Insurance & Banking Subcommittee Meeting Packet, February 1, 2024
Summary
The meeting packet for the Insurance & Banking Subcommittee of the Florida House of Representatives Commerce Committee covers the Thursday, February 1, 2024 meeting at Morris Hall (17 HOB). The agenda lists bills such as HB 29 (Value of Motor Vehicles Exempt from Legal Process) and HB 515 (Protection of Specified Adults), plus a proposed committee substitute for HB 1503 on Citizens Property Insurance Corporation. The staff analysis of HB 29 says the bill raises the maximum value of an exempt motor vehicle from $1,000 to $5,000, effective July 1, 2024. The staff analysis of HB 515 says financial institutions that report suspected financial exploitation of a specified adult may delay a disbursement or transaction under certain conditions.
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Insurance & Banking Subcommittee
Thursday, February 1, 2024
8:00 AM - 11:00 AM
Morris Hall (17 HOB)
Meeting Packet
Paul Renner Wyman Duggan
Speaker Chair
The Florida House of Representatives
Commerce Committee
Insurance & Banking Subcommittee
Paul Renner Wyman Duggan
Speaker Chair
Meeting Agenda
Thursday, February 1, 2024
8:00 am – 11:00 am
Morris Hall (17 HOB)
I. Call to Order
II. Roll Call
III. Welcome and Opening Remarks
IV. Consideration of the following bill(s):
HB 29 Value of Motor Vehicles Exempt from Legal Process by Benjamin
HB 515 Protection of Specified Adults by Silvers
HB 1029 My Safe Florida Condominium Pilot Program by Lopez, V., Hunschofsky
HB 1093 Florida Uniform Fiduciary Income and Principal Act by Caruso
HB 1219 Dental Insurance Claims by Black
HB 1263 My Safe Florida Home Program by LaMarca
HB 1305 Florida Banking Institutions by Maggard
HB 1465 Pet Insurance and Wellness Programs by Tuck
HB 1611 Insurance by Stevenson
CS/HB 1639 Gender and Biological Sex by Select Committee on Health Innovation,
Bankson, Black
303 House Office Building, 402 South Monroe Street, Tallahassee, FL 32399-1300
(850) 717-4870
V. Consideration of the following proposed committee substitute(s):
PCS for HB 1503 -- Citizens Property Insurance Corporation
VI. Closing Remarks
VII. Adjournment
HB 29
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 29 Value of Motor Vehicles Exempt from Legal Process
SPONSOR(S): Benjamin
TIED BILLS: IDEN./SIM. BILLS: SB 158
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Civil Justice Subcommittee 15 Y, 0 N Mathews Jones
2) Insurance & Banking Subcommittee Herrera Lloyd
3) Judiciary Committee
SUMMARY ANALYSIS
The Florida Constitution allows a debtor to exempt a homestead property, regardless of value, from the claims
of creditors as long as it is used as a residence. In addition to this constitutional exemption of homestead
property and other personal property, Florida law protects certain assets from legal process so that they also
remain beyond a creditor’s reach, including:
Funds held in individual retirement accounts (“IRA”) and other tax-exempt accounts.
The cash surrender value of a life insurance policy and the proceeds of an annuity contract.
Funds held in qualified tuition programs and medical, Coverdell education, and hurricane savings
accounts.
Disability income benefits.
Wages, unless the debtor agrees to waive the exemption in writing.
Social security benefits; unemployment compensation, or public assistance benefits; veterans’ benefits;
alimony, support, or separate maintenance; and stock or pension plans under specified circumstances.
A debtor’s interest in any professionally prescribed health aids for the debtor or for a debtor’s
dependent.
A debtor’s interest in a refund or a credit received or to be received pursuant to the Internal Revenue
Code; however, this exemption is not applicable to a debt owed for child support or spousal support.
A debtor’s interest in personal property, not to exceed $4,000, if the debtor does not claim or receive the
benefits of a homestead exemption; however, this exemption is not applicable to a debt owed for child
support or spousal support.
A debtor’s interest, not to exceed $1,000 in value, in a single motor vehicle.
HB 29 increases the maximum value of an exempt motor vehicle from $1,000 to $5,000.
The bill does not appear to have a fiscal impact on state or local governments.
The bill provides an effective date of July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Constitutional Exemptions
The Florida Constitution allows a debtor to exempt a homestead property, regardless of value, from the
claims of creditors as long as it is used as a residence, as well as up to $1,000 in personal property. 1
Other Asset Exemptions
In addition to the exemption of homestead property and personal property provided by the Florida
Constitution, chapter 222, F.S., protects certain assets from legal process so that they remain out of a
creditor’s reach, including:
Funds held in an individual retirement account (“IRA”) and other tax-exempt accounts.2
A life insurance policy’s proceeds.3
A life insurance policy’s cash surrender value and an annuity contract’s proceeds.4
Funds held in qualified tuition programs and medical, Coverdell education, and hurricane
savings accounts.5
Disability income benefits.6
Wages, unless the debtor agrees to waive the exemption in writing.7
Certain personal property items.8
Any professionally prescribed health aides.9
Social security benefits; unemployment compensation, or public assistance benefits; veterans’
benefits; alimony, support, or separate maintenance; and stock or pension plans under
specified circumstances.10
A debtor’s interest in a motor vehicle, up to $1,000 in value. 11
Effect of Proposed Changes
HB 29 amends section 222.25, F.S., to increase the maximum value for a single exempt motor vehicle
from $1,000 to $5,000. The maximum value has not been amended since s. 222.25, F.S., was created
in 1993.
The bill provides an effective date of July 1, 2024.
B. SECTION DIRECTORY:
Section 1: Amends s. 222.25, F.S., relating to other individual property of natural persons exempt from
legal process.
Section 2: Provides an effective date of July 1, 2024.
1 Art. X, s. 4, Fla. Const.
2 S. 222.21, F.S.
3 S. 222.13, F.S.
4 S. 222.14, F.S.
5 S. 222.22, F.S.
6 S. 222.18, F.S.
7 Ss. 222.11 and 225.15, F.S.
8 S. 222.061, F.S.
9 S. 222.25, F.S.
10 S. 222.201, F.S.
11 S. 222.25(1), F.S.
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II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
None.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
Not applicable.
C. DRAFTING ISSUES OR OTHER COMMENTS:
During the 2022 session, the Legislature passed CS/HB 265. CS/HB 265 was substantively similar to
HB 29, except that it contained a provision limiting the exemption to bankruptcy proceedings. The
Governor vetoed the bill due to the limitation of the exemption to only Floridians in bankruptcy.
However, the Governor noted in his veto message that the exemption value is likely ripe for an
increase.12
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
12 See Veto Letter of Ron DeSantis, Governor (May 20, 2022), https://www.flgov.com/wp-content/uploads/2022/05/5.20.22-Transmittal-
Letters.pdf (last visited Nov. 29, 2024).
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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 29 2024
1 A bill to be entitled
2 An act relating to value of motor vehicles exempt from
3 legal process; amending s. 222.25, F.S.; revising
4 upward the value of a motor vehicle owned by a natural
5 person which is exempt from legal process; providing
6 an effective date.
7
8 Be It Enacted by the Legislature of the State of Florida:
9
10 Section 1. Subsection (1) of section 222.25, Florida
11 Statutes, is amended to read:
12 222.25 Other individual property of natural persons exempt
13 from legal process.—The following property is exempt from
14 attachment, garnishment, or other legal process:
15 (1) A debtor's interest, not to exceed $5,000 $1,000 in
16 value, in a single motor vehicle as defined in s. 320.01(1) s.
17 320.01.
18 Section 2. This act shall take effect July 1, 2024.
Page 1 of 1
CODING: Words stricken are deletions; words underlined are additions.
hb0029-00
HB 515
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 515 Protection of Specified Adults
SPONSOR(S): Silvers
TIED BILLS: IDEN./SIM. BILLS: SB 556
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fletcher Lloyd
2) Children, Families & Seniors Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
Florida has been a destination state for senior citizens over the years and has the second highest percentage
of senior residents in the nation. In 2022, Florida had an estimated 4.7 million people age 65 and older,
approximately 21percent of the state’s population. By 2030, this number is projected to increase to 5.9 million,
meaning the elderly will make up approximately one quarter of the state’s population and will account for most
of the state’s growth.
Elder populations are particularly vulnerable to abuse and exploitation due to risk factors associated with
aging, such as physical and mental infirmities and social isolation. Common types of elder abuse include
neglect, physical abuse, psychological abuse, and financial abuse. Up to 5 million older Americans are abused
every year, and the annual loss by victims of financial abuse is estimated to be at least $36.5 billion.
The Adult Protective Services Act, ch. 415, F.S. (Act), codifies Florida’s laws relating to the protection of
vulnerable adults. The bill amends the Act to, among other things:
Create definitions for certain terms;
Provide that if a financial institution reports suspected financial exploitation of a specified adult, it may
delay a disbursement or transaction from an account of a specified adult or an account for which a
specified adult is a beneficiary or beneficial owner, provided certain conditions are met;
Require financial institutions to:
o Create and maintain for at least 5 years after the date of the delayed disbursement or
transaction a written or electronic record of the delayed disbursement or transaction that
includes certain information,
o Make the required information available for review upon request by DCF, any law enforcement
agency, or any state or federal agency with regulatory authority over the financial institution, and
o Develop certain trainings and policies reasonably designed to educate employees on issues
pertaining to financial exploitation of specified adults before placing a delay on any
disbursement or transaction; and
Provide that a financial institution that acts in good faith and exercises reasonable care in complying
with the bill’s provisions is immune from any administrative or civil liability that might otherwise arise
from a delay in a disbursement or transaction.
The bill has no impact on state government or local government revenues and expenses. It has an
indeterminate positive and negative impact on the private sector.
The bill provides an effective date of July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Elder Population in Florida
As the country’s “baby-boom” population reaches retirement age and life expectancy increases, the
nation’s elder population is projected to increase from 54.1 million in 20191 to 80.8 million by 2040.2
Florida has long been a destination state for senior citizens and has the second highest percentage of
senior residents in the nation.3 In 2022, Florida had an estimated 4.7 million people age 65 and older,
approximately 21percent of the state’s population.4 By 2030, this number is projected to increase to 5.9
million, meaning the elderly will make up approximately one quarter of the state’s population and will
account for most of the state’s growth.5
Adult Protective Services Act
The Adult Protective Services Act, ch. 415, F.S. (Act), codifies Florida’s laws relating to the protection
of vulnerable adults. The Act defines “vulnerable adult” as a person 18 years of age or older whose
ability to perform the normal activities of daily living or to provide for his or her own care or protection is
impaired due to a mental, emotional, sensory, long-term physical, or developmental disability, or brain
damage, or the infirmities of aging.6 The term implicitly includes elderly persons, but also incorporates
disabled adults and other adults whom the Legislature has determined to be at risk of abuse, neglect,
and exploitation, and in need of protective services.7
The Department of Children and Families (DCF) protects vulnerable adults from abuse, neglect, and
exploitation through mandatory reporting and investigation of suspected abuse pursuant to the Act.8 In
2022, DCF received 30,581 reports of abuse, neglect, or exploitation of persons aged 60 or older.9
Financial Abuse in Elder Populations
Elder populations are particularly vulnerable to abuse and exploitation due to risk factors associated
with aging, such as physical and mental infirmities and social isolation.10 Common types of elderly
abuse include neglect, physical abuse, psychological abuse, and financial abuse.11 Up to 5 million older
1 U.S. Census Bureau, 65 and Older Population Grows Rapidly as Baby Boomers Age (June 25, 2020), Release Number:
CB20-99, https://www.census.gov/newsroom/ press-releases/2020/65-older-population-grows.html (last visited Jan. 10,
2024).
2 U.S. Department of Health and Human Services Administration on Aging, 2020 Profile of Older Americans (May 2021),
https://acl.gov/sites/default/files/Aging%20and% 20Disability%20in%20America/2020ProfileOlderAmericans.Final_.pdf
(last visited Jan. 10, 2024)
3 Id.
4 U.S. Census Bureau, Quick Facts – Florida, https://www.census.gov/quickfacts/fact/table/FL# (last visited Jan. 10,
2024).
5 5 Florida Office of Economic & Demographic Research, Florida Population by Age Group. Available at
http://edr.state.fl.us/Content/population-demographics/data/pop_c ensus_day-2020.pdf (last visited Jan. 10, 2024).
6 S. 415.102(28), F.S.
7 S. 415.101(2), F.S.
8 Id.
9 Email from Tarah Yeager, Gubernatorial Fellow, Department of Children and Families, Re: APS Statistics Info Request
(March 22, 2023). On file with the Health and Human Services Committee.
10 U.S. Department of Justice, About Elder Abuse, https://www.justice.gov/elderjustice/about -elder-abuse (last visited Jan.
10, 2024)..
11 U.S. Department of Justice, Types of Elder Abuse, https://www.justice.gov/elderjustice/about-elder-abuse (last visited
Jan. 10, 2024).
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Americans are abused every year, and the annual loss by victims of financial abuse is estimated to be
at least $36.5 billion.12
Financial abuse occurs when someone takes or misuses another person’s money or property for the
benefit of someone other than that person.13 For example, neighbors, caregivers, professionals, and
even family or friends may take money without permission, fail to repay the money they owe, charge
too much for services, or not even do what they were paid to do. 14
FINANCIAL SCAMS
Fraudulent scams that target elderly individuals are on the rise.15 The most common fraudulent scams
targeting these populations include:
Government impersonation scams, in which scammers call unsuspecting older adults and
pretend to be from the Internal Revenue Service, Social Security Administration, or Medicare.
They may say the older adult has unpaid taxes and threaten arrest if they do not pay
immediately. Alternatively, the scammers may say Social Security or Medicare benefits will be
cut off if the older adult does not provide personal identifying information, which can later be
used to commit identity theft.16
Sweepstakes scams, in which scammers call an older adult to tell them have won a lottery or
prize of some kind. If the older adult wants to claim their winnings, the older adult must send
money, cash, or gift cards to cover supposed taxes and processing fees, or the older adult must
send their bank account information to receive the alleged winnings. 17
Computer tech support scams, which prey on older people’s lack of knowledge about
computers and cybersecurity. A pop-up message or blank screen usually appears on a
computer or phone, telling the user their device is damaged and needs fixing. When the older
person calls the support number for help, the scammer may either request remote access to the
older person’s computer and/or demand they pay a fee to have it repaired. 18
“Grandparent” scams, in which a scammer calls a would-be grandparent and says something
along the lines of: “Hi, Grandma, do you know who this is?” When the unaware grandparent
guesses the name of the grandchild the scammer most sounds like, the scammer is able to
instantly secure their trust. The fake grandchild then asks for money to solve some urgent
financial problem (such as overdue rent, car repairs, or jail bond).19
In 2022, there were 88,262 complaints of fraud from people aged 60 years or older, resulting in $3.1
billion in losses.20 This was a 82.35percent increase in losses compared to 2021.21 Financial scams are
devastating to many older adults and can leave them in a vulnerable position, with limited ability to
recover their losses.22
Regulation of Financial Institutions in Florida
12 National Council on Aging, Get the Facts on Elder Abuse, https://www.ncoa.org/article/get-the-facts-on-elder-abuse
(last visited Jan. 10, 2024).
13 Consumer Financial Protection Bureau, Reporting Elder Financial Abuse, https://www.consumerfinance.gov/consumer -
tools/educator-tools/resources-for-older-adults/reporting-elder-financial-abuse-guide/ (last visited Jan. 10, 2024).
14 Id.
15 U.S. Department of Justice: Office of Victims of Crime, National Elder Fraud Hotline, https://ovc.ojp.gov/program/stop-
elder-fraud/providing-help-restoring-hope#financial-scams-and-abuses-t hat-target-older-people-are-happenin (last visited
Jan. 29, 2024).
16 National Council on Aging, supra note 12.
17 Id.
18 Id.
19 Id.
20 Federal Bureau of Investigation Internet Crime Complaint Center, 2022 Internet Crime Report,
https://www.ic3.gov/Media/PDF/AnnualReport/2022_IC3Report.pdf (last visited Jan. 10, 2024). See also, National Council
on Aging, supra note 12.
21 Id.
22 National Council on Aging, supra note 12.
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The Office of Financial Regulation is responsible for all activities of the Financial Services Commission
(Commission)23 relating to the regulation of banks, credit unions, other financial institutions, finance
companies, and the securities industry.24 OFR has four divisions: the Division of Consumer Finance,
the Division of Financial Institutions, the Division of Securities, and the Bureau of Financial
Investigations.25
Florida law broadly defines the term “financial institution” as a state or federal savings or thrift
association, bank, savings bank, trust company, international bank agency, international banking
corporation, international branch, international representative office, international administrative offic e,
international trust entity, international trust company representative office, qualified limited service
affiliate, credit union, or an agreement corporation operating pursuant to s. 25 of the Federal Reserve
Act, 12 U.S.C. ss. 601 et seq. or Edge Act corporation organized pursuant to s. 25(a) of the Federal
Reserve Act, 12 U.S.C. ss. 611 et seq.26
Banks and credit unions in the United States are chartered and regulated under a dual banking
system.27 These institutions may elect to have a national charter and a federal primary regulator, or
they may choose to be chartered and regulated by the state in which they are headquartered. 28 OFR’s
Division of Financial Institutions:
Conducts periodic risk-based examinations and ensures that each state-chartered financial
institution meets state and federal requirements for safety and soundness; 29 and
Administers Florida’s financial institutions codes,30 which apply to all state-authorized and state-
chartered financial institutions and to the enforcement of all laws relating to such institutions.31
Under Florida law, the books and records of a financial institution are confidential and shall be made
available for inspection and examination only:
To OFR or its duly authorized representative;
To any person duly authorized to act for the financial institution;
To any federal or state instrumentality or agency authorized to inspect or examine the books
and records of an insured financial institution;
With respect to an international banking corporation or international trust entity, to the home-
country supervisor of the international banking corporation or international trust entity, provided
certain conditions are met;
As compelled by legislative subpoena as provided by law;
As compelled by a court of competent jurisdiction, pursuant to a subpoena issued pursuant to
certain rules,32 or pursuant to a subpoena issued in accordance with state or federal law; 33
Pursuant to a subpoena, to any federal or state law enforcement or prosecutorial instrumentality
authorized to investigate suspected criminal activity;
As authorized pursuant to the board of directors of the financial institution;
23 OFR is housed within the Financial Services Commission (Commission). The Commission is comprised of four
members: the Governor, Attorney General, Chief Financial Officer, and the Commissioner of Agriculture. See Office of
Financial Regulation, Financial Services Commission, https://flofr.gov/sitepages/financialservicescommission.htm (last
visited Jan. 26, 2024).
24 S. 20.121(3)(a)2., F.S.
25 Office of Financial Regulation, Our Agency Divisions, https://flofr.gov/default.htm (last visited Jan. 26, 2024).
26 S. 655.005(1)(i), F.S.
27 Office of Financial Regulation, Agency Analysis of 2024 House Bill 515, p. 2 (Jan. 4, 2025).
28 Id.
29 Office of Financial Regulation, Division of Financial Institutions: What We Do,
https://flofr.gov/sitePages/DivisionOfFinancialInstitutions.htm (last visited Jan. 26, 2024).
30 Chs. 655-667, F.S.
31 Ss. 655.001(1) and 655.012(1), F.S.
32 Specifically, the Florida Rules of Civil Procedure, the Florida Rules of Criminal Procedure, or the Federal Rules of Civil
Procedure. See s. 655.059(1)(e), F.S.
33 Before the production of the books and records of a financial institution under these circumstances, the party seeking
production must reimburse the financial institution for the reasonable costs and fees incurred in compliance with the
production. If the parties disagree regarding the amount of reimbursement, the party seeking the records may request the
court or agency having jurisdiction to set the amount of reimbursement .
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As otherwise provided by law.34
A person who willfully violates the provisions of Florida law described above relating to unlawful
disclosure of confidential information is guilty of a felony of the third degree, punishable as provided by
Florida’s criminal laws.35
Effect of the Bill
The bill amends the Act to create definitions for the following terms:
“Financial exploitation” means the wrongful or unauthorized taking, withholding, appropriation,
or use of money, assets, or property of a specified adult; or any or omission by a person,
including through the use of a power of attorney, guardianship, or conservatorship of a specified
adult, to:
o Obtain control over the specified adult’s money, assets, or property through deception,
intimidation, or undue influence to deprive him or her of the ownership, use, benefit, or
possession of the money, assets, or property; or
o Divert the specified adult’s money, assets, or property to deprive him or her of the
ownership, use, benefit, or possession of the money, assets, or property.
“Financial institution” means a state financial institution or a federal financial institution as those
terms are defined under s. 655.005(1), F.S.36
“Specified adult” means a natural person 65 years of age or older, or a vulnerable adult as
defined in s. 415.102, F.S.37
“Trusted contact” means a natural person 18 years of age or older whom the account owner has
expressly identified and recorded in a financial institution’s books and records as the person
who may be contacted about the account.
