F L O R I D A H O U S E O F R E P R E S E N T A T I V E S
HB 11D 2022D
1 A bill to be entitled
2 An act relating to insurance; amending s. 215.555,
3 F.S.; revising the calculation of amount of losses
4 below which an insurer is not entitled to
5 reimbursement from the Florida Hurricane Catastrophe
6 Fund for certain contract years; requiring the formula
7 for determining actuarially indicated premiums to
8 include a cash build-up factor in contract years only
9 under certain circumstances; deleting obsolete
10 language; limiting the amount of the cash build-up
11 factor; revising the definition of the term "covered
12 policy" in relation to certain collateral protection
13 insurance policies; amending s. 440.381, F.S.;
14 revising the annual audit requirement for construction
15 classes to apply to policies having estimated annual
16 premiums over a specified threshold; creating s.
17 624.46227, F.S.; authorizing any association, trust,
18 or pool created for the purpose of forming a risk
19 management mechanism or providing self-insurance for a
20 public entity to use communications media technology
21 to establish a quorum and conduct business; amending
22 s. 626.221, F.S.; exempting certain applicants for
23 licensure as all-lines adjusters from a required
24 examination; amending s. 626.856, F.S.; revising the
25 definition of the term "company employee adjuster";
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26 reenacting and amending s. 627.062, F.S.; authorizing
27 the use of a certain modeling indication for
28 residential property insurance rate filings; amending
29 s. 627.0629, F.S.; authorizing insurers to file
30 certain insurance rating plans based on certain
31 windstorm mitigation construction standards if certain
32 requirements are met; amending s. 627.0665, F.S.;
33 revising notification requirements for insurers that
34 have automatic bank withdrawal agreements with
35 insureds to include notices when withdrawal amounts
36 increase above a specified threshold; reenacting and
37 amending s. 627.351, F.S.; revising conditions for
38 determining the ineligibility of condominiums for
39 wind-only coverage; amending s. 627.421, F.S.;
40 deleting a requirement for electronic transmissions of
41 certain documents to include specified notices;
42 deleting a requirement that paper copies of policies
43 be provided upon request; amending ss. 627.701 and
44 627.712, F.S.; revising policyholder acknowledgment
45 statement requirements for property insurance policies
46 having certain hurricane deductibles or windstorm or
47 contents coverage exclusions, respectively; amending
48 s. 627.7152, F.S.; revising the definition of the term
49 "assignment agreement"; specifying the addresses to
50 which a notice of intent must be served; amending s.
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51 627.7276, F.S.; revising notice requirements for motor
52 vehicle policies that do not provide coverage for
53 bodily injury and property damage liability; amending
54 ss. 634.171, 634.317, and 634.419, F.S.; authorizing
55 licensed personal lines or general lines agents to
56 solicit, negotiate, advertise, or sell motor vehicle
57 service agreements, home warranty contracts, and
58 service warranty contracts, respectively, without a
59 sales representative license; making technical
60 changes; reenacting ss. 624.424(10) and 627.351(6)(v),
61 F.S., relating to annual statements and other
62 information and Citizens Property Insurance
63 Corporation, respectively, to incorporate the
64 amendment made to s. 215.555, F.S., in references
65 thereto; reenacting s. 626.8734(1)(b), F.S., relating
66 to nonresident all-lines adjuster license
67 qualifications, to incorporate the amendment made to
68 s. 626.221, F.S., in a reference thereto; reenacting
69 s. 626.865(1)(e), F.S., relating to public adjuster's
70 qualifications, to incorporate the amendment made to
71 s. 626.856, F.S., in a reference thereto; reenacti ng
72 s. 627.7153(1) and (2)(d), F.S., relating to policies
73 restricting assignment of post-loss benefits under a
74 property insurance policy, to incorporate the
75 amendment made to s. 627.7152, F.S., in references
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76 thereto; providing effective dates.
77
78 Be It Enacted by the Legislature of the State of Florida:
79
80 Section 1. Effective June 1, 2022, paragraph (e) of
81 subsection (2) of section 215.555, Florida Statutes, is amended
82 to read:
83 215.555 Florida Hurricane Catastrophe Fund.—
84 (2) DEFINITIONS.—As used in this section:
85 (e) "Retention" means the amount of losses below which an
86 insurer is not entitled to reimbursement from the fund. An
87 insurer's retention shall be calculated as follows:
88 1. The board shall calculate and report to each insurer
89 the retention multiples for that year. For the contract year
90 beginning June 1, 2022 2005, the retention multiple shall be
91 equal to $4.5 billion divided by the total estimated
92 reimbursement premium for the contract year; for subsequent
93 years, the retention multiple shall be equal to $4.5 billion,
94 adjusted based upon the reported exposure for the contract year
95 occurring 2 years before the particular contract year to reflect
96 the percentage growth in exposure to the fund for covered
97 policies since 2021 2004, divided by the total estimated
98 reimbursement premium for the contract year. Total reimbursement
99 premium for purposes of the calculation under this subparagraph
100 shall be estimated using the assumption that all insurers have
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101 selected the 90-percent coverage level.
102 2. The retention multiple as determined under subparagraph
103 1. shall be adjusted to reflect the coverage level elected by
104 the insurer. For insurers electing the 90-percent coverage
105 level, the adjusted retention multiple is 100 percent of the
106 amount determined under subparagraph 1. For insurers electing
107 the 75-percent coverage level, the retention multiple is 120
108 percent of the amount determined under subparagraph 1. For
109 insurers electing the 45-percent coverage level, the adjusted
110 retention multiple is 200 percent of the amount determined under
111 subparagraph 1.
