds under sub-subparagraph a. shall be collected
219 by the surplus lines agent at the time the surplus lines agent
220 collects the surplus lines tax required by s. 626.932, and paid
221 to the Florida Surplus Lines Service Office at the time the
222 surplus lines agent pays the surplus lines tax to that office.
223 Upon receipt of regular assessments from surplus lines agents,
224 the Florida Surplus Lines Service Office shall transfer the
225 assessments directly to the corporation as determined by the
226 corporation.
227 c. After accounting for the Citizens policyholder surcharge
228 imposed under sub-subparagraph i., the remaining projected
229 deficits in the personal lines account and in the commercial
230 lines account in a particular calendar year shall be recovered
231 through emergency assessments under sub-subparagraph d.
232 d. Upon a determination by the board of governors that a
233 projected deficit in an account exceeds the amount that is
234 expected to be recovered through regular assessments under sub
235 subparagraph a., plus the amount that is expected to be
236 recovered through surcharges under sub-subparagraph i., the
237 board, after verification by the office, shall levy emergency
238 assessments for as many years as necessary to cover the
239 deficits, to be collected by assessable insurers and the
240 corporation and collected from assessable insureds upon issuance
241 or renewal of policies for subject lines of business, excluding
242 National Flood Insurance policies. The amount collected in a
243 particular year must be a uniform percentage of that year’s
244 direct written premium for subject lines of business and all
245 accounts of the corporation, excluding National Flood Insurance
246 Program policy premiums, as annually determined by the board and
247 verified by the office. The office shall verify the arithmetic
248 calculations involved in the board’s determination within 30
249 days after receipt of the information on which the determination
250 was based. The office shall notify assessable insurers and the
251 Florida Surplus Lines Service Office of the date on which
252 assessable insurers shall begin to collect and assessable
253 insureds shall begin to pay such assessment. The date must be at
254 least 90 days after the date the corporation levies emergency
255 assessments pursuant to this sub-subparagraph. Notwithstanding
256 any other provision of law, the corporation and each assessable
257 insurer that writes subject lines of business shall collect
258 emergency assessments from its policyholders without such
259 obligation being affected by any credit, limitation, exemption,
260 or deferment. Emergency assessments levied by the corporation on
261 assessable insureds shall be collected by the surplus lines
262 agent at the time the surplus lines agent collects the surplus
263 lines tax required by s. 626.932 and paid to the Florida Surplus
264 Lines Service Office at the time the surplus lines agent pays
265 the surplus lines tax to that office. The emergency assessments
266 collected shall be transferred directly to the corporation on a
267 periodic basis as determined by the corporation and held by the
268 corporation solely in the applicable account. The aggregate
269 amount of emergency assessments levied for an account in any
270 calendar year may be less than but may not exceed the greater of
271 10 percent of the amount needed to cover the deficit, plus
272 interest, fees, commissions, required reserves, and other costs
273 associated with financing the original deficit, or 10 percent of
274 the aggregate statewide direct written premium for subject lines
275 of business and all accounts of the corporation for the prior
276 year, plus interest, fees, commissions, required reserves, and
277 other costs asso