The bill provides that if a financial institution reports suspected financial exploitation of a specified adult
pursuant to s. 415.1034, F.S.,38 it may delay a disbursement or transaction from an account of a
specified adult or an account for which a specified adult is a beneficiary or beneficial owner if two
conditions are met. First, the financial institution must immediately initiate an internal review of the facts
and circumstances that caused the employee of the financial institution to report the suspected financial
exploitation.
Second, not later than 3 business days after the date on which the delay was first placed, the financial
institution must:
Notify in writing all parties authorized to transact business on the account and any trusted
contact on the account, using the contact information provided for the account, with the
exception of any party an employee of the financial institution reasonably believes has engaged
in, is engaging in, has attempted to engage in, or will attempt to engage in the suspected
34 S. 655.059(1), F.S. See s. 655.059(2) for a list of other persons that are authorized by Florida law to inspect the books
and records of a financial institution.
35 S. 655.059(1)(c), F.S. The specific provisions of Florida’s criminal laws under which a person may be punished for a
violation includes ss. 755.802, 755.083, and 755.084, F.S.
36 S. 655.005(1) defines “financial institution” as a state or federal savings or thrift association, bank, savings bank, trust
company, international bank agency, international banking corporation, international branch, international representative
office, international administrative office, international trust entity, international trust company representative office,
qualified limited service affiliate, credit union, or an agreement corporation operating pursuant to s. 25 of the Federal
Reserve Act, 12 U.S.C. ss. 601 et seq. or Edge Act corporation organized pursuant to s. 25(a) of the Federal Reserve Act,
12 U.S.C. ss. 611 et seq. “State financial institution” means a state-chartered or state-organized financial institution, and
“federal financial institution” means a federally or nationally chartered or organized financial institution. See ss.
655.005(1)(h), (i), and (w), F.S.
37 S. 415.102, F.S., defines “vulnerable adult” as a person 18 years of age or older whose ability to perform the normal
activities of daily living or to provide for his or her own care or protection is impaired due to a mental, emotional, sensory,
long-term physical, or developmental disability or dysfunction, or brain damage, or the infirmities of aging.
38 S. 415.1034, F.S., relates to mandatory reporting of abuse, neglect, or exploitation of vulnerable adults, and other
mandatory reports of death.
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financial exploitation of the specified adult (the notice, which may be provided electronically,
must provide the reason for the delay); and
Create and maintain for at least 5 years after the date of the delayed disbursement or
transaction a written or electronic record of the delayed disbursement or transaction that
includes, at a minimum, the following information:
o The date on which the delay was first placed;
o The name and address of the specified adult;
o The business location of the financial institution;
o The name and title of the employee who reported suspected financial exploitation of the
specified adult pursuant to s. 415.1034, F.S.;39 and
o The facts and circumstances that caused the employee to report suspected financial
exploitation.
The financial institution must make the required information available for review upon request by DCF,
any law enforcement agency conducting an investigation under s. 417.104, F.S., or any state or federal
agency with regulatory authority over the financial institution. This proposed requirement appears to
eliminate the necessity for a subpoena under certain circumstances. 40 While law enforcement is
generally required to obtain a subpoena to access books and records, 41 the bill requires financial
institutions to make these records available for review by law enforcement agencies that are engaged
in an investigation under s. 417.104, F.S., regardless of whether the law enforcement agency has a
subpoena or search warrant.42
The bill provides that a delay on a disbursement or transaction expires 15 business days after the date
on which the delay was first placed. However, the financial institution may extend the delay for up to 10
additional business days if the financial institution’s review of the available facts and circumstances
continues to support the reasonable belief that financial exploitation of the specified adult has occurred,
is occurring, has been attempted, or will be attempted.
The length of the delay may be shortened or extended at any time by a court of competent jurisdiction.
However, a financial institution is not prevented from terminating a delay after communicating with the
parties authorized to transact business on the account and any trusted contact on the account.
The bill provides that a financial institution that acts in good faith and exercises reasonable care in
complying with the bill’s provisions is immune from any administrative or civil liability that might
otherwise arise from a delay in a disbursement or transaction. Further, the immunity provided by the bill
does not supersede or diminish any immunity granted elsewhere in the Act.
Before placing a delay on any disbursement or transaction pursuant to the bill, a financial institution
must:
Develop training policies or programs reasonably designed to educate employees on issues
pertaining to financial exploitation of specified adults;
Conduct training for all employees at least annually and maintain a written record of all trainings
conducted; and
Develop, maintain, and enforce written procedures regarding the manner in which suspected
financial exploitation is reviewed internally, including, if applicable, the manner in which
suspected financial exploitation is required to be reported to supervisory personnel.
The bill provides that, absent a reasonable belief of financial exploitation, a financial institution’s
obligations to parties authorized to transact business on an account or any trusted contact named on
such account are not otherwise altered. Further, the bill does not create new rights for or impose new
obligations on financial institutions under other applicable law.
39 S. 415.104, F.S., relates to protective investigations of cases of abuse, neglect, or exploitation of vulnerable adults, and
the transmittal of records to state attorneys pursuant to such investigations.
40 Office of Financial Regulation, supra note 27, p. 4.
41 See s. 655.059(1)(e), F.S.
42 Office of Financial Regulation, supra note 27, p. 4.
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The bill also provides legislative intent.
B. SECTION DIRECTORY:
Section 1. Creates s. 415.10341, F.S., relating to protection of specified adults.
Section 2. Provides an effective date of July 1, 2024.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill has an indeterminate positive impact on specified adults to the extent the bill allows financial
institutions to delay a financial transaction if an employee at the institution reasonably suspects
financial abuse of a specified adult. Accordingly, it is foreseeable that fewer specified adults will be able
to effectuate a financial transaction procured by improper methods.
The bill has an indeterminate negative impact on financial institutions to the extent that such institutions
decide to delay disbursements as provided by the bill. Further, if the financial institution does decide to
delay disbursements, the institution must first comply with the conditions provided by the bill.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
None.
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B. RULE-MAKING AUTHORITY:
Not applicable. The rule does not amend or create rule-making authority.
C. DRAFTING ISSUES OR OTHER COMMENTS:
Lines 49-77: The language relating to legislative intent may be used unfavorably by courts in statutory
interpretation. An amendment could address this possibility by removing the language from the bill.
Lines 98-99: The requirement that a financial institution create and maintain for at least 5 years after
the date of a delayed disbursement or transaction a written or electronic record of certain information
seemingly creates a future obligation to a condition precedent. An amendment could address this issue
by moving the requirement to maintain the records for 5 years to a new subsection of proposed s.
415.10341, F.S.
Lines 110-114: The provisions of the bill authorize a financial institution to make the name and address
of a specified adult available to “any law enforcement agency” conducting an investigation under s.
415.104, F.S. The following issues were pointed out by OFR in their formal analysis of these lines of
the bill:
The information required to be made available may be protected by the Right to Financial
Privacy Act (RFPA),12 U.S.C. § 3401 et seq.43 Pursuant to RFPA, a federal government
authority generally must seek a subpoena to access such books and records, and may only
request financial records pursuant to a formal written request under certain conditions, one of
which includes serving a copy of the request upon the customer.44 As the bill is drafted to
govern “any law enforcement agency,” it may be read to expand the powers of federal law
enforcement agencies to the extent they may be involved with such an investigation. 45 Further,
state-chartered banks and credit unions are subject to federal regulation from the Federal
Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA),
respectively.46 The lack of a subpoena requirement in lines 110-114 may conflict with various
regulations of FDIC and NCUA governing confidentiality. 47 As such, state-chartered banks and
credit unions may be forced to determine whether to comply with federal law or state law upon a
request from a law enforcement agency which is unaccompanied by a subpoena.48
It is unclear whether the “request” referenced in these lines of the bill must be in writing and
whether, and how, the financial institution should maintain the request as a record. 49 As such, it
may be difficult or impossible for an OFR examiner to make a determination about which law
should apply to the release of records pertaining to specified adults, and whether the financial
institution acted in compliance.50
An amendment could address the first issue by removing the requirement that the financial
institution make the information available for review by the specified entities. An amendment could
address the second issue by clarifying how the referenced request should be made.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
43 Office of Financial Regulation, supra note 27, p. 7.
44 See 12 U.S.C. s. 3408. See also, Office of Financial Regulation, supra note 27, p. 7.
45 Office of Financial Regulation, supra note 27, p. 7.
46 Id.
47 Id.
48 Id.
49 Id.
50 Id.
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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 515 2024
1 A bill to be entitled
2 An act relating to protection of specified adults;
3 creating s. 415.10341, F.S.; defining terms; providing
4 legislative findings and intent; authorizing financial
5 institutions, under certain circumstances, to delay a
6 disbursement or transaction from an account of a
7 specified adult; requiring the financial institution
8 to make certain information available upon request by
9 certain entities; specifying that a delay on a
10 disbursement or transaction expires on a certain date;
11 authorizing the financial institution to extend the
12 delay under certain circumstances; authorizing a court
13 of competent jurisdiction to shorten or extend the
14 delay; providing construction; granting financial
15 institutions immunity from certain liability;
16 providing construction; requiring financial
17 institutions to take certain actions before placing a
18 delay on a disbursement or transaction; providing
19 construction; providing an effective date.
20
21 Be It Enacted by the Legislature of the State of Florida:
22
23 Section 1. Section 415.10341, Florida Statutes, is created
24 to read:
25 415.10341 Protection of specified adults.—
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26 (1) As used in this section, the term:
27 (a) "Financial exploitation" means the wrongful or
28 unauthorized taking, withholding, appropriation, or use of
29 money, assets, or property of a specified adult; or any act or
30 omission by a person, including through the use of a power of
31 attorney, guardianship, or conservatorship of a specified adult,
32 to:
33 1. Obtain control over the specified adult's money,
34 assets, or property through deception, intimidation, or undue
35 influence to deprive him or her of the ownership, use, benefit,
36 or possession of the money, assets, or property; or
37 2. Divert the specified adult's money, assets, or property
38 to deprive him or her of the ownership, use, benefit, or
39 possession of the money, assets, or property.
40 (b) "Financial institution" means a state financial
41 institution or a federal financial institution as those terms
42 are defined under s. 655.005(1).
43 (c) "Specified adult" means a natural person 65 years of
44 age or older, or a vulnerable adult as defined in s. 415.102.
45 (d) "Trusted contact" means a natural person 18 years of
46 age or older whom the account owner has expressly identified and
47 recorded in a financial institution's books and records as the
48 person who may be contacted about the account.
49 (2) The Legislature finds that many persons in this state,
50 because of age or disability, are at increased risk of f inancial
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51 exploitation and loss of their assets, funds, investments, and
52 investment accounts. The Legislature further finds that
53 specified adults in this state are at a statistically higher
54 risk of being targeted for financial exploitation, regardless of
55 diminished capacity or other disability, because of their
56 accumulation of substantial assets and wealth compared to
57 younger age groups. In enacting this section, the Legislature
58 recognizes the freedom of specified adults to manage their
59 assets, make investment choices, and spend their funds, and
60 intends that such rights may not be infringed absent a
61 reasonable belief of financial exploitation as provided in this
62 section. The Legislature therefore intends to provide for the
63 prevention of financial exploitation of such persons. The
64 Legislature intends to encourage the constructive involvement of
65 financial institutions that take action based upon the
66 reasonable belief that specified adults who have accounts with
67 such financial institutions have been or are the su bject of
68 financial exploitation, and to provide financial institutions
69 and their employees immunity from liability for taking actions
70 as authorized herein. The Legislature intends to balance the
71 rights of specified adults to direct and control their assets ,
72 funds, and investments and to exercise their constitutional
73 rights consistent with due process with the need to provide
74 financial institutions the ability to place narrow, time -limited
75 restrictions on these rights in an effort to decrease specified
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76 adults' risk of loss due to abuse, neglect, or financial
77 exploitation.
78 (3) If a financial institution reports suspected financial
79 exploitation of a specified adult pursuant to s. 415.1034, it
80 may delay a disbursement or transaction from an account of a
81 specified adult or an account for which a specified adult is a
82 beneficiary or beneficial owner if all of the following apply:
83 (a) The financial institution immediately initiates an
84 internal review of the facts and circumstances that caused an
85 employee of the financial institution to report suspected
86 financial exploitation.
87 (b) Not later than 3 business days after the date on which
88 the delay was first placed, the financial institution:
89 1. Notifies in writing all parties authorized to transact
90 business on the account and any trusted contact on the account,
91 using the contact information provided for the account, with the
92 exception of any party an employee of the financial institution
93 reasonably believes has engaged in, is engaging in, has
94 attempted to engage in, or will attempt to engage in the
95 suspected financial exploitation of the specified adult. The
96 notice, which may be provided electronically, must provide the
97 reason for the delay.
98 2. Creates and maintains for at least 5 years after the
99 date of the delayed disbursement or transaction a written or
100 electronic record of the delayed disbursement or transaction
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101 that includes, at minimum, the following information:
102 a. The date on which the delay was first placed.
103 b. The name and address of the specified adult.
104 c. The business location of the financial institution.
105 d. The name and title of the employee who reported
106 suspected financial exploitation of the specified adult pursuant
107 to s. 415.1034.
108 e. The facts and circumstances that caused the employee to
109 report suspected financial exploitation.
110 (4) The financial institution must make the information
111 required in subparagraph (3)(b)2. available for review upon
112 request by the department, any law enforcement agency conducting
113 an investigation under s. 415.104, or any state or federal
114 agency with regulatory authority over the financial institution.
115 (5) A delay on a disbursement or transaction under
116 subsection (3) expires 15 business days after the date on which
117 the delay was first placed. However, the financial institution
118 may extend the delay for up to 10 additional business days if
119 the financial institution's review of the available facts and
120 circumstances continues to support the reasonable belief that
121 financial exploitation of the specified adult has occurred, is
122 occurring, has been attempted, or will be attempted. The length
123 of the delay may be shortened or extended at any time by a court
124 of competent jurisdiction. This subsection does not prevent a
125 financial institution from terminating a delay after
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126 communication with the parties authorized to transact business
127 on the account and any trusted contact on the account.
128 (6) A financial institution that acts in good faith and
129 exercises reasonable care to comply with this section is immune
130 from any administrative or civil liability that might otherwise
131 arise from such delay in a disbursement or transaction in
132 accordance with this section. This subsection does not supersede
133 or diminish any immunity granted elsewhere in this chapter.
134 (7) Before placing a delay on a disbursement or
135 transaction pursuant to this section, a financial institution
136 must do all of the following:
137 (a) Develop training policies or programs reasonably
138 designed to educate employees on issues pertaining to financial
139 exploitation of specified adults.
140 (b) Conduct training for all employees at least annually
141 and maintain a written record of all trainings conducted.
142 (c) Develop, maintain, and enforce written procedures
143 regarding the manner in which suspected financial exploitation
144 is reviewed internally, including, if applicable, the manner in
145 which suspected financial exploitation is required to be
146 reported to supervisory personnel.
147 (8) Absent a reasonable belief of financial exploitation
148 as provided in this section, this section does not otherwise
149 alter a financial institution's obligations to all parties
150 authorized to transact business on an account and any trusted
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151 contact named on such account.
152 (9) This section does not create new rights for or impose
153 new obligations on a financial institution under other
154 applicable law.
155 Section 2. This act shall take effect July 1, 2024.
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INSURANCE & BANKING SUBCOMMITTEE
HB 515 by Rep. Silvers
Protection of Specified Adults
AMENDMENT SUMMARY
February 1, 2024
Amendment 1 by Rep. Silvers (Line 43): The amendment makes the following changes:
• Changes the definition of a “specified adult” to mean a natural person 70 years of age or
older, rather than 65 years of age or older;
• Provides that a delay on a disbursement or transaction expires 5 business days after
date on which the delay was first placed, rather than 15 business days;
• Allows a financial institution to extend a delay for up to 7 additional calendar days under
certain circumstances, rather than 10 additional business days; and
• Removes the proposed grant of administrative and civil immunity to a financial institution
based on certain circumstances.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 515 (2024)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Silvers offered the following:
4
5 Amendment
6 Remove lines 43-152 and insert:
7 (c) "Specified adult" means a natural person 70 years of
8 age or older, or a vulnerable adult as defined in s. 415.102.
9 (d) "Trusted contact" means a natural person 18 years of
10 age or older whom the account owner has expressly identified and
11 recorded in a financial institution's books and records as the
12 person who may be contacted about the account.
13 (2) The Legislature finds that many persons in this state,
14 because of age or disability, are at increased risk of financial
15 exploitation and loss of their assets, funds, investments, and
16 investment accounts. The Legislature further finds that
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 515 (2024)
Amendment No. 1
17 specified adults in this state are at a statistically higher
18 risk of being targeted for financial exploitation, regardless of
19 diminished capacity or other disability, because of their
20 accumulation of substantial assets and wealth compared to
21 younger age groups. In enacting this section, the Legislature
22 recognizes the freedom of specified adults to manage their
23 assets, make investment choices, and spend their funds, and
24 intends that such rights may not be infringed absent a
25 reasonable belief of financial exploitation as provided in this
26 section. The Legislature therefore intends to provide for the
27 prevention of financial exploitation of such persons. The
28 Legislature intends to encourage the constructive involvement of
29 financial institutions that take action based upon the
30 reasonable belief that specified adults who have accounts with
31 such financial institutions have been or are the subject of
32 financial exploitation. The Legislature intends to balance the
33 rights of specified adults to direct and control their assets,
34 funds, and investments and to exercise their constitutional
35 rights consistent with due process with the need to provide
36 financial institutions the ability to place narrow, time-limited
37 restrictions on these rights in an effort to decrease specified
38 adults' risk of loss due to abuse, neglect, or financial
39 exploitation.
40 (3) If a financial institution reports suspected financial
41 exploitation of a specified adult pursuant to s. 415.1034, it
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 515 (2024)
Amendment No. 1
42 may delay a disbursement or transaction from an account of a
43 specified adult or an account for which a specified adult is a
44 beneficiary or beneficial owner if all of the following apply:
45 (a) The financial institution immediately initiates an
46 internal review of the facts and circumstances that caused an
47 employee of the financial institution to report suspected
48 financial exploitation.
49 (b) Not later than 3 business days after the date on which
50 the delay was first placed, the financial institution:
51 1. Notifies in writing all parties authorized to transact
52 business on the account and any trusted contact on the account,
53 using the contact information provided for the account, with the
54 exception of any party an employee of the financial institution
55 reasonably believes has engaged in, is engaging in, has
56 attempted to engage in, or will attempt to engage in the
57 suspected financial exploitation of the specified adult. The
58 notice, which may be provided electronically, must provide the
59 reason for the delay.
60 2. Creates and maintains for at least 5 years after the
61 date of the delayed disbursement or transaction a written or
62 electronic record of the delayed disbursement or transaction
63 that includes, at minimum, the following information:
64 a. The date on which the delay was first placed.
65 b. The name and address of the specified adult.
66 c. The business location of the financial institution.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 515 (2024)
Amendment No. 1
67 d. The name and title of the employee who reported
68 suspected financial exploitation of the specified adult pursuant
69 to s. 415.1034.
70 e. The facts and circumstances that caused the employee to
71 report suspected financial exploitation.
72 (4) The financial institution must make the information
73 required in subparagraph (3)(b)2. available for review upon
74 request by the department, any law enforcement agency conducting
75 an investigation under s. 415.104, or any state or federal
76 agency with regulatory authority over the financial institution.
77 (5) A delay on a disbursement or transaction under
78 subsection (3) expires 5 business days after the date on which
79 the delay was first placed. However, the financial institution
80 may extend the delay for up to 7 additional calendar days if the
81 financial institution's review of the available facts and
82 circumstances continues to support the reasonable belief that
83 financial exploitation of the specified adult has occurred, is
84 occurring, has been attempted, or will be attempted. The length
85 of the delay may be shortened or extended at any time by a court
86 of competent jurisdiction. This subsection does not prevent a
87 financial institution from terminating a delay after
88 communication with the parties authorized to transact business
89 on the account and any trusted contact on the account.
90 (6) Before placing a delay on a disbursement or
91 transaction pursuant to this section, a financial institution
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 515 (2024)
Amendment No. 1
92 must do all of the following:
93 (a) Develop training policies or programs reasonably
94 designed to educate employees on issues pertaining to financ ial
95 exploitation of specified adults.
96 (b) Conduct training for all employees at least annually
97 and maintain a written record of all trainings conducted.
98 (c) Develop, maintain, and enforce written procedures
99 regarding the manner in which suspected financial exploitation
100 is reviewed internally, including, if applicable, the manner in
101 which suspected financial exploitation is required to be
102 reported to supervisory personnel.
103 (7) Absent a reasonable belief of financial exploitation
104 as provided in this section, this section does not otherwise
105 alter a financial institution's obligations to all parties
106 authorized to transact business on an account and any trusted
107 contact named on such account.