112 3. An insurer shall determine its provisional retention by
113 multiplying its provisional reimbursement premium by the
114 applicable adjusted retention multiple and shall determine its
115 actual retention by multiplying its actual reimbursement premium
116 by the applicable adjusted retention multiple.
117 4. For insurers who experience multiple covered events
118 causing loss during the contract year, beginning June 1, 2005,
119 each insurer's full retention shall be applied to each of the
120 covered events causing the two largest losses for that insurer.
121 For each other covered event resulting in losses, the insurer's
122 retention shall be reduced to one-third of the full retention.
123 The reimbursement contract shall provide for the reim bursement
124 of losses for each covered event based on the full retention
125 with adjustments made to reflect the reduced retentions on or
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126 after January 1 of the contract year provided the insurer
127 reports its losses as specified in the reimbursement contract.
128 Section 2. Paragraph (b) of subsection (5) of section
129 215.555, Florida Statutes, is amended to read:
130 215.555 Florida Hurricane Catastrophe Fund.—
131 (5) REIMBURSEMENT PREMIUMS.—
132 (b) The State Board of Administration shall select an
133 independent consultant to develop a formula for determining the
134 actuarially indicated premium to be paid to the fund. The
135 formula shall specify, for each zip code or other limited
136 geographical area, the amount of premium to be paid by an
137 insurer for each $1,000 of insured value under covered policies
138 in that zip code or other area. In establishing premiums, the
139 board shall consider the coverage elected under paragraph (4)(b)
140 and any factors that tend to enhance the actuarial
141 sophistication of ratemaking for the fund, includin g
142 deductibles, type of construction, type of coverage provided,
143 relative concentration of risks, and other such factors deemed
144 by the board to be appropriate. The formula must provide for a
145 cash build-up factor only in a contract year in which the fund's
146 cash balance at the end of the previous calendar year is less
147 than $10 billion and for 2 subsequent contract years after the
148 year in which such a cash build-up factor is triggered. For the
149 2009-2010 contract year, the factor is 5 percent. For the 2010-
150 2011 contract year, the factor is 10 percent. For the 2011 -2012
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151 contract year, the factor is 15 percent. For the 2012 -2013
152 contract year, the factor is 20 percent. For the 2013 -2014
153 contract year and thereafter, The factor is and may not exceed
154 25 percent. The formula may provide for a procedure to determine
155 the premiums to be paid by new insurers that begin writing
156 covered policies after the beginning of a contract year, taking
157 into consideration when the insurer starts writing covered
158 policies, the potential exposure of the insurer, the potential
159 exposure of the fund, the administrative costs to the insurer
160 and to the fund, and any other factors deemed appropriate by the
161 board. The formula must be approved by unanimous vote of the
162 board. The board may, at any time, revise the formula pursuant
163 to the procedure provided in this paragraph.
164 Section 3. Effective June 1, 2023, paragraph (c) of
165 subsection (2) of section 215.555, Florida Statutes, is amended
166 to read:
167 215.555 Florida Hurricane Catastrophe Fund.—
168 (2) DEFINITIONS.—As used in this section:
169 (c) "Covered policy" means any insurance policy covering
170 residential property in this state, including, but not limited
171 to, any homeowner, mobile home owner, farm owner, condominium
172 association, condominium unit owner, tenant, or apartment
173 building policy, or any other policy covering a residential
174 structure or its contents issued by any authorized insurer,
175 including a commercial self-insurance fund holding a certificate
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176 of authority issued by the Office of Insurance Regulation under
177 s. 624.462, the Citizens Property Insurance Corporation, and any
178 joint underwriting association or similar entity created under
179 law. The term "covered policy" includes any collateral
180 protection insurance policy covering personal resid ences which
181 protects both the borrower's and the lender's financial
182 interests, in an amount at least equal to the coverage amount
183 for the dwelling in place under the lapsed homeowner's policy,
184 the coverage amount that the homeowner has been notified of by
185 the collateral protection insurer, or the coverage amount that
186 the homeowner requests from the collateral protection insurer,
187 if such collateral protection insurance policy can be accurately
188 reported as required in subsection (5). Additionally, covered
189 policies include policies covering the peril of wind removed
190 from the Florida Residential Property and Casualty Joint
191 Underwriting Association or from the Citizens Property Insurance
192 Corporation, created under s. 627.351(6), or from the Florida
193 Windstorm Underwriting Association, created under s. 627.351(2),
194 by an authorized insurer under the terms and conditions of an
195 executed assumption agreement between the authorized insurer and
196 such association or Citizens Property Insurance Corporation.
197 Each assumption agreement between the association and such
198 authorized insurer or Citizens Property Insurance Corporation
199 must be approved by the Office of Insurance Regulation before
200 the effective date of the assumption, and the Office of
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201 Insurance Regulation must provide written notification to the
202 board within 15 working days after such approval. "Covered
203 policy" does not include any policy that excludes wind coverage
204 or hurricane coverage or any reinsurance agreement and does not
205 include any policy otherwise meeting this definition which is
206 issued by a surplus lines insurer or a reinsurer. All commercial
207 residential excess policies and all deductible buy-back policies
208 that, ba