108 (8) This section does not create new rights for or impose
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HB 1029
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1029 My Safe Florida Condominium Pilot Program
SPONSOR(S): Lopez, V. and others
TIED BILLS: IDEN./SIM. BILLS: SB 1366
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenberry Lloyd
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
The My Safe Florida Home (MSFH) Program was created in 2006 within the Department of Financial Services
(DFS) to perform mitigation inspections of site-built, single-family, residential properties (inspections), and
mitigation grants (grants) to eligible applicants to make their homes less vulnerable to hurricane damage. The
MSFH Program received $250 million in appropriations for the Fiscal Year 2006-2007, but was not funded again
until 2022. Since then, the Legislature has provided approximately $433 million in subsequent additional funding
to the MSFH Program.
Mitigation inspections are limited to homesteaded properties. Funds may be used to inspect townhouses to
determine if opening protection mitigation would help decrease the risk of hurricane damage and grant funds
may be used to pay for such opening protection mitigation if warranted. The value of the mitigation grant-
eligible homes is currently $700,000. While initially limited to homes within the wind-borne debris region, the
MSFH Program is currently a statewide program.
The bill establishes within DFS the My Safe Florida Condominium Pilot Program ( MSFCP Program), with the
intent that the Program provide licensed inspectors to perform inspections for and grants to eligible
associations, as funding allows. Under the MSFCP Program, DFS must provide fiscal accountability, contract
management, and strategic leadership for the MSFCP Program, consistent with the bill’s provisions. The
MSFCP Program must be implemented pursuant to appropriations, and is subject to annual legislative
appropriations thereafter.
Essentially, the bill provides to condominium owners a program similar to that of the MSFH Program in regards
to requirements for participation, hurricane mitigation inspectors and inspections, eligibility for mitigation grants,
contract management by DFS, and required annual reports.
The bill has no impact on state or local government revenues and expenditures. The implementation of the
MSFCP Program is subject to funding separate from the bill. The bill may have a positive direct economic
impact on the private sector.
The bill provides an effective date of July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
In 2006, the Legislature created the My Safe Florida Home (MSFH) Program within the Department of
Financial Services (DFS) with the intent that the Program provide trained and certified inspectors to
perform inspections for owners of site-built, single-family, residential properties (mitigation inspections)
and grants to eligible applicants, subject to funding availability. 1 The purpose of the MSFH Program
was to “develop and implement a comprehensive and coordinated approach for hurricane damage
mitigation.”2 The MSFH program allowed DFS to undertake a public outreach and advertising campaign
to inform consumers of the availability, and benefits, of the mitigation inspections and grants. 3 It
required the development of brochures for distribution to general contractors, roofing contractors, and
real estate brokers and sales associates to explain the benefits of residential hurricane damage
mitigation to homeowners.4
Hurricane Mitigation Inspections
The purpose of the mitigation inspections was to determine:
What mitigation measures were needed;
What insurance premium discounts might have been available; and
What improvements to existing residential properties were needed to reduce the properties’
susceptibility to hurricane damage.5
The mitigation inspections had to include, at a minimum:
A report that summarized the results and identified recommended improvements the
homeowner could take to mitigate hurricane damage;
A range of cost estimates regarding the recommended mitigation improvements; and
Insurer-specific information regarding premium discounts correlated to current and
recommended hurricane mitigation improvements.6
DFS was required to maintain a list of hurricane mitigation inspectors who were authorized to conduct
the mitigation inspections for the MSFH Program.7 DFS entered contracts with wind certification entities
to provide mitigation inspections. In order to be eligible for the contracts, the entities had to use
hurricane mitigation inspectors who, at a minimum:
Were certified building inspectors;
Were licensed as general or residential contractors;
Were licensed and professional engineers and had passed the appropriate equivalency test of
the building code training program;
Were licensed professional architects; or
Had at least two years of experience in residential construction or residential building inspection
and had received specialized training in hurricane mitigation procedures. 8
Mitigation Grants
The purpose of the mitigation grants component of the MSFH Program was to retrofit single-family
1 S. 215.5586, F.S.
2 Id.
3 S. 215.5586(3), F.S.
4 S. 215.5586(7), F.S.
5 S. 215.5586(1)(a), F.S.
6 Id.
7 S. 215.55186(6), F.S.
8 S. 215.5586(1)(b), F.S.
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homes to make them less vulnerable to hurricane damage. 9 To be eligible for a grant, the following
criteria must have been met:
The homeowner must have had a homestead exemption on the home to be retrofitted;
The home must have had an insured value of $300,000 or less, unless the homeowner was
classified as a low-income person;
The home must have undergone an acceptable hurricane mitigation inspection after May 1,
2007;
The home must have been located in the “wind-borne debris region” as defined in the
International Building Code; and
The building permit application for initial construction of the home must have been made before
March 1, 2002.10
In addition, the homeowner had to match the grant award on a dollar-for-dollar basis up to $10,000, for
the actual cost of the mitigation project, and the state’s contribution could not exceed $5,000. 11 Low-
income homeowners were eligible for grants of up to $5,000, and were not required to provide a
matching amount to receive a grant.12 Matching fund grants were also available to local governments
and nonprofit entities for projects to reduce hurricane damages to single-family homes.13
Grants could be used on previously-inspected existing structures or on rebuilds.14 If recommended by a
hurricane mitigation inspection, grants could be used for the following improvements:
Opening protection.
Upgrading exterior doors, including garage doors.
Bracing gable ends.
Reinforcing roof-to-wall connections.
Improving the strength of roof-deck attachments.
Upgrading roof coverings from code to code plus.
Installing secondary water barrier for roofs.15
DFS was required to issue an annual report on the activities of the MSFH Program that accounted for
the use of any appropriated state funds, the number of inspections requested and performed, the
number of grant applications received, and the number and value of grants approved. 16
The MSFH Program was appropriated $250 million in Fiscal Year 2006-07.17 As of May 2009,
approximately $93 million in MSFH grants were allocated to 32,000 homes, and approximately 400,000
homes received a MSFH home inspection.18 DFS requested that Risk Management Solutions (RMS),
conduct an impact analysis of the MSFH program, and RMS released a report of the impact analysis on
May 14, 2009 (report).19 In the report, RMS concluded that the MSFH grants were beneficial to the
State of Florida, individual homeowners, and the insurance industry. 20 RMS indicated that the predicted
reduction in loss as a result of the grant projects completed far exceeded the grant money spent.21
While the MSFH Program was never repealed from law, additional funding was not provided until May
2022.
2022 Renewal of the MSFH Program
9 S. 215.5586(2), F.S.
10 Id.
11
Id.
12 Id.
13 Id.
14 Rebuilds were defined as site-built, single-family dwellings under construction to replace homes that were destroyed or significantly
damaged by hurricanes and deemed unlivable by a regulatory authority. S. 215.5586(2)(e), F.S.
15 S. 215.5586(2)(e), F.S.
16 S. 215.5586(10), F.S.
17 Risk Management Solutions, Analyzing the Effects of the My Safe Florida Home Program on Florida Insura nce Risk, May 14, 2009,
https://www.ipcc.ch/apps/njlite/srex/njlite_download.php?id=5036 (last visited Jan. 26, 2024).
18 Id.
19 Id.
20 Id.
21 Id.
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During the 2022D Special Session, the Legislature passed a property insurance bill (SB 2-D), in which
it renewed the funding for the MSFH Program by appropriating $150 million in nonrecurring funds from
General Revenue (GR) to DFS for the Program for the 2022-2023 fiscal year. The funds appropriated
were allocated as follows:
$115 million for mitigation grants.
$25 million for hurricane mitigation inspections.
$4 million for education and consumer awareness.
$1 million for public outreach for contractors and estate brokers and sales associates.
$5 million for administrative costs.
SB 2-D reappropriated any unexpended balance of funds from the appropriation remaining on June 30,
2023, to DFS for the 2023-2024 fiscal year to be used for the MSFH Program. The appropriation will
expire on October 1, 2024. SB 2-D gave DFS the authority to adopt emergency rules to implement the
MSFH Program.
SB 2-D made additional modifications to the MSFH Program. It required that an application for a
mitigation grant include a provision that requires an applicant to make his or her home available for
inspection once a mitigation project is completed. The bill changed the monetary limits for eligibility for
mitigation grants so that homes with an insured value of $500,000, or less, qualify for the program.
SB 2-D required that homes that receive mitigation grants have undergone home mitigation inspections
after July 1, 2008, and have received permits for initial construction before January 1, 2008. The
homeowner must also match grant funds on the basis of $1 from the homeowner for every $2 provided
by the state up to a maximum state contribution of $10,000 towards the actual cost of the mitigation
project undertaken on the eligible home.
The bill enhanced the reporting requirements for DFS under the MSFH Program by requiring that the
report include the following received by homeowners from insurers as a result of the mitigation funded
by the program:
The average annual amount of insurance premium discounts; and
The total annual amount of insurance premium discounts.
2022 MSFH Program Implementation
Following the passage of SB 2-D, DFS procured a vendor to administer the MSFH Program, qualified
inspectors to conduct mitigation inspections, and qualified contractors who agreed to provide mitigation
repairs and retrofitting under the grant portion of the Program.22 DFS compiled a list of approved
vendors that homeowners participating in the MSFH Program may choose for inspections and
mitigation work.23
On November 18, 2022, a web-based application for homeowners to request mitigation inspections and
grant funds went live.24 Between May 26, 2022 and February 28, 2023, 16,724 mitigation inspections
were completed and 2,979 grant applications were approved. 25
Inspectors completing mitigation inspections under the MSFH Program must complete the Uniform
Mitigation Verification Inspection Form (Inspection Form), as revised by the Office of Insurance
Regulation on January 12, 2023.26 The mitigation inspection report provided to the homeowner includes
the completed Inspection Form, as well as the information already required by statute,27 including:
A summary of the results of the mitigation inspection identifying recommended improvements a
homeowner may undertake;
22 Florida Department of Financial Services, Agency Analysis of 2023 House Bill 881, p. 1 (Mar. 1, 2023).
23 Id.
24 Id.
25 Id.
26 Id.
27 S. 215.5586(1)(a), F.S.
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A range of cost estimates regarding the recommended improvements; and
Estimated property insurance premium discounts based on the mitigation measures the
homeowner has completed.28
2023 Developments to the MSFH Program
Following the significant interest in the program in 2022 and early 2023, the Legislature made
additional changes to the statutory framework for the MSFH Program during the 2023 Regular Session.
These changes included changes to the inspection and grant eligibility requirements, and program
management changes.
Single-family home eligibility for mitigation inspections was limited only to homesteaded properties.29
Funds from the MSFH Program may now be used to inspect townhouses to determine if opening
protection mitigation would help decrease the risk of hurricane damage. 30 If an inspection determines
that opening protection mitigation would decrease such risk, grant funds from the MSFH Program may
be used to pay for the mitigation.31 The value of the mitigation grant-eligible homes was also increased
from $500,000 to $700,000.32
The designation of a specific portion of the grant funds for low-income recipients was removed, but
increases the overall grant award for low-income recipients from $5,000 to $10,000.33 The program’s
geographic eligibility area was broadened to include otherwise in eligible homes outside the wind-borne
debris region, in effect making it a statewide program.
Among the project management changes implemented, home inspectors must be licensed, in addition
to certified.34 This requirement conforms with other statutory chapters that address home inspectors.
Funding for the MSFH Program
As of December 2023, the Legislature has appropriated a total of $433 million for the MSFH Program
since May 2022.35 In addition to the $150 million appropriated during the 2022D Special Session, this
includes $100 million in grant funding appropriated during the 2023 Regular Session and an additional
$176 million in grant funding appropriated during the 2023C Special Session.36
Results of the MSFH Program
Between November 2022, and December 2023, the MSFH Program has provided more than 94,000
homeowners with hurricane mitigation inspections and approved more than 23,000 grant applications. 37
Over 73 percent of those homeowners who have completed participation in the grant component of the
MSFH Program have seen their homeowners insurance premiums drop or stabilize, and many are
paying premiums at or below the state average.38 According to DFS, upon applying to the MSFH
Program, the average premium of the applicants was 55.1 percent higher than the average Florida
homeowner’s premium.39 Based upon the decrease in premium following participation, DFS has
concluded that the MSFH Program participation is comprised of higher-than-average risk homeowners,
28 Department of Financial Services, supra note 22, at 2.
29 The homestead requirement was already in place for the grant portion of the MSFH Program under s. 215.5586(2), F.S., prior to the
2023 Regular Session.
30 S. 215.5586(1)(a), F.S.
31 S. 215.5586(2)(f), F.S.
32 S. 215.5586(2)(e)2., F.S.
33 S. 215.5586(2)(h), F.S.
34 S. 215.5586, F.S.
35 Department of Financial Services, 2023 Annual Report of My Safe Florida Home, p. 1.
36 Id. at p. 6. The mitigation grant funding is by far the largest component of the MSFH Program.
37 Id. at p. 1. Because the grant portion of the MSFH Program is fulfille d based on reimbursement to homeowners after proof of
completion of mitigation projects, the money to fulfill these grants has been reserved, but not all of it has been paid to th e homeowners
yet.
38 Id.
39 Id. at p. 2.
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which is consistent with the goal of helping those with homes at greatest risk. 40
Condominiums
While the current MSFH Program provides for the inspections of, and some mitigation projects to,
townhouses, Florida law does not currently provide a program for condominium owners similar to the
MSFH Program.
Effect of the Bill
The bill establishes within DFS the My Safe Florida Condominium Pilot Program ( MSFCP Program),
with the intent that the Program provide licensed inspectors to perform inspections for and grants to
eligible associations, as funding allows. Under the MSFCP Program, DFS must provide fiscal
accountability, contract management, and strategic leadership for the MSFCP Program, consistent with
the bill’s provisions.
The MSFCP Program must be implemented pursuant to appropriations, and is subject to annual
legislative appropriations thereafter. The bill provides that its provisions do not create an entitlem ent for
associations or unit owner or obligate the state in any way to fund the inspection or retrofitting of
condominiums in Florida.
Essentially, the bill provides to condominium owners a program similar to that of the MSFH Program.
Definitions
The bill creates definitions for the following terms:
“Association” means, in addition to any entity responsible for the operation of common elements
owned in undivided shares by unit owners, any entity which operates or maintains other real
property in which unit owners have use rights, where membership in the entity is composed
exclusively of unit owners or their elected or appointed representatives and is a required
condition of unit ownership.41
“Association property” means that property, real and personal, which is owned or leased by, or
is dedicated by a recorded plat to, the association for the use and benefit of its members. 42
“Board of administration” means the board of directors or other representative body which is
responsible for administration of the association.43
“Condominium” means that form of ownership of real property created pursuant to ch. 718, F.S.,
which is comprised entirely of units that may be owned by one or more persons, and in which
there is, appurtenant to each unit, an undivided share in common elements.44
“Property” means association property and condominium property, as applicable.
“Rebuild” means property under construction to replace a structure that was destroyed or
significantly damaged by a hurricane and deemed unlivable by a regulatory authority.
“Unit” means a part of the condominium property which is subject to exclusive ownership. A unit
may be in improvements, land, or land and improvements together, as specified in an
association’s declaration.45
“Unit owner” means a record owner of legal title to a condominium parcel.46
Participation
The bill provides that, to apply for an inspection or grant for association property or condominium
40 Id.
41 See s. 718.103(3), F.S.
42 See s. 718.103(4), F.S.
43 See s. 718.103(5), F.S.
44 See s. 718.103(12), F.S.
45 See s. 718.103(29), F.S.
46 See s. 718.103(30), F.S.
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property, an association must receive approval by a majority vote of the board of administration or a
majority vote of the total voting interests of the association to participate in the pilot program.
Additionally, to apply for a grant which improves one or more units within a condominium, an
association must receive both of the following:
Approval by a majority vote of the board of administration or a majority vote of the total voting
interests of the association to participate in a mitigation inspection.
A unanimous vote of all unit owners within the structure or building that is the subject of the
mitigation grant.
The votes required by this section of the bill may take place at the annual budget meeting of the
association or at a unit owner meeting called for the purpose of taking such vote. However, before a
vote of the unit owners can be taken, the association must provide to the unit owners a clear disclosure
of the MSFCP Program on form created by DFS. The bill further provides that:
The president and the treasurer of the board of administration must sign the disclosure form
indicating that a copy of the form was provided to each unit owner of the association;
The signed disclosure form and the minutes from the meeting at which the unit owners voted to
participate in the MSFCP Program must be maintained as part of the official records of the
association;
Within 14 days after an affirmative vote to participate in the MSFCP Program, the association
must provide written notice in the same manner as required under s. 718.112(2)(d), F.S., 47 to all
unit owners of the decision to participation in the MSFCP Program.
The bill provides that a unit owner may participate in the MSFCP Program through a mitigation grant
awarded to the association, but a unit owner may not participate individually in the MSFCP Program.
Hurricane Mitigation Inspectors
Licensed inspectors under the MSFCP Program are to provide inspections of the property to determine
the mitigation measures that are needed, the insurance premium discounts that may be available to the
association, and the improvements to existing properties of the association that are needed to reduce a
property’s vulnerability to hurricane damage.
The bill requires DFS to contract with wind certification entities to provide hurricane mitigation
inspections. To qualify for selection by DFS as a wind certification entity to provide hurricane mitigation
inspections, the entity must, at a minimum, meet all of the following requirements:
Use hurricane mitigation inspectors who are licensed or certified as a:
o Building inspector,
o General, building, or residential contractor,
o A professional engineer,
o A professional architect, or
o A home inspector who has completed at least 3 hours of hurricane mitigation training
approved by the Construction Industry Licensing Board, which must include hurricane
mitigation techniques, compliance with the uniform mitigation verification form, and
completion of a proficiency exam;
Use hurricane mitigation inspectors who have undergone drug testing and a background
screening;48 and
Provide a quality assurance program including a reinspection component.
Hurricane Mitigation Inspections
47 Section 718.112(2)(d), F.S., are Florida’s laws relating to unit owner meetings of condominium associations.
48 The bill provides that DFS may conduct criminal record checks of inspectors used by wind certification entities. Under
the bill, inspectors must submit a set of fingerprints to DFS for state and national criminal history checks and must pay a
fingerprint processing fee. The fingerprints must be sent by DFS to the Department of Law Enforcement and forwarded to
the Federal Bureau of Investigation for processing. The results must be returned to DFS for screening. The fingerprints
must be taken by a law enforcement agency, designated examination center, or other DFS-approved entity.
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The bill provides that the inspections provided to an association under the MSFCP Program must, at a
minimum, include all of the following:
An inspection of the property, and a report that summarizes the results and identifies
recommended improvements the association may take to mitigate hurricane damage;
A range of cost estimates regarding the recommended mitigation improvements; and
Information regarding estimated insurance premium discounts, correlated to the current
mitigation features and the recommended mitigation improvements identified by the inspection.
An application for an inspection must contain a signed or electronically verified statement made under
penalty of perjury by the president of the board of administration that the association has submitted only
a single application for each property that the association operates or maintains. Additionally, an
association may apply for an deceive an inspection without also applying for a grant.
Mitigation Grants
Financial grants under the MSFCP Program may be used to encourage associations to retrofit the
property the association operates and maintains in order to make such property less vulnerable to
hurricane damage. The bill provides that an application for a mitigation grant must:
Contain a signed or electronically verified statement made under penalty of perjury by the
president of the board of administration that the association has submitted only a single
application for each property that the association operates or maintains;
Include a notarized statement from the president of the board of administration containing the
name and license number of the contractor the association intends to use for the mitigation
project; and
Include a notarized statement from the president of the board of administration which commits
to DFS that the association will complete the mitigation improvements. 49
An association may select its own contractor for the mitigation project, provided such contractor meets
all qualification, certification, or licensing requirements in general law. A mitigation project must be
performed by a properly licensed contractor who has secured all required local permits necessary for
the project. DFS must electronically verify that the contractor's state license number is accurate and up
to date before approving a grant application.
An association awarded a grant must complete the entire mitigation project to receive the final grant
award and must agree to make the property available for a final inspection once the mitigation project is
finished to ensure the mitigation improvements are completed in a matter consistent with the intent of
the MSFCP Program and meet or exceed the applicable Florida Building Code requirements.
Construction must be completed and the association must submit a request to DFS for a final
inspection, or request an extension of time, within 1 year after receiving grant approval. If the
association fails to comply with these provisions, the application is deemed abandoned and the grant
money reverts back to DFS.
All grants must be matched on the basis of $1 provided by the association for $2 provided by the state,
up to a maximum contribution as provided in the General Appropriations Act. When recommended by a
hurricane mitigation inspection report, grants for eligible associations may be used for the following
improvements:
Opening protection.
Exterior doors, including garage doors.
Reinforcing roof-to-wall connections.
Improving the strength of roof-deck attachments.
Secondary water barrier for roof.
49 If the grant will be used to improve
units, the application must also include an acknowledged statement from each unit
owner who is required to provide approval for a grant under the other applicable provision of the bill.
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On the other hand, the association may not use a mitigation grant to install the same type of
improvements that were previously installed or pay a deductible for a pending insurance claim for
damage that is part of the property for which grant funds are being received. However, grants may be
used for a previously inspected existing structure on the property or for a rebuild.
If improvements to protect the property which complied with the current applicable building code at the
time have been previously installed, the association must use a mitigation grant to install improvements
that do both of the following:
Comply with or exceed the applicable building code in effect at the time the association applied
for the grant.
Provide more hurricane protection than the improvements that the association previously
installed.
The bill requires DFS to develop a process that ensures the most efficient means to collect and verify
grant applications to determine eligibility and may direct hurricane mitigation inspectors to collect and
verify grant application information or use the internet or other electronic means to collect information
and determine eligibility.
Contract Management
The bill allows DFS to contract with third parties for grants management, inspection services, contractor
services, information technology, educational outreach, and auditing services. Such contracts are
considered direct costs of the MSFCP Program and are not subject to administrative cost limits. DFS
must contract with providers that have a demonstrated record of successful business operations in
areas directly related to the services to be provided and must ensure the highest accountability for use
of state funds, consistent with the bill’s provisions.
Further, the bill requires DFS to implement a quality assurance and reinspection program that
determines whether initial inspections and mitigation improvements are completed in a manner
consistent with the intent of the MSFCP Program. DFS may use a valid random sampling in order to
perform the quality assurance portion of the MSFCP Program.
Reports
By February 1 of each year, DFS must submit a report to the President of the Senate and the Speaker
of the House of Representatives on the activities of the MSFCP Program and the use of state funds.
The report must include all of the following information:
The number of inspections requested;
The number of inspections performed;
The number of grant applications received;
The number of grants approved and the monetary value of each grant;
The estimated average annual amount of insurance premium discounts each association
received and the total estimated annual amount of insurance premium discounts received by all
associations participating in the MSFCP Program; and
The estimated average annual amount of insurance premium discounts each unit owner
received as a result of the improvements to the building or structure.
B. SECTION DIRECTORY:
Section 1. Creates s. 215.5587, F.S., relating to My Safe Florida Condominium Pilot Program.
Section 2. Provides an effective date of July 1, 2024.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
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1. Revenues:
None.
2. Expenditures:
See Fiscal Comments.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
To the extent that homes that participate in the MSFCP Program receive mitigation credits or premium
discounts under their property insurance policies and are less exposed to risk as a result of mitigation
retrofitting using grant funds, the MSFCP Program may have a positive direct economic impact on
homeowners. Hurricane mitigation inspectors and contractors may also see an increase in activity.
D. FISCAL COMMENTS:
The bill has no direct impact on state government expenditures. Instead, the bill establishes that the
MSFCP Program will be implements subject to separate funding.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill does not authorize DFS to adopt rules to administer the MSFCP Program. However,
rulemaking authority should be considered to align this program with the rulemaking authority for the
MSFH Program.
C. DRAFTING ISSUES OR OTHER COMMENTS:
See Rule-making Authority.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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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 1029 2024
1 A bill to be entitled
2 An act relating to the My Safe Florida Condominium
3 Pilot Program; creating s. 215.5587, F.S.;
4 establishing the My Safe Florida Condominium Pilot
5 Program within the Department of Financial Services;
6 providing legislative intent; providing definitions;
7 providing requirements for associations and unit
8 owners to participate in the pilot program; providing
9 voting requirements; requiring the department to
10 contract with specified entities for certain
11 inspections; providing requirements for such entities;
12 authorizing the department to conduct criminal record
13 checks of certain inspectors; requiring inspectors to
14 submit fingerprints and processing fees to the
15 department; providing requirements for hurricane
16 mitigation inspectors and inspections; requiring
17 applications for inspections and grants to include
18 specified statements; authorizing an association to
19 receive an inspection without applying for a
20 mitigation grant; providing mitigation grants for a
21 specified purpose; providing requirements for an
22 association receiving a mitigation grant; authorizing
23 an association to select is own contractor if such
24 contractor meets certain requirements; requiring the
25 department to electronically verify a contractor's
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26 state license; requiring construction to be completed
27 and the association to submit a request for a final
28 inspection within a specified time period; requiring
29 mitigation grants to be matched by the association;
30 providing a maximum state contribution based on the
31 General Appropriations Act; providing requirements for
32 mitigation projects; providing how mitigation grants
33 may be used; requiring the department to develop a
34 specified process to ensure efficiency; authorizing
35 the department to contract for certain services;
36 providing requirements for such contracts; requiring
37 the department to implement a quality assurance and
38 reinspection program; requiring the department to
39 submit to the Legislature an annual report with
40 specified information; providing an effective date.
41
42 Be It Enacted by the Legislature of the State of Florida:
43
44 Section 1. Section 215.5587, Florida Statutes, is created
45 to read:
46 215.5587 My Safe Florida Condominium Pilot Program.—There
47 is established within the Department of Financial Services the
48 My Safe Florida Condominium Pilot Program to be implemented
49 pursuant to appropriations. The department shall provide fiscal
50 accountability, contract management, and strategic leadership
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51 for the pilot program, consistent with this section. This
52 section does not create an entitlement for associations or unit
53 owners or obligate the state in any way to fund the inspection
54 or retrofitting of condominiums in the state. Implementation of
55 this pilot program is subject to annual legislative
56 appropriations. It is the intent of the Legislature that the My
57 Safe Florida Condominium Pilot Program provide licensed
58 inspectors to perform inspections for and grants to eligible
59 associations as funding allows.
60 (1) DEFINITIONS.—As used in this section, the term:
61 (a) "Association" has the same meaning as in s. 718.103.
62 (b) "Association property" has the same meaning as in s.
63 718.103.
64 (c) "Board of administration" has the same meaning as in
65 s. 718.103.
66 (d) "Condominium" has the same meaning as in s. 718.103.
67 (e) "Condominium property" has the same meaning as in s.
68 718.103.
69 (f) "Department" means the Department of Financial
70 Services.
71 (g) "Property" means association property and condominium
72 property, as applicable.
73 (h) "Rebuild" means property under construction to replace
74 a structure that was destroyed or significantly damaged by a
75 hurricane and deemed unlivable by a regulatory authority.
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76 (i) "Unit" has the same meaning as in s. 718.103.
77 (j) "Unit owner" has the same meaning as in s. 718.103.
78 (2) PARTICIPATION.—
79 (a) In order to apply for an inspection under subsection
80 (4) or a grant under subsection (5) for association property or
81 condominium property, an association must receive approval by a
82 majority vote of the board of administration or a majority vote
83 of the total voting interests of the association to participate
84 in the pilot program.
85 (b) In order to apply for a grant under subsection (5)
86 which improves one or more units within a condominium, a n
87 association must receive both of the following:
88 1. Approval by a majority vote of the board of
89 administration or a majority vote of the total voting interests
90 of the association to participate in a mitigation inspection.
91 2. A unanimous vote of all unit owners within the
92 structure or building that is the subject of the mitigation
93 grant.
94 (c) A unit owner may participate in the pilot program
95 through a mitigation grant awarded to the association but may
96 not participate individually in the pilot program.
97 (d) The votes required under this subsection may take
98 place at the annual budget meeting of the association or at a
99 unit owner meeting called for the purpose of taking such vote.
100 Before a vote of the unit owners may be taken, the association
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101 must provide to the unit owners a clear disclosure of the pilot
102 program on a form created by the department. The president and
103 the treasurer of the board of administration must sign the
104 disclosure form indicating that a copy of the form was provided
105 to each unit owner of the association. The signed disclosure
106 form and the minutes from the meeting at which the unit owners
107 voted to participate in the pilot program must be maintained as
108 part of the official records of the association. Within 14 days
109 after an affirmative vote to participate in the pilot program,
110 the association must provide written notice in the same manner
111 as required under s. 718.112(2)(d) to all unit owners of the
112 decision to participate in the pilot program.
113 (3) HURRICANE MITIGATION INSPECTORS.—
114 (a) Licensed inspectors are to provide inspections of the
115 property to determine the mitigation measures that are needed,
116 the insurance premium discounts that may be available to the
117 association, and the improvements to existing properties of the
118 association that are needed to reduce a property's vulnerability
119 to hurricane damage.
120 (b) The department shall contract with wind certification
121 entities to provide hurricane mitigation inspections. To qualify
122 for selection by the department as a wind certification entity
123 to provide hurricane mitigation inspections, the entity must, at
124 a minimum, meet all of the following requirements:
125 1. Use hurricane mitigation inspectors who are licensed or
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126 certified as:
127 a. A building inspector under s. 468.607;
128 b. A general, building, or residential contractor under s.
129 489.111;
130 c. A professional engineer under s. 471.015;
131 d. A professional architect under s. 481.213; or
132 e. A home inspector under s. 468.8314 who has completed at
133 least 3 hours of hurricane mitigation training approved by the
134 Construction Industry Licensing Board, which must include
135 hurricane mitigation techniques, compliance with the uniform
136 mitigation verification form, and completion of a proficiency
137 exam.
138 2. Use hurricane mitigation inspectors who have undergone
139 drug testing and a background screening. The department may
140 conduct criminal record checks of inspectors used by wind
141 certification entities. Inspectors must submit a set of
142 fingerprints to the department for state and national criminal
143 history checks and must pay the fingerprint processing fee set
144 forth in s. 624.501. The fingerprints must be sent by the
145 department to the Department of Law Enforcement and forwarded to
146 the Federal Bureau of Investigation for processing. The results
147 must be returned to the department for screening. The
148 fingerprints must be taken by a law enforcement agency,
149 designated examination center, or other department-approved
150 entity.
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151 3. Provide a quality assurance program including a
152 reinspection component.
153 (4) HURRICANE MITIGATION INSPECTIONS.—
154 (a) The inspections provided to an association under this
155 section must, at a minimum, include all of the following:
156 1. An inspection of the property, and a report that
157 summarizes the results and identifies recommended improvements
158 the association may take to mitigate hurricane damage.
159 2. A range of cost estimates regarding the recommended
160 mitigation improvements.
161 3. Information regarding estimated insurance premium
162 discounts, correlated to the current mitigation features a nd the
163 recommended mitigation improvements identified by the
164 inspection.
165 (b) An application for an inspection must contain a signed
166 or electronically verified statement made under penalty of
167 perjury by the president of the board of administration that th e
168 association has submitted only a single application for each
169 property that the association operates or maintains.
170 (c) An association may apply for and receive an inspection
171 without also applying for a grant under subsection (5).
172 (5) MITIGATION GRANTS.—Financial grants may be used to
173 encourage associations to retrofit the property the association
174 operates and maintains in order to make such property less
175 vulnerable to hurricane damage.
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176 (a) An application for a mitigation grant must:
177 1. Contain a signed or electronically verified statement
178 made under penalty of perjury by the president of the board of
179 administration that the association has submitted only a single
180 application for each property that the association operates or
181 maintains.
182 2. Include a notarized statement from the president of the
183 board of administration containing the name and license number
184 of the contractor the association intends to use for the
185 mitigation project.
186 3. Include a notarized statement from the president of the
187 board of administration which commits to the department that the
188 association will complete the mitigation improvements. If the
189 grant will be used to improve units, the application must also
190 include an acknowledged statement from each unit owner who is
191 required to provide approval for a grant under paragraph (2)(b).
192 (b) An association may select its own contractor for the
193 mitigation project as long as such contractor meets all
194 qualification, certification, or licensing requirements in
195 general law. A mitigation project must be performed by a
196 properly licensed contractor who has secured all required local
197 permits necessary for the project. The department must
198 electronically verify that the contractor's state license number
199 is accurate and up to date before approving a grant application.
200 (c) An association awarded a grant must complete the
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201 entire mitigation project in order to receive the final grant
202 award and must agree to make the property available for a final
203 inspection once the mitigation project is finished to ensure the
204 mitigation improvements are completed in a matter consistent
205 with the intent of the pilot program and meet or exceed the
206 applicable Florida Building Code requirements. Construct ion must
207 be completed and the association must submit a request to the
208 department for a final inspection, or request an extension of
209 time, within 1 year after receiving grant approval. If the
210 association fails to comply with this paragraph, the application
211 is deemed abandoned and the grant money reverts back to the
212 department.
213 (d) All grants must be matched on the basis of $1 provided
214 by the association for $2 provided by the state up to a maximum
215 contribution as provided in the General Appropriations Act .
216 (e) When recommended by a hurricane mitigation inspection
217 report, grants for eligible associations may be used for the
218 following improvements:
219 1. Opening protection.
220 2. Exterior doors, including garage doors.
221 3. Reinforcing roof-to-wall connections.
222 4. Improving the strength of roof-deck attachments.
223 5. Secondary water barrier for roof.
224 (f) Grants may be used for a previously inspected existing
225 structure on the property or for a rebuild.
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226 (g)1. If improvements to protect the property which
227 complied with the current applicable building code at the time
228 have been previously installed, the association must use a
229 mitigation grant to install improvements that do both of the
230 following:
231 a. Comply with or exceed the applicable building code in
232 effect at the time the association applied for the grant.
233 b. Provide more hurricane protection than the improvements
234 that the association previously installed.
235 2. The association may not use a mitigation grant to:
236 a. Install the same type of improvements that were
237 previously installed; or
238 b. Pay a deductible for a pending insurance claim for
239 damage that is part of the property for which grant funds are
240 being received.
241 (h) The department shall develop a process that ensures
242 the most efficient means to collect and verify grant
243 applications to determine eligibility and may direct hurricane
244 mitigation inspectors to collect and verify grant application
245 information or use the Internet or other electronic means to
246 collect information and determine eligibility.
247 (6) CONTRACT MANAGEMENT.—
248 (a) The department may contract with third parties for
249 grants management, inspection services, contractor services,
250 information technology, educational outreach, and auditing
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251 services. Such contracts are considered direct costs of the
252 pilot program and are not subject to administrative cost limits.
253 The department shall contract with providers that have a
254 demonstrated record of successful business operations in areas
255 directly related to the services to be provided and shall ensure
256 the highest accountability for use of state funds, consistent
257 with this section.
258 (b) The department shall implement a quality assurance and
259 reinspection program that determines whether initial inspections
260 and mitigation improvements are completed in a manner consistent
261 with the intent of the pilot program. The department may use a
262 valid random sampling in order to perform the quality assurance
263 portion of the pilot program.
264 (7) REPORTS.—By February 1 of each year, the department
265 shall submit a report to the President of the Senate and the
266 Speaker of the House of Representatives on the activities of the
267 pilot program and the use of state funds. The report must
268 include all of the following information:
269 (a) The number of inspections requested.
270 (b) The number of inspections performed.
271 (c) The number of grant applications received.
272 (d) The number of grants approved and the monetary value
273 of each grant.
274 (e) The estimated average annual amount of insurance
275 premium discounts each association received and the total
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276 estimated annual amount of insurance premium discounts received
277 by all associations participating in the pilot program.
278 (f) The estimated average annual amount of insurance
279 premium discounts each unit owner received as a result of the
280 improvements to the building or structure.
281 Section 2. This act shall take effect July 1, 2024.
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INSURANCE & BANKING SUBCOMMITTEE
HB 1029 by Rep. Lopez, V.
My Safe Florida Condominium Pilot Program
AMENDMENT SUMMARY
February 1, 2024
Amendment 1 by Rep. Rep. Lopez, V. (Line 62): The amendment:
• Defines a “service area” for the program that is the area of the state 15 miles inward of
the coastline; making the pilot project statewide in this coastal zone.
• Clarifies the fingerprinting requirement to comport with a recommendation by FDLE.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1029 (2024)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Lopez, V. offered the following:
4
5 Amendment
6 Remove lines 62-150 and insert:
7 (b) "Association property" means that property, real and
8 personal, which is owned or leased by, or is dedicated by a
9 recorded plat to, the association for the use and benefit of its
10 members and is located in the service area.
11 (c) "Board of administration" has the same meaning as in
12 s. 718.103.
13 (d) "Condominium" has the same meaning as in s. 718.103.
14 (e) "Condominium property" means the lands, leaseholds,
15 and personal property that are subjected to condominium
16 ownership, whether or not contiguous, and all improvements
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1029 (2024)
Amendment No. 1
17 thereon and all easements and rights appurtenant thereto
18 intended for use in connection with the condominium and is
19 located in the service area.
20 (f) "Department" means the Department of Financial
21 Services.
22 (g) "Property" means association property and condominium
23 property, as applicable, located in the service area.
24 (h) "Rebuild" means property under construction to replace
25 a structure that was destroyed or significantly damaged by a
26 hurricane and deemed unlivable by a regulatory authorit y.
27 (i) "Service area" means the area of the state with 15
28 miles inward of a coastline as defined in s. 376.031.
29 (j) "Unit" has the same meaning as in s. 718.103.
30 (k) "Unit owner" has the same meaning as in s. 718.103.
31 (2) PARTICIPATION.—
32 (a) In order to apply for an inspection under subsection
33 (4) or a grant under subsection (5) for association property or
34 condominium property, an association must receive approval by a
35 majority vote of the board of administration or a majority vote
36 of the total voting interests of the association to participate
37 in the pilot program.
38 (b) In order to apply for a grant under subsection (5)
39 which improves one or more units within a condominium, an
40 association must receive both of the following:
41 1. Approval by a majority vote of the board of
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Bill No. HB 1029 (2024)
Amendment No. 1
42 administration or a majority vote of the total voting interests
43 of the association to participate in a mitigation inspection.
44 2. A unanimous vote of all unit owners within the
45 structure or building that is the subject of the mitigation
46 grant.
47 (c) A unit owner may participate in the pilot program
48 through a mitigation grant awarded to the association but may
49 not participate individually in the pilot program.
50 (d) The votes required under this subsection may take
51 place at the annual budget meeting of the association or at a
52 unit owner meeting called for the purpose of taking such vote.
53 Before a vote of the unit owners may be taken, the association
54 must provide to the unit owners a clear disclosure of the pilot
55 program on a form created by the department. The president and
56 the treasurer of the board of administration must sign the
57 disclosure form indicating that a copy of the form was provided
58 to each unit owner of the association. The signed disclosure
59 form and the minutes from the meeting at which the unit owners
60 voted to participate in the pilot program must be maintained as
61 part of the official records of the association. Within 14 days
62 after an affirmative vote to participate in the pilot program,
63 the association must provide written notice in the same manner
64 as required under s. 718.112(2)(d) to all unit owners of the
65 decision to participate in the pilot program.
66 (3) HURRICANE MITIGATION INSPECTORS.—
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Amendment No. 1
67 (a) Licensed inspectors are to provide inspections of the
68 property to determine the mitigation measures that are needed,
69 the insurance premium discounts that may be available to the
70 association, and the improvements to existing properties of the
71 association that are needed to reduce a property's vulnerability
72 to hurricane damage.
73 (b) The department shall contract with wind certification
74 entities to provide hurricane mitigation inspections. To qualify
75 for selection by the department as a wind certification entity
76 to provide hurricane mitigation inspections, the entity must, at
77 a minimum, meet all of the following requirements:
78 1. Use hurricane mitigation inspectors who are licensed or
79 certified as:
80 a. A building inspector under s. 468.607;
81 b. A general, building, or residential contractor under s.
82 489.111;
83 c. A professional engineer under s. 471.015;
84 d. A professional architect under s. 481.213; or
85 e. A home inspector under s. 468.8314 who has completed at
86 least 3 hours of hurricane mitigation training approved by the
87 Construction Industry Licensing Board, which must include
88 hurricane mitigation techniques, compliance with the uniform
89 mitigation verification form, and completion of a proficiency
90 exam.
91 2. Use hurricane mitigation inspectors who have undergone
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1029 (2024)
Amendment No. 1
92 drug testing and a background screening. The department may
93 conduct criminal record checks of inspectors used by wind
94 certification entities. Inspectors must submit a full set of
95 fingerprints to the department or to a vendor, entity, or agency
96 authorized by s. 943.053(13). The department, vendor, entity,
97 or agency shall forward the fingerprints to the Department of
98 Law Enforcement for state processing and the Department of Law
99 Enforcement shall forward the fingerprints to the Federal Bureau
100 of Investigation for national processing. Fees for state and
101 federal fingerprint processing shall be borne by the applicant.
102 The state cost for fingerprint processing shall be as provided
103 in s. 943.053(3)(e).The results must be returned to the
104 department for screening. The fingerprints must be taken by a
105 law enforcement agency, designated examination center, or other
106 department-approved entity.
107
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HB 1093
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1093 Florida Uniform Fiduciary Income and Principal Act
SPONSOR(S): Caruso
TIED BILLS: IDEN./SIM. BILLS: SB 1316
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Civil Justice Subcommittee 18 Y, 0 N Mawn Jones
2) Insurance & Banking Subcommittee Fletcher Lloyd
3) Judiciary Committee
SUMMARY ANALYSIS
A trust is a relationship in which one party, the “settlor,” gives another party, the “trustee,” the right to hold title
to the settlor’s property or assets for a third party’s benefit (“beneficiary”). Traditionally, many trust beneficiaries
were entitled to receive either income earned by trust investments (“income beneficiary”) or a share of trust
principal when an income interest ended (“remainder beneficiary”). In such a scenario, the trustee’s allocation
of receipts and expenditures to income or principal had a direct effect on a beneficiary’s financial interests, and
the financial interests of an income beneficiary were often at odds with those of the remainder beneficiary.
In 1931, the National Conference of Commissioners on Uniform State Laws (“NCCUSL”) adopted the first
Uniform Principal and Income Act (“UPIA”), which, in pertinent part, governed the allocation of trust and estate
receipts and disbursements between income and principal where the terms of the trust did not provide for such
allocation. Forty-seven states, including Florida, subsequently adopted some form of the UPIA; Florida’s
version, known as the Florida Uniform Principal and Income Act (“FUPIA”), is codified in ch. 783, F.S.
However, in recent decades, the distinction between income and principal has become less important, for two
reasons. First, the “modern portfolio theory” allows trustees to invest for the maximum total return, whether the
return is in the form of income or principal growth. This has led to the rise in popularity of the “unitrust,” which
has reduced the likelihood that the financial interests of the income beneficiary and the remainder beneficiary
will be at odds, as such a trust allows the income beneficiary to receive income from the trust at a set
percentage of the trust’s fair market value while the remainder beneficiary receives a fair disbursement after
the income interest ends. Second, modern trusts are often drafted with more flexible terms, giving trustees
discretion to accumulate income or invade principal when advantageous to further the trust’s purposes.
In 2018, the NCCUSL adopted the Uniform Fiduciary Income and Principal Act (“UFIPA”) to account for these
more recent developments. In response to UFIPA’s adoption, the Real Property, Probate and Trust Law
Section of the Florida Bar convened a committee (“Committee”) to review UFIPA and consider whether Florida
should adopt the new model law. The Committee ultimately proposed a revision to FUPIA that would
incorporate UFIPA language wherever possible while preserving certain public policy choices found in existing
Florida law. This proposed revision is the Florida Uniform Fiduciary Income and Principal Act (“FUFIPA”).
HB 1093 codifies FUFIPA into ch. 783, F.S., replacing FUPIA as the law governing the allocation of trust and
estate receipts and disbursements between principal and interest where a Florida trust does not provide its
own terms for such an allocation. FUFIPA would, in addition to modernizing trust law generally:
Allow for total-return investing under the “modern portfolio theory.”
Provide for the conversion of an existing trust into a unitrust.
Provide flexibility for more individualized estate planning.
Provide a governing law provision to reduce jurisdictional disputes.
The bill does not appear to have a fiscal impact on state or local governments.
The bill provides an effective date of January 1, 2025.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Trusts
A trust is a relationship in which one party (the “settlor”) 1 gives another party (the “trustee”) the right to
hold title to the settlor’s assets for a third party’s benefit (the “beneficiary”). A trust may be created and
take effect during a settlor’s lifetime (“a living trust”) or may be created by a will and take effect when
the settlor dies (“testamentary trust”).2 A trust may also be revocable (so that the terms may be
changed at any time before the settlor’s death) or irrevocable (so that the terms cannot be modified
after the trust’s creation absent consent of the beneficiaries).3 Most trusts are generally governed by
the Florida Trust Code, codified in chapter 736, F.S. However, additional provisions of Florida law may
apply if the trust has special attributes.
Uniform Fiduciary Income and Principal Act
Traditionally, many trust beneficiaries were entitled to receive either income earned by trust
investments (“income beneficiary”) or a share of trust principal when an income interest ended
(“remainder beneficiary”).4 In such a scenario, the trustee’s allocation of receipts and disbursements to
income or principal had a direct effect on a beneficiary’s financial interests, and, thus, the financial
interests of an income beneficiary were often at odds with those of the remainder beneficiary.5
In 1931, the National Conference of Commissioners on Uniform State Laws, also known as the Uniform
Law Commission (“ULC”)6 adopted the first Uniform Principal and Income Act (“UPIA”), which, in
pertinent part, governed the allocation of trust and estate receipts and disbursements between income
and principal where the terms of the trust or will did not provide for such allocation or give the fiduciary
a discretionary power of administration. Forty-seven states, including Florida, subsequently adopted
some form of UPIA; Florida’s version, adopted in 2002 and known as the Florida Uniform Principal and
Income Act (“FUPIA”), is codified in ch. 783, F.S.
However, in recent decades, the distinction between income and principal has lost some significance,
for two reasons. First, the “modern portfolio theory” allows trustees to invest for the maximum total
return, whether the return is in the form of income or principal growth. 7 This has led to the rise in
popularity of the “unitrust,” which trust allows the income beneficiary to receive income from the trust at
a set percentage of the trust’s fair market value while the remainder beneficiary receives a fair
disbursement after the income interest ends, thereby reducing the likelihood that the financial interests
of the income beneficiary and the remainder beneficiary will be at odds. 8 In other words, under a
unitrust, both the income beneficiary and remainder beneficiary benefit from an increase in the value of
1 “Settlor” means a person, including a testator, who creates or contributes property to a trust. S. 736.0103(18), F.S.
2 See “inter vivos trust” and “testamentary trust,” Black's Law Dictionary (11th ed. 2019).
3 Greg Depersio, Investopedia (Apr. 30, 2023), Revocab le Trust v. Irrevocab le Trust: What’s the Difference,
https://www.investopedia.com/ask/answers/071615/what-difference-between-revocable-trust-and-living-trust.asp (last visited Jan. 25,
2024).
4 For example, a trust may require that all trust income be distributed to the settlor’s surviving spouse, but that trust princ ipal be held
and accumulated for the settlor’s surviving children, to be paid after the surviving spouse’s death. Uniform Law Commission, The
Uniform Fiduciary Income and Principal Act: A Summary, https://www.uniformlaws.org/viewdocument/enactment-kit-
74?CommunityKey=1105f9bb-eb93-4d4d-a1ab-a535ef73de0c&tab=librarydocuments (last visited Jan. 25, 2024).
5 Id.
6 The NCCUSL is an association of commissioners appointed by each state, the District of Columbia, the Commonwealth of Puerto
Rico, and the U.S. Virgin Islands, that discusses and debates which areas of the law require uniformity among the states and territories
and drafts uniform acts accordingly. Legal Information Institute, National Conference of Commissioners on Uniform State Laws,
https://www.law.cornell.edu/wex/national_conference_of_commissioners_on_uniform_state_laws_(nccusl) (last visited Jan. 25, 2024).
7 Uniform Law Commission, supra note 4.
8 Id.; Rod Fluck, What is a Unitrust and Why is it Used, http://buteralaw.com/newsletters/estate/what-is-a-unitrust-and-why-is-it-used/
(last visited Jan. 25, 2024).
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a trust’s assets.9 Second, modern trusts are often drafted with more flexible terms, thereby giving
trustees discretion to accumulate income or invade principal when advantageous to further the trust’s
overall purposes.10
Thus, in 2018, the ULC adopted the Uniform Fiduciary Income and Principal Act (“UFIPA”) to account
for these developments, provide additional flexibility in tailoring individual trusts to meet a settlor’s
specific needs, provide for the conversion of older trusts into unitrusts, and provide a governing law
section to help avoid jurisdictional disputes.11 Seven states have since enacted some form of UFIPA. 12
In response to UFIPA’s adoption, the Real Property, Probate and Trust Law Section of the Florida Bar
convened a Principal and Income Committee (“Committee”) to review UFIPA and consider whether
Florida should adopt the new model law. The Committee ultimately proposed a revision to FUPIA,
known as the Florida Uniform Fiduciary Income and Principal Act (“FUFIPA”), that would incorporate
UFIPA language wherever possible while preserving certain public policy choices found in existing
Florida law that continue to make sense for the State.
Effect of Proposed Changes
HB 1093 codifies FUFIPA into ch. 783, F.S., replacing FUPIA as the law governing the allocation of
trust and estate receipts and disbursements between principal and interest where a Florida trust does
not provide its own terms for such an allocation. FUFIPA would, in addition to modernizing Florida trust
law generally:
Allow for total-return investing under the “modern portfolio theory.”
Provide for the conversion of an older trust into a unitrust.
Provide flexibility for more individualized estate planning.
Provide a governing law provision to reduce jurisdictional disputes.
Definitions
The bill revises s. 738.102, F.S., to modify existing definitions and provide new definitions to
incorporate UFIPA terminology and concepts. Under the bill, the definitions of “accounting period,”
“income,” “mandatory income interest,” and “person” remain unchanged, while definitions for new
terms, including “court,” “estate,” “personal representative,” and “record,” were added without impacting
current policy. However, the bill modifies the following definitions in a substantive way:
“Beneficiary” is redefined to distinguish between current income beneficiaries and current
remainder beneficiaries, as well as to encompass persons holding life estates or term interests.
“Fiduciary” is broadened to apply not only to the personal representative and trustee, as under
current law, but also to those with a power to direct, those under a fiduciary’s delegation, and
those holding property for a successor beneficiary who may be impacted by principal or income
allocations.
“Income interest” is redefined as a right of a current income beneficiary and includes a current
beneficiary’s use of property held by a fiduciary.
“Net income” is broadened to include application to a unitrust and an income to principal
adjustment.
“Principal” is modified from meaning that which is distributed to a remainder beneficiary to that
which is held for distribution to, for production of income for, or for use by, a current or
successor beneficiary.
“Terms of the trust” is broadened to extend to wills, life estates, and term interests, and thus
more closely follows the definition of the term in the Florida Trust Code.
9 Fluck, supra note 8.
10 Uniform Law Commission, supra note 4.
11 Id.
12 These states are Arkansas, California, Colorado, Kansas, Utah, Virginia, and Washington State. Uniform Law Commission, Fiduciary
Income and Principal Act: Legislative Bill Tracking, https://www.uniformlaws.org/committees/community-
home?communitykey=1105f9bb-eb93-4d4d-a1ab-a535ef73de0c#LegBillTrackingAnchor (last visited Jan. 25, 2024).
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Additionally, the bill adds the following new definitions, which definitions modify Florida law in a
substantive way:
“Distribution,” meaning a payment or transfer by a fiduciary to a beneficiary in the beneficiary’s
capacity as a beneficiary, without consideration other than the beneficiary’s right to receive the
payment or transfer under the terms of the trust, will, life estate, or term interest.
“Independent person,” meaning a person that is not:
o For a trust, a qualified beneficiary; a settlor; an individual whose legal obligation to
support a beneficiary may be satisfied by a trust distribution; or any trustee whom an
interested distributee may remove and replace with a related or subordinate party.
o For an estate, a beneficiary; a spouse, parent, brother, sister, or issue of specified
persons; a corporation, partnership, limited liability company, or other entity in which
specified persons have voting control; or an employee of a specified person.
“Personal representative,” meaning an executor, administrator, successor personal
representative, special administrator, or person that performs substantially the same function
with respect to an estate under the law governing the person’s status.
“Record,” meaning information that is inscribed on a tangible medium or stored in an electronic
or other medium and is retrievable in perceivable form.
“Settlor,” meaning a person, including a testator, that creates or contributes property to a trust.
“Special tax benefit,” meaning the annual gift tax exclusion, 13 qualified subchapter S status,14
federal marital tax deduction,15 and generation-skipping transfer tax exemption.16
“Successive interest,” meaning the interest of a successor beneficiary.
“Successor beneficiary,” meaning a person entitled to receive income or principal or to use
property when an income interest or other current interest ends.
“Trust,” meaning an express trust, whether private or charitable, with additions to the trust,
wherever and however created, and a trust created or determined by judgment or decree under
which the trust is to be administered in the manner of an express trust.
“Trustee,” meaning a person, other than a personal representative, that owns or holds property
for the benefit of a beneficiary.
“Will,” meaning any testamentary instrument recognized by applicable law which makes a
legally effective disposition of an individual’s property, effective at the individual’s death, and
includes a codicil or other amendment to a testamentary instrument.
13 The Internal Revenue Service allows individuals to give away up to a specific amount of assets each year tax-free under the annual
gift tax exclusion. Jean Gordon Carter and Janice L. Davies, Gift Tax, the Annual Exclusion and Estate Planning,
https://www.actec.org/resource-center/video/gift-tax-the-annual-exclusion-and-estate-planning/ (last visited Jan. 25, 2024)
14
A trust with qualified subchapter S status is eligible to own stock in an S corporation. A settlor can use this type of trust to make a gift
of all or a part of the S corporation stock and retain voting power while the beneficiary receives the income and the tax burden.
Rebecca C. Bowen, Trusts as Eligib le Shareholders of an S Corporation, https://www.t-mlaw.com/commentary/trusts -as-eligible-
shareholders-of-an-s-corporation/ (last visited Jan. 25, 2024).
15 The Internal Revenue Service allows a spouse to leave property of unlimited value to his or her surviving spouse tax-free. Such
assets may be distributed by a direct transfer from the decedent to the surviving spouse or by an indirect transfer to a qualifying trust for
the surviving spouse’s benefit. Peter B. von Stein, Basic Estate Tax Planning for Married Couples: Opportunities for Use of Estate Tax
Exemptions, https://www.wardandsmith.com/articles/basic-estate-tax-planning-married-couples-use-estate-tax-exemptions (last visited
Jan. 25, 2024).
16 The generation-skipping transfer tax is a federal tax on a gift or an inheritance that prevents the donor from avoiding estate taxes by
skipping over children in favor of grandchildren. However, the Internal Revenue Service allows a person to give up to a certa in amount
to a qualified recipient to avoid this tax. Troy Segal, What is the Generation-Skipping Transfer Tax, Investopedia (Feb. 7, 2023),
https://www.investopedia.com/terms/g/generation-skipping-transfer-tax.asp (last visited Jan. 25, 2024).
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Scope
The bill amends s. 738.103, F.S., to provide FUFIPA’s scope. Specifically, the bill states that, except as
otherwise provided by the terms of a trust or FUFIPA, FUFIPA applies to a trust or estate and to a life
estate or other term interest in which someone’s interest will be succeeded by another’s interest under
s. 738.508, F.S.
Governing Law
The bill adds a new governing law provision to renumbered s. 738.104, F.S. Specifically, the bill
provides that, if the principal place of administration of a trust or estate or the situs of property not held
in trust or an estate is Florida, the trustee is governed by FUFIPA, except as otherwise provided in the
terms of the trust or elsewhere in that chapter.
General Principles of Fiduciary Duties
The bill renumbers from s. 738.103, F.S., to s. 738.201, F.S., a provision setting forth a trustee’s
fiduciary duties, including the duty to administer a trust or estate impartially based on what is fair and
reasonable to all beneficiaries. Current law also establishes the general principles for allocating receipts
and disbursements to or between principal and income, specifying that, generally speaking, receipts
and disbursements must be allocated to principal, and establishes a presumption that a determination
made in accordance with ch. 738 is fair and reasonable.
The bill substantially preserves current law, with four exceptions. Specifically, the bill:
Incorporates the revised definition of “terms of the trust.”
Adds an express requirement that a fiduciary act in good faith.
Requires a fiduciary to add undistributed income to principal within a specified time period.
Incorporates the factors currently set out in s. 738.104(2), F.S., applicable in exercising the
adjustment power, and making such factors applicable to all fiduciary decisions under FUFIPA.
The factors incorporated from s. 738.104(2), F.S., remain largely the same as in current law, except
that the bill substitutes the objective “terms of the trust” factor for the subjective “intent of the grantor”
factor, in keeping with changes made by UFIPA.
Judicial Review
The bill renumbers from s. 738.105, F.S., to s. 738.202, F.S., a provision governing judicial review of a
trustee’s exercise of or failure to exercise any discretionary power under FUFIPA, as it relates to a
decision to transfer principal to income, or vice versa. Under current law, a court may not determine
that a trustee abused its discretion merely because the court would have exercised the discretion
differently, but, once an abuse of discretion is found, the court must take certain actions to restore the
beneficiaries to the positions they would have been in had the trustee not abused its discretion.
The bill substantially preserves current law, with four exceptions. Specifically, the bill:
Updates the term “trustee” in this provision to “fiduciary,” thus broadening this section’s scope.
Defines “fiduciary decisions” to expressly include the fiduciary’s allocation between income and
principal and the exercise or failure to exercise any power under FUFIPA.
Expressly adds to the remedies available when a fiduciary abuses his or her discretion “all
remedies authorized by law,” including remedies and damages for breach of trust as set out in
the Florida Trust Code in ss. 736.1001 and 736.1002, F.S.
Removes an unnecessary provision prohibiting the court from substituting its discretion for that
of the fiduciary.
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Fiduciary’s Adjustment Powers
The bill renumbers from s. 738.104, F.S., to s. 738.203, F.S., a provision authorizing a trustee to adjust
between income and principal if specified conditions are met, including the consideration of enumerated
factors, and a determination that an adjustment is necessary to administer the trust impartially, based
on what is fair and reasonable. Under current law, a trustee is prohibited from exercising the adjustment
power under certain circumstances where adverse tax consequences would result but may release all
or part of the power for any time period. Further, current law expressly negates any inference of
impropriety simply because a trustee declines to exercise the power.
The bill makes several changes to current law. Specifically, the bill:
Expands the scope of this section from trustees to all fiduciaries.
Relocates the conditions limiting when a fiduciary may adjust between principal and income to a
different section, making such conditions applicable to all fiduciary decisions.
Replaces the standard of “impossibility” with a standard of “assistance,” thereby authorizing a
fiduciary to exercise the adjustment power if the fiduciary determines that doing so will assist the
fiduciary in administering the trust or estate impartially.
Authorizes the appointment of a co-fiduciary to exercise the adjustment power under specified
circumstances.
Includes a presumption that a release or delegation of the adjustment power is a release or
delegation of the entire power, and that such a release or delegation is permanent.
Clarifies that the exercise of the adjustment power may apply to the immediately preceding
period, current period, and one or more subsequent periods.
Adds new accountability procedures, including a requirement that the exercise of the adjustment
power be included in the annual accounting report or communicated at least annually to the
trust’s qualified beneficiaries.
Unitrusts
The bill replaces s. 738.1041, F.S., which specifically authorizes the express creation of a unitrust,
provides that the unitrust amount is considered to be the trust’s net income for purposes of allowing or
requiring income distributions, and provides for the conversion of an income trust to a unitrust, or vice
versa, with ss. 738.301-738.310, F.S.
The bill makes several changes to current law. Specifically, the bill:
Separates provisions relating to unitrusts into distinct sections, making them more visible.
Specifies that these sections apply to estates only where a trust is a beneficiary of an estate.
Adds definitions applicable to a unitrust, including “applicable value,” “express unitrust,” “net fair
market value of a trust,” “unitrust,” “unitrust policy,” and “unitrust rate.”
Modernizes but does not substantially alter provisions relating to a fiduciary’s authority and
duties as they relate to unitrusts; the method for determining the unitrust rate; and the method
for determining an asset’s fair market value for the purpose of determining the unitrust amount.
Ensures that the unitrust provisions remain within the safe harbor standards of the Treasury
Regulations (as they are under current law) but allows for future modification of the relevant
provisions should the Treasury relax those standards.
Character of Receipts
The bill amends s. 738.401, F.S., which currently characterizes receipts from entities, applies a
“lookback period”17 of unlimited duration, and establishes rules applicable to receipts from public
entities; provisions regarding private trustees administering investment entities; treating as principal
money received from specified sources; and treating as income dividends a fiduciary elects to reinvest.
Current law favors objective calculations over the exercise of fiduciary discretion in such matters.
The bill modifies current law by:
17 Florida’s “lookback period” applies a portion of large receipts to income, at a rate of three percent per year.
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Limiting the lookback period to three accounting periods to simplify trust administration.
Restructuring the law to more closely match UFIPA’s overall organization.
Amending or adding definitions, including “capital distribution,” “entity,” and “entity distribution,”
to clarify certain concepts incorporated into this section.
Allocations
Deferred Compensation Accounts, Annuities, and Similar Arrangements
The bill renumbers from s. 738.602, F.S., to s. 738.409, F.S., a section of law characterizing rec eipts
from deferred compensation accounts, annuities, and other similar arrangements. Under current law,
the “income of the fund” is determined in a specified manner, and such amount is compared to
payments actually received from the fund; the lesser of such amounts is then allocated to income, while
the remainder is allocated to principal.
The bill modifies this section by:
Changing the phrase “income of the fund” to the more customary “internal income.”
Adding an accounting period concept to balance the allocation of intra-period receipts between
principal and income.
Specifically authorizing fiduciaries to transfer assets from principal to income as necessary to
fully fund the internal income of the fund and distribute such income to the beneficiary.
Minerals, Water, and Other Natural Resources
The bill renumbers from s. 738.604, F.S., to s. 738.411, F.S., a provision allocating receipts from an
interest in minerals, water, or other natural resources as 90 percent to principal and ten percent to
income. The bill modifies this section by removing the 90/10 allocation standard and replacing it with a
fact-specific standard.
Marital Deduction Property Not Productive of Income
The bill renumbers from s. 738.606, F.S., to s. 738.413, F.S., a provision providing a safe harbor to
ensure that a trust intending to qualify for the estate tax marital deduction allows the surviving spouse
to require the trustee to make property income-producing where the trust assets do not otherwise
provide the spouse with sufficient income to qualify for the deduction. Current law also allows the
surviving spouse to require the trustee to make property income-producing where trust assets have
been used in whole or in part to satisfy the spouse’s elective share under s. 732.2125, F.S.,18 and the
property, in the aggregate, does not provide the spouse with sufficient income.
The bill substantially preserves current law but provides that this section may be overridden only if the
terms of the trust explicitly reference this section.
Derivatives and Options
The bill renumbers from s. 738.607, F.S., to s. 738.414, F.S., a provision providing for the allocation of
all amounts received from derivatives and options to principal. The bill also modifies this section to
provide for the allocation of 10 percent of receipts from the transaction and 10 percent of
disbursements made in connection with the transaction to income, with the remaining balance allocated
to principal.
Asset-Backed Securities
18 This section allows the surviving spouse of a decedent to claim up to 30 percent of the decedent’s estate, regardless of the terms of
the decedent’s will. Practically speaking, this prevents a surviving spouse from being disinherited and potentially left destitute.
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The bill renumbers from s. 738.608, F.S., to s. 738.415, F.S., a provision for the allocation of payments
received in exchange for the trust’s or estate’s entire interest in an asset-backed security19 during a
single accounting period entirely to principal. Current law also provides that, for payments that are part
of a series of payments that will result in the liquidation of the trust’s or estate’s interest in the security
over more than a single accounting period, the fiduciary must allocate 10 percent of the payment to
income and the balance to principal.20
The bill modifies the definition of an “asset-backed security” to more closely align with the definition
used by the Securities and Exchange Commission21 and extends the 90/10 distribution rule to all
receipts from or related to such a security.
Other Financial Instruments or Arrangements
The bill creates s. 738.416, F.S., to be a “catch-all” provision for the allocation of receipts and
disbursements arising from or related to financial instruments or arrangements not specifically
mentioned in FUFIPA. Under the bill, allocation must be 90 percent to principal and 10 percent to
income, making the allocation standard the same as for derivatives, options, and asset-backed
securities.
Disbursements
Disbursements from Income and Principal
The bill amends s. 738.501, F.S., which currently directs that one-half of certain forms of compensation
and expenses be disbursed from income, along with all of the ordinary expenses incurred in connection
with a trust property that primarily concerns the income interest.
The bill modifies this section to address what happens where there is insufficient income to disburse
the full amount charged and to give the fiduciary the discretion to disburse specified amounts charged if
the fiduciary is an independent person and the disbursement would be in the beneficiaries’ interest.
The bill also amends s. 738.502, F.S., which currently directs that the remaining one-half of certain
forms of compensation and expenses be disbursed from principal, along with all of the trustee’s
compensation for preparing property for sale; payments on the principal of trust debt; and expenses of
proceedings that primarily concern trust principal.
The bill modifies this section to provide that principal must be disbursed in an amount equal to the
remaining balance of the compensation and expenses provided for in s. 738.501, F.S., and to allow a
fiduciary to use income to disburse the balance of such amounts charged to income before using
principal. Further, the bill incorporates certain tax provisions found elsewhere in current law into this
section.
Transfers from Income to Principal for Depreciation
The bill amends s. 738.503, F.S., which currently allows a fiduciary to transfer a reasonable amount of
the net cash receipts from a principal asset from income to principal, subject to depreciation to such
principal, with restrictions.
The bill substantially preserves current law, with three exceptions. Specifically, the bill:
19 Under current law, an “asset-backed security” is an asset, the value of which is based upon the right given to the owner to receive
distributions from the proceeds of financial assets that provide collateral for the security. S. 738.608, F.S.
20 See s. 738.608(3), F.S.
21 17 C.F.R. Sec. 229.1101(c)(1) defines “asset-backed security” as a security that is primarily serviced by the cash flows of a discrete
pool of receivables or other financial assets, either fixed or revolving, that by their terms convert into cash within a finite time period,
plus any rights or other assets designed to assure the servicing or timely distributions of proceeds to the security holders; provided that
in the case of financial assets that are leases, those assets may convert to cash partially by the cash proceeds from the disposition of
the physical property underlying such leases. See 17 C.F.R. Sec. 229.1101(c)(1)(2) for other conditions that must apply for a security to
be considered as an “asset-backed security.”
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Replaces the term “fixed asset” with the term “tangible asset” to conform to changes made
elsewhere in FUFIPA.
Excludes depreciation for assets accounted for as a liquidating asset.
Removes a safe harbor specifying that any amount of depreciation taken for an asset must be
presumed to be a reasonable amount of depreciation.
Reimbursements
The bill amends s. 738.504, F.S., which currently relates to allocations from insurance policies and
similar contracts, to create a provision authorizing a fiduciary to reimburse income from principal. Such
reimbursement is not presently authorized under Florida law.
The bill also renumbers from s. 738.704, F.S., to s. 738.505, F.S., a provision authorizing a fiduciary to
transfer an appropriate amount of income to principal to either reimburse or provide a reserve in
specified situations. The bill modifies this section by clarifying that, when a current income interest of a
principal asset ends and a successive income interest remains, the fiduciary may continue to transfer
those appropriate amounts from income to principal as specified in this section. The bill also authorizes
fiduciaries to transfer an appropriate amount from income to principal for the cost of an improvement to
principal, whether a change to an existing asset or the construction of a new asset, and for a periodic
payment on an obligation secured by a principal asset, in specified circumstances.
Income Taxes
The bill renumbers from s. 738.705, F.S., to s. 738.506, F.S., a provision specifying that, with respect to
income tax, the fiduciary must disburse from income those amounts allocated to income and from
principal those amounts allocated to principal. Current law also specifies that the same allocation rules
must be followed on the trust’s or estate’s share of an entity’s taxable income, except that principal
must be used to disburse amounts exceeding total receipts from the entity; however, the fiduciary must
also adjust income or principal receipts, pursuant to a specified formula, to the extent the trust’s or
estate’s income taxes are reduced, but not eliminated, due to a deduction for beneficiary payments.
The bill substantially retains current law but makes several changes. Specifically, the bill:
Removes the phrase “but not eliminated,” as it created confusion.
Removes the formula outlining the amount distributable to a beneficiary.
Adds a provision allowing a fiduciary to reimburse the “owner” of a “grantor trust”22 for income
taxes paid.
Adjustments Between Principal and Income Because of Taxes
The bill renumbers from s. 738.706, F.S., to s. 738.507, F.S., a provision authorizing a fiduciary to
adjust between principal and income to offset the shifting of economic interests or tax benefits between
income and remainder beneficiaries due to elections and decisions made by a fiduciary; a tax imposed
on the fiduciary or beneficiary due to a distribution from the trust or estate; or the taxable income of an
entity owned by the trust or estate includable in the taxable income of the trust, estate, or beneficiary.
This section also provides that, when an estate tax marital deduction or charitable contribution
deduction is reduced due to a fiduciary deducting an amount paid from principal for income tax
purposes, resulting in the amount of income tax paid by the trust or estate decreasing, the income tax
payor must reimburse principal for the amount of tax not paid, with limitations (“deduction adjustment”).
The bill substantially preserves current law but modifies this section to specify that a fiduciary that
charges a beneficiary under the deduction adjustment may offset the charge by obtaining payment from
22 A “grantor trust” is a type of trust that allows the settlor, in this case known as the “grantor,” to retain some control ove r trust assets.
For tax purposes, the grantor is considered the owner of the trust and is liable for any taxes on trust income. Christopher R. Callahan
and Scott M. Snyder, Foreign Grantor Trust Planning: A Flexib le Planning Structure for U.S. Income Tax, Fla. Bar Journal Vol. 97, No. 6
(Nov./Dec. 2023), https://www.floridabar.org/the-florida-bar-journal/foreign-grantor-trust-planning-a-flexible-planning-structure-for-u-s-
income-tax/ (last visited Jan. 25, 2024).
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the beneficiary, withholding future distributions to the beneficiary, or adopting another method or
combination of methods.
Apportionment when Income Interest Ends
The bill amends s. 738.703, F.S., to incorporate the substance of former s. 738.303, F.S., which
provides for the apportionment of income after an income interest ends. The bill also removes a
provision for the proration of the unitrust amount under this section, as this concept is covered
elsewhere in FUFIPA.
Relation to Electronic Signatures in Global and National Commerce Act
The bill amends s. 738.802, F.S., to replace existing law relocated elsewhere in the bill with a provision,
not found in current law, specifying that FUFIPA modifies, limits, or supersedes the Electronic
Signatures in Global and National Commerce Act (“GNCA”), 23 with exceptions, but does not authorize
electronic delivery of specified notices described in the GNCA.
Non-Substantive Changes
The bill makes non-substantive, technical changes to what are now numbered as ss. 738.402, 738.403,
738.501, 738.502, 738.503, 738.504, 738.508, 738.601, 738.602, 738.603, 738.605, 738.701, 738.702,
and 738.801, F.S.
Severability
The bill amends s. 738.803, F.S., to provide for severability. Specifically, the bill states that if any
provision of FUFIPA or its application to any person or circumstance is held invalid, the invalidity does
not affect other provisions or applications of FUFIPA which can be given effect without the invalid
provisions or application.
Applicability
The bill amends s. 738.804, F.S., to provide that, except as otherwise provided by a trust’s terms or the
bill itself, the bill applies to any receipt or expense received or incurred and any disbursement made
after January 1, 2025, by any trust or estate, regardless of when the trust or estate was established or
the asset involved was acquired.
Effective Date
The bill provides an effective date of January 1, 2025.
B. SECTION DIRECTORY:
Section 1: Amends s. 738.101, F.S., relating to short title.
Section 2: Amends s. 738.102, F.S., relating to definitions.
Section 3: Amends s. 738.103, F.S., relating to fiduciary duties; general principles.
Section 4: Amends s. 738.104, F.S., relating to trustee’s power to adjust.
Section 5: Repeals s. 738.1041, F.S., relating to total return unitrust.
Section 6: Repeals s. 738.105, F.S., relating to judicial control of discretionary powers.
Section 7: Amends s. 738.201, F.S., relating to determination and distribution of net income.
Section 8: Amends s. 738.202, F.S., relating to distribution to residuary and remainder beneficiaries.
Section 9: Creates s. 738.203, F.S., relating to fiduciary’s power to adjust.
Section 10: Amends s. 738.301, F.S., relating to when right to income begins and ends.
23 See 15. U.S.C. s. 7001(c). The GNCA provides a general rule of validity for electronic records and signatures for transactions in or
affecting interstate or foreign commerce, allowing the use of electronic records to satisfy any statute, regulation, or rule of law requiring
that such information be provided in writing.
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Section 11: Amends s. 738.302, F.S., relating to apportionment of receipts and disbursements when
decedent dies or income interest begins.
Section 12: Amends s. 738.303, F.S., relating to apportionment when income interest ends.
Section 13: Creates s. 738.304, F.S., relating to notice.
Section 14: Creates s. 738.305, F.S., relating to unitrust policy.
Section 15: Creates s. 738.306, F.S., relating to unitrust rate.
Section 16: Creates s. 738.307, F.S., relating to applicable value.
Section 17: Creates s. 738.308, F.S., relating to period.
Section 18: Creates s. 738.309, F.S., relating to express unitrust.
Section 19: Creates s. 738.310, F.S., relating to other rules.
Section 20: Amends s. 738.401, F.S., relating to character of receipts.
Section 21: Amends s. 738.402, F.S., relating to distribution from trust or estate.
Section 22: Amends s. 738.403, F.S., relating to business and other activities conducted by fiduciary.
Section 23: Creates s. 738.404, F.S., relating to principal receipts.
Section 24: Creates s. 738.405, F.S., relating to rental property.
Section 25: Creates s. 738.406, F.S., relating to receipt on obligation to be paid in money.
Section 26: Creates s. 738.407, F.S., relating to insurance policy on contracts.
Section 27: Creates s. 738.408, F.S., relating to insubstantial allocation not required.
Section 28: Creates s. 738.409, F.S., relating to deferred compensation, annuity, or similar payment.
Section 29: Renumbers and amends s. 738.603, F.S., relating to liquidating asset.
Section 30: Renumbers and amends s. 738.604, F.S., relating to minerals, water, and other natural
resources.
Section 31: Renumbers and amends s. 738.605, F.S., relating to timber.
Section 32: Renumbers and amends s. 738.606, F.S., relating to property not productive of income.
Section 33: Renumbers and amends s. 738.607, F.S., relating to derivatives and options.
Section 34: Renumbers and amends s. 738.608, F.S., relating to asset-backed securities.
Section 35: Creates s. 738.416, F.S., relating to other financial instrument or arrangement.
Section 36: Amends. s. 738.501, F.S., relating to principal receipts.
Section 37: Amends s. 738.502, F.S., relating to rental property.
Section 38: Amends s. 738.503, F.S., relating to obligation to pay money.
Section 39: Amends s. 738.504, F.S., relating to insurance policies and similar contracts.
Section 40: Renumbers and amends s. 738.704, F.S., relating to transfers from income to reimburse
principal.
Section 41: Renumbers and amends s. 738.705, F.S., relating to income taxes.
Section 42: Renumbers and amends s. 738.706, F.S., relating to adjustments between principal and
income because of taxes.
Section 43: Creates s. 738.508, F.S., relating to apportionment of property expenses between tenant
and remainderman.
Section 44: Amends s. 738.601, F.S., relating to insubstantial allocations not required.
Section 45: Amends s. 738.602, F.S., relating to payments from deferred compensation plans,
annuities, and retirement plans or accounts.
Section 46: Amends s. 738.701, F.S., relating to disbursements from income.
Section 47: Amends s. 738.702, F.S., relating to disbursements from principal.
Section 48: Amends s. 738.703, F.S., relating to transfers from income to principal for depreciation.
Section 49: Amends s. 738.801, F.S., relating to apportionment of expenses; improvements.
Section 50: Amends s. 738.802, F.S., relating to uniformity of application and construction.
Section 51: Amends s. 738.803, F.S., relating to severability.
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Section 52: Amends s. 738.804, F.S., relating to application.
Section 53: Provides an effective date of January 1, 2025.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill will likely have a positive economic impact on the private sector to the extent that it provides
more flexibility for individualized estate planning, allows for total-return investing under the “modern
portfolio theory,” and otherwise gives Floridians advantages that benefit their financial interests.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable.
2. Other:
Federalism
The framers of the United States Constitution allocated power among the federal and state
governments, seeking to establish a unified national government of limited powers while carving out
for the states a distinct sphere of autonomy for the exercise of general police powers. 24 Although the
Constitution does not clearly delineate many of the boundaries between federal and state
government powers, the Supreme Court has invoked certain constitutional provisions when
determining whether a government has exceeded its constitutional authority. 25
One such provision is the Supremacy Clause, found in Article IV of the United States Constitution,
which clause gives federal law supremacy over state law where the laws conflict. 26 Put another way,
24 Library of Congress, Constitution Annotated: Federalism and the Constitution, https://constitution.congress.gov/browse/essay/intro.7-
3/ALDE_00000032/ (last visited Jan. 25, 2024).
25 Id.
26 Id.
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under the Supremacy Clause, a federal law preempts any conflicting state laws. 27 Another such
provision is the Commerce Clause, found in Article I, section 8, clause 3 of the United States
Constitution, which clause gives Congress broad power to regulate interstate and foreign commerce
and restricts the states from impairing such commerce through the enactment of state laws. 28
The bill amends s. 738.802, F.S., to specify that FUFIPA modifies, limits, or supersedes the
Electronic Signatures in Global and National Commerce Act (“GNCA”), using language similar to
language already appearing elsewhere in Florida law. The GNCA is a federal law, codified at 15
U.S.C. s. 7001, which law provides a general rule of validity for electronic records and signatures for
transactions in or affecting interstate or foreign commerce, allowing the use of electronic records to
satisfy any statute, regulation, or rule of law requiring that such information be provided in writing. To
the extent that, in a particular case, FUFIPA could conflict with the GNCA, or its application thereto
otherwise could impair interstate or foreign commerce, a court may find the GNCA controls over the
amendment to s. 738.802, F.S.
B. RULE-MAKING AUTHORITY:
Not applicable.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
27 Id.
28 Library of Congress, Constitution Annotated: Overview of Commerce Clause, https://constitution.congress.gov/browse/essay/artI-S8-
C3-1/ALDE_00013403/ (last visited Jan. 25, 2024).
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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 1093 2024
1 A bill to be entitled
2 An act relating to the Florida Uniform Fiduciary
3 Income and Principal Act; amending s. 738.101, F.S.;
4 revising a short title; amending s. 738.102, F.S.;
5 revising and providing definitions governing ch. 738,
6 F.S.; amending s. 738.103, F.S.; specifying the scope
7 of ch. 738, F.S.; amending s. 738.104, F.S.;
8 specifying circumstances under which ch. 738, F.S.,
9 applies to a trust; repealing s. 738.1041, F.S.,
10 relating to total return unitrusts; repealing s.
11 738.105, F.S., relating to judicial control of
12 discretionary powers; amending s. 738.201, F.S.;
13 specifying the duties of a fiduciary; providing that a
14 fiduciary's allocation, determination, or exercise of
15 discretion is presumed to be fair and reasonable to
16 all beneficiaries; requiring a fiduciary to take
17 specified actions; authorizing a fiduciary to exercise
18 discretionary power of administration under specified
19 circumstances; requiring the fiduciary to consider
20 specified factors before exercising such discretionary
21 power; providing for applicability; amending s.
22 738.202, F.S.; defining the term "fiduciary decision";
23 prohibiting a court from ordering a fiduciary to
24 change his or her decision unless the decision was an
25 abuse of discretionary power; prohibiting a court from
Page 1 of 113
CODING: Words stricken are deletions; words underlined are additions.
hb1093-00
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 1093 2024
26 determining that a fiduciary abused its discretion
27 under specified conditions; authorizing a court to
28 order a specified remedy; authorizing a court to
29 determine whether a proposed fiduciary decision will
30 result in an abuse of discretion; providing that a
31 beneficiary who opposes a proposed decision has the
32 burden to establish that such decision is an abuse of
33 discretion; requiring that any attorney fees incurred
34 in defending an action related to the abuse of a
35 fiduciary's discretion be paid from trust assets;
36 creating s. 738.203, F.S.; authorizing a fiduciary to
37 adjust between income and principal if such adjustment
38 assists in administering the trust or estate
39 impartially; providing construction; providing that a
40 fiduciary is not liable to another for an adjustment,
41 or failure to adjust, between income and principal
42 made in good faith; requiring a fiduciary to consider
43 certain relevant factors when considering such
44 adjustment; prohibiting a fiduciary from exercising or
45 considering such adjustment if certain conditions
46 exist; revising applicability; authorizing a fiduciary
47 to release or delegate to a cofiduciary specified
48 powers to adjust under specified conditions; providing
49 requirements and powers for any such releases and
50 delegations; providing applicability; requiring that
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51 the description of an exercise of the power to adjust
52 between income and principal contain specified
53 information; amending s. 738.301, F.S.; defining
54 terms; amending s. 738.302, F.S.; specifying
55 applicability of specified provisions; authorizing the
56 conversion of an income trust to a unitrust;
57 restricting provisions to trusts that are
58 beneficiaries of an estate; providing construction;
59 providing that a fiduciary acting in good faith is not
60 liable to a person affected by a certain action or
61 inaction; amending s. 738.303, F.S.; specifying the
62 authority of a fiduciary with respect to the
63 administration of certain trusts; providing the
64 circumstances under which a fiduciary may perform such
65 actions; authorizing a beneficiary or a fiduciary to
66 request the court to allow the beneficiary or
67 fiduciary to take a specified action; requiring a
68 fiduciary to inform specified persons of a decision to
69 take action; authorizing a beneficiary to request a
70 court to direct the fiduciary to take the requested
71 action under specified circumstances; requiring
72 fiduciaries to consider specified factors before
73 taking a certain action; authorizing a fiduciary to
74 release or delegate the power to take certain actions;
75 creating s. 738.304, F.S.; requiring a certain notice
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76 to be sent to specified parties; providing
77 applicability; authorizing a person to consent to a
78 specified action in a record; providing that such
79 person does not need to be sent notice of such action;
80 providing requirements for such notices; creating s.
81 738.305, F.S.; requiring a fiduciary of a unitrust to
82 follow a certain policy; providing rules for a
83 unitrust policy; providing additional actions a
84 unitrust policy may contain; creating s. 738.306,
85 F.S.; requiring a unitrust rate to be within a
86 specified range; authorizing a unitrust policy to
87 provide for specified limits within such range;
88 requiring a fiduciary who is a non-independent person
89 to use a specified unitrust rate; creating s. 738.307,
90 F.S.; requiring a unitrust policy to provide a
91 specified method for determining fair market value of
92 an asset in determining a unitrust amount; authorizing
93 specified unitrust policies to provide methods for
94 determining a certain net fair market value;
95 prohibiting certain property from being included in
96 the determination of the value of a trust; creating s.
97 738.308, F.S.; requiring a unitrust policy to provide
98 a specified period; specifying that such period must
99 be a calendar year; authorizing a unitrust policy to
100 provide certain standards for periods; creating s.
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101 738.309, F.S.; providing applicability; authorizing a
102 trustee of an express unitrust to determine the
103 unitrust amount by reference to the net fair market
104 value of the unitrust's assets in a specified
105 timeframe; providing that distribution of a unitrust
106 amount is considered a distribution of all the net
107 income of an express unitrust and is considered an
108 income interest; specifying that the unitrust amount
109 is considered a reasonable apportionment of the total
110 return of the express unitrust; providing that an
111 express unitrust that allows a distribution in excess
112 of a specified unitrust rate is considered a
113 distribution of all of the income of the unitrust;
114 authorizing an express unitrust to provide a mechanism
115 for changing the unitrust rate and for conversion from
116 a unitrust to an income trust or from an income trust
117 to a unitrust; specifying that unless an express
118 unitrust prohibits the power to change the rate or
119 convert the trust, the trustee has such power;
120 authorizing the governing instrument of an express
121 unitrust to grant the trustee discretion to adopt a
122 certain practice; specifying that unless an express
123 unitrust provides otherwise, the distribution of an
124 amount is considered a distribution from specified
125 sources in a specified order of priority; authorizing
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126 a governing instrument of an express unitrust to allow
127 exclusion of specified assets; providing that the use
128 of such assets may be considered equivalent to income
129 or to the unitrust amount; creating s. 738.310, F.S.;
130 requiring a trustee, after the conversion of an income
131 trust to a unitrust, to consider the unitrust amount
132 paid from certain sources in a specified order of
133 priority; amending s. 738.401, F.S.; defining terms;
134 specifying that an attribute or action of an entity
135 includes an attribute or action from any other entity
136 in which the initial entity has an ownership interest
137 or holds another interest; requiring a fiduciary to
138 allocate certain money and tangible personal property
139 to income; requiring a fiduciary to allocate specified
140 property and money to principal; providing that
141 certain money received in an entity distribution is a
142 capital distribution in specified circumstances;
143 specifying that in cases of capital distribution, the
144 amount received in an entity distribution must be
145 reduced to the extent that cumulative distributions
146 from the entity to the fiduciary are within certain
147 ranges; authorizing a fiduciary to consider additional
148 information before deciding to make or change a
149 decision to make a payment to a beneficiary; providing
150 that if a fiduciary receives specified additional
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151 information after a distribution to a beneficiary, the
152 fiduciary is not required to change or recover the
153 payment; authorizing a fiduciary in such a situation
154 to exercise other specified powers; revising
155 definitions; requiring a fiduciary to allocate certain
156 money and property to principal; providing the
157 mechanism for such allocation; defining the term
158 "public entity"; conforming provisions to changes made
159 by the act; amending s. 738.402, F.S.; conforming
160 provisions to changes made by the act; amending s.
161 738.403, F.S.; providing applicability; authorizing a
162 fiduciary to make certain determinations separately
163 and differently from the decisions concerning
164 distributions of income or principal; conforming
165 provisions to changes made by the act; making
166 technical changes; creating s. 738.404, F.S.;
167 specifying receipts that a fiduciary must allocate to
168 principal; creating s. 738.405, F.S.; providing for
169 the allocation of income from rental property;
170 creating s. 738.406, F.S.; specifying applicability;
171 requiring a fiduciary to allocate to income certain
172 amounts received as interest; requiring a fiduciary to
173 allocate to income increments in value of certain
174 bonds or other obligations; creating s. 738.407, F.S.;
175 specifying applicability; requiring a fiduciary to
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176 allocate proceeds from insurance policies or contracts
177 to principal in a specified manner; creating s.
178 738.408, F.S.; specifying circumstances under which a
179 fiduciary may allocate an insubstantial allocation to
180 principal, subject to certain conditions and
181 limitations; creating s. 738.409, F.S.; defining
182 terms; specifying the manner in which a fiduciary may
183 determine incomes of separate funds; providing duties
184 of a fiduciary of a marital trust and other trusts;
185 requiring a fiduciary of a nonseparate fund to
186 calculate internal income in a specified manner;
187 providing construction; transferring, renumbering, and
188 amending s. 738.603, F.S.; revising the definition of
189 the term "liquidating asset"; providing applicability;
190 requiring a fiduciary to allocate to income and
191 principal the receipts produced by liquidating assets
192 in a certain manner; transferring, renumbering, and
193 amending s. 738.604, F.S.; requiring a fiduciary to
194 allocate the receipts from interests in minerals,
195 water, or other natural resources to income,
196 principal, or between income and principal under
197 specified conditions; revising applicability;
198 providing that an allocation between income and
199 principal from a receipt from a natural resource is
200 presumed equitable under a specified condition;
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201 providing construction; transferring, renumbering, and
202 amending s. 738.605, F.S.; requiring a fiduciary to
203 allocate receipts from timber to income, principal, or
204 between income and principal under specified
205 conditions; revising applicability; transferring,
206 renumbering, and amending s. 738.606, F.S.;
207 authorizing a settlor's spouse to require the trustee
208 of a trust that receives certain property to make such
209 property produce income under specified conditions;
210 authorizing the trustee to take specified actions if
211 directed by such spouse; providing that the trustee
212 decides whether to take one or a combination of such
213 actions; revising applicability; providing
214 construction; transferring, renumbering, and amending
215 s. 738.607, F.S.; revising the definition of the term
216 "derivative"; requiring a fiduciary to allocate
217 specified percentages of certain receipts and
218 disbursements to income and allocate the balance to
219 principal; providing construction; requiring certain
220 fiduciaries to allocate a specified percentage to
221 income and allocate the balance to principal of
222 certain amounts; transferring, renumbering, and
223 amending s. 738.608, F.S.; requiring a fiduciary to
224 allocate to income a receipt from or related to asset -
225 backed securities under a specified condition;
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226 requiring a fiduciary to allocate to income a
227 specified percentage of receipts from the transaction
228 and the disbursement of a payment received as a result
229 of an interest in an asset-backed security; conforming
230 provisions to changes made by the act; creating s.
231 738.416, F.S.; requiring a fiduciary to make specified
232 allocations from receipts from other financial
233 instruments or arrangements; providing construction;
234 amending s. 738.501, F.S.; specifying the manner by
235 which a fiduciary must make disbursements from income;
236 amending s. 738.502, F.S.; specifying the manner by
237 which a fiduciary must make disbursements from
238 principal; amending s. 738.503, F.S.; defining the
239 term "depreciation"; specifying the manner by which a
240 fiduciary may make transfers from income to principal
241 to account for depreciation; amending s. 738.504,
242 F.S.; specifying the manner by which a fiduciary may
243 make transfers from principal to income for
244 reimbursements; transferring, renumbering, and
245 amending s. 738.704, F.S.; providing that a fiduciary
246 that makes or expects to make a certain principal
247 disbursement may transfer an appropriate amount from
248 income to principal in one or more accounting periods;
249 providing applicability; making technical changes;
250 deleting a provision relating to payments necessary to
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251 avoid defaulting on a mortgage or security interest on
252 certain property; transferring, renumbering, and
253 amending s. 738.705, F.S.; revising the sources from
254 which a fiduciary must pay a tax required by a share
255 of an entity's taxable income; requiring a fiduciary
256 to adjust income or principal receipts if the taxes
257 paid are reduced due to a deduction for a payment made
258 to a beneficiary; providing construction; making
259 technical changes; transferring, renumbering, and
260 amending s. 738.706, F.S.; revising the circumstances
261 under which a fiduciary may make adjustments between
262 income and principal to offset shifts in the economic
263 interests or tax benefits of specified beneficiaries;
264 requiring a fiduciary to charge a beneficiary to
265 reimburse the principal if the beneficiary benefits
266 from an applicable tax deduction; requiring the share
267 of reimbursement for each fiduciary or beneficiary to
268 be the same as its share of the decrease in income
269 tax; authorizing such fiduciary to charge a
270 beneficiary to offset the estate tax by obtaining
271 payment from the beneficiary, withholding an amount
272 from future distributions, or adopting another method
273 or combination of methods; creating s. 738.508, F.S.;
274 defining terms; specifying the manner by which
275 property expenses are apportioned between a tenant and
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276 remainderman; providing applicability and
277 construction; amending s. 738.601, F.S.; providing
278 applicability; specifying the manner by which a
279 fiduciary determines and distributes net income;
280 providing circumstances under which a fiduciary may
281 not reduce certain principal or income receipts;
282 amending s. 738.602, F.S.; providing that certain
283 beneficiaries of non-unitrusts are entitled to receive
284 a specified share of net income; providing that
285 certain requirements apply in determining a
286 beneficiary's share of net income; providing
287 construction; amending s. 738.701, F.S.; providing
288 that an income beneficiary is entitled to net income
289 when an asset is subject to a certain trust or
290 successive interest; providing that an asset becomes
291 subject to a specified trust on certain dates;
292 amending s. 738.702, F.S.; specifying the manner by
293 which a fiduciary allocates certain receipts and makes
294 disbursements when a decedent dies or income interest
295 begins; providing construction; amending s. 738.703,
296 F.S.; defining the term "undistributed income";
297 specifying the manner by which a fiduciary makes
298 allocations of undistributed income when income
299 interest ends; amending s. 738.801, F.S.; providing
300 for uniform application and construction of the act;
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301 amending s. 738.802, F.S.; providing construction in
302 relation to federal law; amending s. 738.803, F.S.;
303 making a technical change; amending s. 738.804, F.S.;
304 revising application of ch. 738, F.S., to conform to
305 changes made by the act; providing an effective date.
306
307 Be It Enacted by the Legislature of the State of Florida:
308
309 Section 1. Section 738.101, Florida Statutes, is amended
310 to read:
311 738.101 Short title.—This chapter may be cited as the
312 "Florida Uniform Fiduciary Income and Principal and Income Act."
313 Section 2. Section 738.102, Florida Statutes, is amended
314 to read:
315 738.102 Definitions.—As used in this chapter, the term:
316 (1) "Accounting period" means a calendar year unless
317 another 12-month period is selected by a fiduciary selects
318 another period of 12 calendar months or approximately 12
319 calendar months. The term includes a part portion of a calendar
320 year or another period of 12 calendar months or approximately 12
321 calendar months which other 12-month period that begins when an
322 income interest begins or ends when an income interest ends.
323 (2) "Asset-backed security," as provided in s. 738.415,
324 means a security that is serviced primarily by the cash flows of
325 a discrete pool of fixed or revolving receivables or other
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326 financial assets that by their terms convert to cash withi n a
327 finite time. The term includes rights or other assets that
328 ensure the servicing or timely distribution of proceeds to the
329 holder of the asset-backed security. The term does not include
330 an asset to which s. 738.401, s. 738.409, or s. 738.414 applies.
331 (3) "Beneficiary" includes:
332 (a) For a trust:
333 1. A current beneficiary, including a current income
334 beneficiary and a beneficiary that may receive only principal;
335 2. A remainder beneficiary; and
336 3. Any other successor beneficiary;
337 (b) For an estate, an heir, and a devisee; and
338 (c) For a life estate or term interest, a person who holds
339 a life estate, a term interest, or a remainder or other interest
340 following a life estate or term interest means, in the case of a
341 decedent's estate, an heir or devisee and, in the case of a
342 trust, an income beneficiary or a remainder beneficiary .
343 (4)(3) "Carrying value" means the fair market value at the
344 time the assets are received by the fiduciary. For an estate and
345 for a trust the estates of decedents and trusts described in s.
346 733.707(3), after the grantor's death, the assets are considered
347 received as of the date of the settlor's death. If there is a
348 change in fiduciaries, a majority of the continuing fiduciaries
349 may elect to adjust the carrying values to reflect the fair
350 market value of the assets at the beginning of their
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351 administration. If such election is made, it must be reflected
352 on the first accounting filed after the election. For assets
353 acquired during the administration of the estate or trust, the
354 carrying value is equal to the acquisition costs of the asset.
355 Carrying value of assets should not be arbitrarily "written up"
356 or "written down." In some circumstances, including, but not
357 limited to, those described in ss. 738.410 and 738.602, carrying
358 value may be adjusted with proper disclosure to reflect changes
359 in carrying value applied in a consistent manner.
360 (5) "Court" means a circuit court of this state.
361 (6) "Current income beneficiary" means a beneficiary to
362 which a fiduciary may distribute net income, regardless of
363 whether the fiduciary also distributes principal to the
364 beneficiary.
365 (7) "Distribution," "distribute," "distributed," or
366 "distributee" means a payment or transfer by a fiduciary to a
367 beneficiary in the beneficiary's capacity as a beneficiary,
368 without consideration other than the beneficiary's right to
369 receive the payment or transfer under the terms of the trust as
370 defined in this section, or in a will, a life estate, or a term
371 interest.
372 (8) "Estate" means a decedent's estate, including the
373 property of the decedent as the estate is originally constituted
374 and the property of the estate as it exists at any time during
375 administration.
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376 (9)(4) "Fiduciary" includes means a trustee, a trust
377 director as defined in s. 736.0103, or a personal
378 representative, and a person acting under a delegation from a
379 fiduciary or a trustee. The term also includes a person that
380 holds property for a successor beneficiary whose interest may be
381 affected by an allocation of receipts and expenditures between
382 income and principal. If there are two or more cofiduciaries,
383 the term includes all cofiduciaries acting under the terms of
384 the trust and applicable law an executor, administrator,
385 successor personal representative, special administrator, or a
386 person performing substantially the same function.
387 (10)(5) "Income" means money or other property that a
388 fiduciary receives as current return from a principal asset. The
389 term includes a part portion of receipts from a sale, exchange,
390 or liquidation of a principal asset, to the extent provided in
391 ss. 738.401-738.416 ss. 738.401-738.403 and s. 738.503.
392 (6) "Income beneficiary" means a person to whom net income
393 of a trust is or may be payable.
394 (11)(7) "Income interest" means the right of a current an
395 income beneficiary to receive all or part of net income, whether
396 the terms of the trust require the net income to be distributed
397 or authorize the net income to be distributed in the fiduciary's
398 trustee's discretion. The term includes the right of a current
399 beneficiary to use property held by a fiduciary.
400 (12) "Independent person" means a person who is not:
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401 (a) For a trust:
402 1. A qualified beneficiary as defined in s. 736.0103;
403 2. A settlor of the trust;
404 3. An individual whose legal obligation to support a
405 beneficiary may be satisfied by a distribution from the trust;
406 or
407 4. Any trustee whom an interested distributee has the
408 power to remove and replace with a related or subordinate party.
409 (b) For an estate, a beneficiary;
410 (c) A spouse, a parent, a brother, a sister, or an issue
411 of an individual described in paragraph (a) or paragraph (b);
412 (d) A corporation, a partnership, a limited liability
413 company, or another entity in which persons describ ed in
414 paragraphs (a), (b), and (c), in the aggregate, have voting
415 control; or
416 (e) An employee of a person described in paragraph (a),
417 paragraph (b), paragraph (c), or paragraph (d).
418 (13) "Internal Revenue Code" means the Internal Revenue
419 Code of 1986, as amended.
420 (14)(8) "Mandatory income interest" means the right of a
421 current an income beneficiary to receive net income that the
422 terms of the trust require the fiduciary to distribute.
423 (15)(9) "Net income" means the total allocations receipts
424 allocated to income during an accounting period to income under
425 the terms of a trust and this chapter minus the disbursements
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426 made from income during the period, other than distributions,
427 allocated to income under the terms of the trust and this
428 chapter. To the extent that the trust is a unitrust under ss.
429 738.301-738.310, the term means the unitrust amount determined
430 under ss. 738.301-738.310. The term includes the amount of an
431 adjustment from principal to income under s. 738.203. The term
432 does not include the amount of an adjustment plus or minus
433 transfers under this chapter to or from income to principal
434 under s. 738.203 during the period.
435 (16)(10) "Person" means an individual, a business or a
436 nonprofit entity, corporation, business trust, an estate, a
437 trust, partnership, limited liability company, association,
438 joint venture, a public corporation, or any other legal or
439 commercial entity or a government or governmental subdivision,
440 agency, or instrumentality, or other legal entity.
441 (17) "Personal representative" means an executor, an
442 administrator, a successor personal representative, a special
443 administrator, or a person that performs substantially the same
444 function with respect to an estate under the law governing the
445 person's status.
446 (18)(11) "Principal" means property held in trust for
447 distribution to, production of income for, or use by a current
448 or successor a remainder beneficiary when the trust terminates.
449 (19) "Record" means information inscribed on a tangible
450 medium or stored in an electronic or other medium and is
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451 retrievable in perceivable form.
452 (20) "Settlor" means a person, including a testator, who
453 creates or contributes property to a trust. If more than one
454 person creates or contributes property to a trust, the term
455 includes each person, to the extent of the trust property
456 attributable to that person's contribution, except to the extent
457 that another person has the power to revoke or withdraw that
458 portion.
459 (21) "Special tax benefit" means:
460 (a) Exclusion of a transfer to a trust from gifts
461 described in s. 2503(b) of the Internal Revenue Code because of
462 the qualification of an income interest in the trust as a
463 present interest in property;
464 (b) Status as a qualified subchapter S trust described in
465 s. 1361(d)(3) of the Internal Revenue Code at a time the trust
466 holds stock of an S corporation described in s. 1361(a)(1) of
467 the Internal Revenue Code;
468 (c) An estate or gift tax marital deduction for a transfer
469 to a trust under s. 2056 or s. 2523 of the Internal Revenue Code
470 which depends or depended in whole or in part on the right of
471 the settlor's spouse to receive the net income of the trust;
472 (d) Exemption in whole or in part of a trust from the
473 federal generation-skipping transfer tax imposed by s. 2601 of
474 the Internal Revenue Code because the trust was irrevocable on
475 September 25, 1985, if there is any possibility that:
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476 1. A taxable distribution as defined in s. 2612(b) of the
477 Internal Revenue Code could be made from the trust; or
478 2. A taxable termination as defined in s. 2612(a) of the
479 Internal Revenue Code could occur with respect to the trust; or
480 (e) An inclusion ratio as defined in s. 2642(a) of the
481 Internal Revenue Code of the trust which is less than one, if
482 there is any possibility that:
483 1. A taxable distribution as defined in s. 2612(b) of the
484 Internal Revenue Code could be made from the trust; or
485 2. A taxable termination as defined in s. 2612(a) of the
486 Internal Revenue Code could occur with respect to the trust.
487 (22) "Successive interest" means the interest of a
488 successor beneficiary.
489 (23)(12) "Successor Remainder beneficiary" means a person
490 entitled to receive income or principal or to use property when
491 an income interest or other current interest ends.
492 (24)(13) "Terms of a trust" means:
493 (a) Except as otherwise provided in paragraph (b), the
494 manifestation of the settlor's intent regarding a trust's
495 provisions as:
496 1. Expressed in the will or trust instrument; or
497 2. Established by other evidence that would be admissible
498 in a judicial proceeding.
499 (b) The trust's provisions as established, determined, or
500 amended by:
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501 1. A trustee or trust director in accordance with the
502 applicable law;
503 2. A court order; or
504 3. A nonjudicial settlement agreement under s. 736.0111.
505 (c) For an estate, a will; or
506 (d) For a life estate or term interest, the corresponding
507 manifestation of the rights of the beneficiaries to the extent
508 provided in s. 738.508 the manifestation of the intent of a
509 grantor or decedent with respect to the trust, expressed in a
510 manner that admits of its proof in a judicial proceeding,
511 whether by written or spoken words or by conduct.
512 (25) "Trust" includes an express trust, whether private or
513 charitable, with additions to the trust, wherever and however
514 created; and a trust created or determined by a judgment or
515 decree under which the trust is to be administered. The term
516 does not include a constructive trust; a resulting trust; a
517 conservatorship; a custodial arrangement under the Florida
518 Uniform Transfers to Minors Act; a business trust providing for
519 certificates to be issued to beneficiaries; a common trust fund;
520 a land trust under s. 689.071; a trust created by the form of
521 the account or by the deposit agreement at a financial
522 institution; a voting trust; a security arrangement; a
523 liquidation trust; a trust for the primary purpose of paying
524 debts, dividends, interest, salaries, wages, profits, pensions,
525 retirement benefits, or employee benefits of any kind; or an
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526 arrangement under which a person is a nominee, an escrowee, or
527 an agent for another.
528 (26)(14) "Trustee" means a person, other than a personal
529 representative, that owns or holds property for the benefit of a
530 beneficiary. The term includes an original, additional, or
531 successor trustee, regardless of whether they are or not
532 appointed or confirmed by a court.
533 (27) "Will" means any testamentary instrument recognized
534 under applicable law which makes a legally effective disposition
535 of an individual's property, effective at the individual's
536 death. The term includes a codicil or other amendment to a
537 testamentary instrument.
538 Section 3. Section 738.103, Florida Statutes, is amended
539 to read:
540 (Substantial rewording of section. See
541 s. 738.103, F.S., for present text.)
542 738.103 Scope.—Except as otherwise provided in the terms
543 of a trust or this chapter, this chapter applies to all of the
544 following:
545 (1) A trust or an estate.
546 (2) A life estate or other term interest in which the
547 interest of one or more persons will be succeeded by the
548 interest of one or more other persons to the extent provided in
549 s. 738.508.
550 Section 4. Section 738.104, Florida Statutes, is amended
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551 to read:
552 (Substantial rewording of section. See
553 s. 738.104, F.S., for present text.)
554 738.104 Governing law.—Except as otherwise provided in the
555 terms of a trust or this chapter, this chapter applies when this
556 state is the principal place of administration of a trust or
557 estate or the situs of property that is not held in a trust or
558 estate and is subject to a life estate or other term interest
559 described in s. 738.103(2). By accepting the trusteeship of a
560 trust having its principal place of administration in this state
561 or by moving the principal place of administration of a trust to
562 this state, the trustee submits to the application of this
563 chapter to any matter within the scope of this chapter involving
564 the trust.
565 Section 5. Section 738.1041, Florida Statutes, is
566 repealed.
567 Section 6. Section 738.105, Florida Statutes, is repealed.
568 Section 7. Section 738.201, Florida Statutes, is amended
569 to read:
570 (Substantial rewording of section. See
571 s. 738.201, F.S., for present text.)
572 738.201 Fiduciary duties; general principles.—
573 (1) In making an allocation or determination or exercising
574 discretion under this chapter, a fiduciary shall do all of the
575 following:
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576 (a) Act in good faith, based on what is a fair and
577 reasonable fee to all beneficiaries;
578 (b) Administer a trust or estate impartially, except to
579 the extent that the terms of the trust manifest an intent that
580 the fiduciary favors one or more beneficiaries;
581 (c) Administer the trust or estate in accordance with the
582 terms of the trust, even if there is a different provision in
583 this chapter.
584 (d) Administer the trust or estate in accordance with this
585 chapter, except to the extent that the terms of the tru st
586 provide otherwise or authorize the fiduciary to determine
587 otherwise.
588 (2) A fiduciary's allocation, determination, or exercise
589 of discretion under this chapter is presumed to be fair and
590 reasonable to all beneficiaries. A fiduciary may exercise a
591 discretionary power of administration given to the fiduciary by
592 the terms of the trust, and an exercise of the power that
593 produces a result different from a result required or permitted
594 by this chapter does not create an inference that the fiduciary
595 abused the fiduciary's discretion.
596 (3) A fiduciary shall:
597 (a) Add a receipt to principal, to the extent that the
598 terms of the trust and this chapter do not allocate the receipt
599 between income and principal;
600 (b) Charge a disbursement to principal, to the extent that
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601 the terms of the trust and this chapter do not allocate the
602 disbursement between income and principal; and
603 (c) Within 65 days after the fiscal year ends, add any
604 undistributed income to principal, unless otherwise provided by
605 the terms of the trust.
606 (4) A fiduciary may exercise the power to adjust under s.
607 738.203(1), convert an income trust to a unitrust under ss.
608 738.301-738.310, change the percentage or method used to
609 calculate a unitrust amount under ss. 738.301-738.310, or
610 convert a unitrust to an income trust under ss. 738.301-738.310
611 if the fiduciary determines the exercise of the power will
612 assist the fiduciary to administer the trust or estate
613 impartially.
614 (5) The fiduciary must consider the following factors in
615 making the determination in subsection (4), including:
616 (a) The terms of the trust.
617 (b) The nature, distribution standards, and expected
618 duration of the trust.
619 (c) The effect of the allocation rules, including specific
620 adjustments between income and principal, under ss. 738.30 1-
621 738.416.
622 (d) The desirability of liquidity and regularity of
623 income.
624 (e) The desirability of the preservation and appreciation
625 of principal.
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626 (f) The extent to which an asset is used or may be used by
627 a beneficiary.
628 (g) The increase or decrease in the value of principal
629 assets, reasonably determined by the fiduciary.
630 (h) Whether and to what extent the terms of the trust give
631 the fiduciary power to accumulate income or invade principal or
632 prohibit the fiduciary from accumulating income or invading
633 principal.
634 (i) The extent to which the fiduciary has accumulated
635 income or invaded principal in preceding accounting periods.
636 (j) The effect of current and reasonably expected economic
637 conditions.
638 (k) The reasonably expected tax consequences of the
639 exercise of the power.
640 (l) The identities and circumstances of the beneficiaries.
641 (6) Except as provided in ss. 738.301-738.310, this
642 chapter pertains to the administration of a trust and is
643 applicable to any trust that is administered in this state or
644 under its law. This chapter also applies to any estate that is
645 administered in this state unless the provision is limited in
646 application to a trustee, rather than a fiduciary.
647 Section 8. Section 738.202, Florida Statutes, is amended
648 to read:
649 (Substantial rewording of section. See
650 s. 738.202, F.S., for present text.)
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651 738.202 Judicial review of exercise of discretionary
652 power; request for instruction.—
653 (1) As used in this section, the term "fiduciary decision"
654 means any of the following:
655 (a) A fiduciary's allocation between income and principal
656 or other determination regarding income and principal required
657 or authorized by the terms of the trust or this chapter.
658 (b) The fiduciary's exercise or nonexercise of a
659 discretionary power regarding income and principal granted by
660 the terms of the trust or this chapter, including the power to
661 adjust under s. 738.203, convert an income trust to a unitrust
662 under ss. 738.301-738.310, change the percentage of method used
663 to calculate a unitrust amount under ss. 738.301-738.310,
664 convert a unitrust to an income trust under ss. 738.301 -738.310,
665 or the method used to make property productive of income under
666 s. 738.413.
667 (c) The fiduciary's implementation of a decision described
668 in paragraph (a) or paragraph (b).
669 (2) The court may not order a fiduciary to change a
670 fiduciary decision unless the court determines that the
671 fiduciary decision was an abuse of the fiduciary's discretion. A
672 court may not determine that a fiduciary abused its discretion
673 merely because the court would have exercised the discretion in
674 a different manner or would not have exercised the discretion.
675 (3) If the court determines that a fiduciary decision was
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676 an abuse of the fiduciary's discretion, the court may order a
677 remedy authorized by law, including those prescribed under ss.
678 736.1001 and 736.1002. Following such a determination by the
679 court, the remedy is to place the beneficiaries in the positions
680 the beneficiaries would have occupied if the fiduciary had not
681 abused its discretion, as follows:
682 (a) The court may order the fiduciary to exercise or
683 refrain from exercising the power to adjust under s. 738.203;
684 (b) The court may order the fiduciary to exercise or
685 refrain from exercising the power to convert an income trust to
686 a unitrust under ss. 738.301-738.310, change the percentage or
687 method used to calculate a unitrust amount under ss. 738.301 -
688 738.310, or convert a unitrust to an income trust under ss.
689 738.301-738.310;
690 (c) The court may compel the fiduciary to take any of the
691 actions listed under s. 738.413;
692 (d) To the extent that the abuse of discretion has
693 resulted in no distribution to a beneficiary or a distribution
694 that is too small, the court shall require the fiduciary to
695 distribute from the trust to the beneficiary an amount the court
696 determines will restore the beneficiary, in whole or in part, to
697 his or her appropriate position;
698 (e) To the extent that the abuse of discretion has
699 resulted in a distribution to a beneficiary that is too large,
700 the court shall restore the beneficiaries, the trust, or both,
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701 in whole or in part, to their appropriate positions by requiring
702 the fiduciary to withhold an amount from one or more future
703 distributions to the beneficiary who received the distribution
704 that was too large or requiring that beneficiary to return some
705 or all of the distribution to the trust; or
706 (f) To the extent that the court is unable, after applying
707 paragraphs (a)-(e), to restore the beneficiaries or the trust,
708 or both, to the positions they would have occupied if the
709 fiduciary had not abused its discretion, the court may require
710 the fiduciary to pay an appropriate amount from its own funds to
711 one or more of the beneficiaries or the trust or both.
712 (4) On petition by the fiduciary for instruction, the
713 court may determine whether a proposed fiduciary decision will
714 result in an abuse of the fiduciary's discretion. If the
715 petition describes the proposed decision, contains sufficient
716 information to inform the beneficiary of the reasons for making
717 the proposed decision and the facts on which the fiduciary
718 relies, and explains how the beneficiary will be affected by the
719 proposed decision, a beneficiary who opposes the proposed
720 decision has the burden to establish that it will result in an
721 abuse of the fiduciary's discretion.
722 (5) If an action is instituted alleging an abuse of
723 discretion in the exercise or nonexercise of the fiduciary's
724 discretion under this chapter and the court determines no abuse
725 of discretion has occurred, the fiduciary's costs and attorney
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726 fees incurred in defending the action shall be paid from the
727 trust assets.
728 Section 9. Section 738.203, Florida Statutes, is created
729 to read:
730 738.203 Fiduciary's power to adjust.—
731 (1) Except as otherwise provided in the terms of a trust
732 or this section, a fiduciary, in a record without court
733 approval, may adjust between income and principal if the
734 fiduciary determines that the exercise of the power to adjust
735 will assist the fiduciary in administering the trust or estate
736 impartially.
737 (2) This section does not create a duty to exercise or
738 consider the power to adjust under subsection (1) or to inform a
739 beneficiary about the applicability of this section.
740 (3) A fiduciary that in good faith exercises or fails to
741 exercise the power to adjust under subsection (1) is not liable
742 to a person affected by the exercise or failure to exercise.
743 (4) In deciding whether and to what extent to exercise the
744 power to adjust under subsection (1), a fiduciary shall consider
745 all factors the fiduciary considers relevant, including relevant
746 factors in s. 738.201(5) and ss. 738.408 and 738.413.
747 (5) A fiduciary may not exercise the power under
748 subsection (1) to make an adjustment or under s. 738.408 to make
749 a determination that an allocation is insubstantial if:
750 (a) The adjustment or determination would reduce the
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751 amount payable to a current income beneficiary from a trust that
752 qualifies for a special tax benefit, except to the extent that
753 the adjustment is made to provide for a reasonable apportionment
754 of the total return of the trust between the current income
755 beneficiary and successor beneficiaries;
756 (b) The adjustment or determination would change the
757 amount payable to a beneficiary, as a fixed annuity or a fixed
758 fraction of the value of the trust assets, under the terms of
759 the trust;
760 (c) The adjustment or determination would reduce an amount
761 that is permanently set aside for a charitable purpose under the
762 terms of the trust unless both income and principal are set
763 aside for the charitable purpose;
764 (d) Possessing or exercising the power would cause a
765 person to be treated as the owner of all or part of the trust
766 for federal income tax purposes and the person would not be
767 treated as the owner if the fiduciary did not possess the power
768 to adjust;
769 (e) Possessing or exercising the power would cause all or
770 part of the value of the trust assets to be included in the
771 gross estate of an individual for federal real estate tax
772 purposes and the assets would not be included in the gross
773 estate of the individual if the fiduciary did not possess the
774 power to adjust;
775 (f) Possessing or exercising the power would cause an
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776 individual to be treated as making a gift for federal gift tax
777 purposes;
778 (g) The fiduciary is not an independent person;
779 (h) The trust is irrevocable and provides for income t o be
780 paid to the settlor, and possessing or exercising the power
781 would cause the adjusted principal or income to be considered an
782 available resource or available income under a public -benefit
783 program; or
784 (i) The trust is a unitrust under ss. 738.301-738.310.
785 (6) If paragraph (5)(d), paragraph (5)(e), paragraph
786 (5)(f), or paragraph (5)(g) applies to a fiduciary:
787 (a) A cofiduciary to which paragraphs (5)(d)-(g) do not
788 apply may exercise the power to adjust, unless the exercise of
789 the power by the remaining cofiduciary or cofiduciaries is not
790 permitted by the terms of the trust or law other than this
791 chapter; or
792 (b) If there is no cofiduciary to which paragraphs (5)(d) -
793 (g) do not apply, the fiduciary may appoint a cofiduciary to
794 which paragraphs (5)(d)-(g) do not apply which may be a special
795 fiduciary with limited powers, and the appointed cofiduciary may
796 exercise the power to adjust under subsection (1), unless the
797 appointment of a cofiduciary or the exercise of the power by a
798 cofiduciary is not permitted by the terms of the trust or law
799 other than this chapter.
800 (7) A fiduciary may release or delegate to a cofiduciary
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801 the power to adjust under subsection (1) if the fiduciary
802 determines that the fiduciary's possession or exercise of the
803 power will or may:
804 (a) Cause a result described in paragraph (5)(a),
805 paragraph (5)(b), paragraph (5)(c), paragraph (5)(d), paragraph
806 (5)(e), paragraph (5)(f), or paragraph (5)(h); or
807 (b) Deprive the trust of a tax benefit or impose a tax
808 burden not described in paragraph (5)(a), paragraph (5)(b),
809 paragraph (5)(c), paragraph (5)(d), paragraph (5)(e), or
810 paragraph (5)(f).
811 (8) A fiduciary's release or delegation to a cofiduciary
812 under subsection (7) of the power to adjust under subsection
813 (1):
814 (a) Must be in a record;
815 (b) Applies to the entire power, unless the release or
816 delegation provides a limitation, which may be a limitation to
817 the power to adjust:
818 1. From income to principal;
819 2. From principal to income;
820 3. For specified property; or
821 4. In specified circumstances.
822 (c) For a delegation, may be modified by a redelegation
823 under this subsection by the cofiduciary to which the delegation
824 is made; and
825 (d) Subject to paragraph (c), is permanent, unless the
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826 release or delegation provides a specified period, including a
827 period measured by the life of an individual or the lives of
828 more than one individual.
829 (9) Terms of a trust that deny or limit the power to
830 adjust between income and principal do not affect the
831 application of this section, unless the terms of the trust
832 expressly deny or limit the power to adjust under subsection
833 (1).
834 (10) The exercise of the power to adjust under subsection
835 (1) in any accounting period may apply to the current period,
836 the immediately preceding period, and one or more subse quent
837 periods.
838 (11) A description of the exercise of the power to adjust
839 under subsection (1) must be:
840 (a) Included in a report, if any, sent to beneficiaries
841 under s. 736.0813; or
842 (b) Communicated at least annually to the qualified
843 beneficiaries as defined in s. 736.0103 other than the Attorney
844 General.
845 (12) With respect to a trust in existence on January 1,
846 2003:
847 (a) A fiduciary may not have the power to adjust under
848 this section until the statement required in subsection (13) is
849 provided and either no objection is made or any objection which
850 is made has been terminated.
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851 1. An objection is made if, within 60 days after the date
852 of the statement required in subsection (13), a super majority
853 of the eligible beneficiaries deliver to the fiduciary a written
854 objection to the application of this section to such trust. An
855 objection shall be deemed to be delivered to the fiduciary on
856 the date the objection is mailed to the mailing address listed
857 in the notice provided in subsection (13).
858 2. An objection is terminated upon the earlier of the
859 receipt of consent from a super majority of eligible
860 beneficiaries of the class that made the objection, or the
861 resolution of the objection under paragraph (c).
862 (b) An objection or consent under this section may b e
863 executed by a legal representative or natural guardian of a
864 beneficiary without the filing of any proceeding or approval of
865 any court.
866 (c) If an objection is delivered to the fiduciary, then
867 the fiduciary may petition the circuit court for an order
868 quashing the objection and vesting in such fiduciary the power
869 to adjust under this section. The burden will be on the
870 objecting beneficiaries to prove that the power to adjust would
871 be inequitable, illegal, or otherwise in contravention of the
872 grantor's intent. The court may award costs and attorney fees
873 relating to the fiduciary's petition in the same manner as in
874 chancery actions. When costs and attorney fees are to be paid
875 out of the trust, the court may, in its discretion, direct from
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876 which part of the trust they shall be paid.
877 (d) If no timely objection is made or if the fiduciary is
878 vested with the power to adjust by court order, the fiduciary
879 may thereafter exercise the power to adjust without providing
880 notice of its intent to do so unless, in vesting the fiduciary
881 with the power to adjust, the court determines that unusual
882 circumstances require otherwise.
883 (e)1. If a fiduciary makes a good faith effort to comply
884 with the notice provisions of subsection (13), but fails to
885 deliver notice to one or more beneficiaries entitled to such
886 notice, neither the validity of the notice required under this
887 subsection nor the fiduciary's power to adjust under this
888 section shall be affected until the fiduciary has actual notice
889 that one or more beneficiaries entitled to notice were not
890 notified. Until the fiduciary has actual notice of the notice
891 deficiency, the fiduciary shall have all of the powers and
892 protections granted a fiduciary with the power to adjust under
893 this chapter.
894 2. When the fiduciary has actual notice that one or more
895 beneficiaries entitled to notice under subsection (13) were not
896 notified, the fiduciary's power to adjust under this section
897 shall cease until all beneficiaries who are entitled to such
898 notice, including those who were previously provided with such
899 notice, are notified and given the opportunity to object as
900 provided for under this subsection.
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901 (f) The objection of a super majority of eligible
902 beneficiaries under this subsection shall be valid for a period
903 of 1 year after the date of the notice set forth in subsection
904 (13). Upon expiration of the objection, the fiduciary may
905 thereafter give a new notice under subsection (13).
906 (g) This section is not intended to create or imply a duty
907 of the fiduciary of a trust existing on January 1, 2003, to seek
908 a power to adjust under this subsection or to give the notice
909 described in subsection (13) if the fiduciary does not desire to
910 have a power to adjust under this section, and no inference of
911 impropriety shall be made as the result of a fiduciar y not
912 seeking a power to adjust under this subsection.
913 (13)(a) A fiduciary of a trust in existence on January 1,
914 2003, that is not prohibited under subsection (5) from
915 exercising the power to adjust shall, any time before initially
916 exercising the power, provide to all eligible beneficiaries a
917 statement containing the following:
918 1. The name, telephone number, street address, and mailing
919 address of the fiduciary and of any person who may be contacted
920 for further information;
921 2. A statement that unless a super majority of the
922 eligible beneficiaries objects to the application of this
923 section to the trust within 60 days after the date the statement
924 pursuant to this subsection was served, this section shall apply
925 to the trust; and
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926 3. A statement that, if this section applies to the trust,
927 the fiduciary will have the power to adjust between income and
928 principal and that such a power may have an effect on the
929 distributions to such beneficiary from the trust.
930 (b) The statement may contain information regardi ng a
931 fiduciary's obligation with respect to the power to adjust
932 between income and principal under this section.
933 (c) The statement shall be served informally, in the
934 manner provided in the Florida Rules of Civil Procedure relating
935 to service of pleadings subsequent to the initial pleading. The
936 statement may be served on a legal representative or natural
937 guardian of a beneficiary without the filing of any proceeding
938 or approval of any court.
939 (14) For purposes of subsections (12) and (13), the term:
940 1. "Eligible beneficiaries" means:
941 a. If at the time the determination is made there are one
942 or more beneficiaries described in s. 736.0103(19)(c), the
943 beneficiaries described in s. 736.0103(19)(a) and (c); or
944 b. If there is no beneficiary described in s.
945 736.0103(19)(c), the beneficiaries described in s.
946 736.0103(19)(a) and (b).
947 2. "Super majority of the eligible beneficiaries" means:
948 a. If at the time the determination is made there are one
949 or more beneficiaries described in s. 736.0103(19)(c), at le ast
950 two-thirds in interest of the beneficiaries described in s.
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951 736.0103(19)(a) or two-thirds in interest of the beneficiaries
952 described in s. 736.0103(19)(c), if the interests of the
953 beneficiaries are reasonably ascertainable; otherwise, it means
954 two-thirds in number of either such class; or
955 b. If there is no beneficiary described in s.
956 736.0103(19)(c), at least two-thirds in interest of the
957 beneficiaries described in s. 736.0103(19)(a) or two-thirds in
958 interest of the beneficiaries described in s. 736.0 103(19)(b),
959 if the interests of the beneficiaries are reasonably
960 ascertainable, otherwise, two-thirds in number of either such
961 class.
962 (15) A trust exists on January 1, 2003, if it is not
963 revocable on January 1, 2003. A trust is revocable if revocable
964 by the grantor alone or in conjunction with any other person. A
965 trust is not revocable for purposes of this section if revocable
966 by the grantor only with the consent of all persons having a
967 beneficial interest in the property.
968 Section 10. Section 738.301, Florida Statutes, is amended
969 to read:
970 (Substantial rewording of section. See
971 s. 738.301, F.S., for present text).
972 738.301 Definitions.—For purposes of this section and ss.
973 738.302-738.310:
974 (1) "Applicable value" means the amount of the net fair
975 market value of a trust taken into account under s. 738.307.
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976 (2) "Express unitrust" means a trust for which, under the
977 terms of the trust without regard to this section and ss.
978 738.302-738.310, net income must be calculated as a unitrust
979 amount.
980 (3) "Income trust" means a trust, created by an inter
981 vivos or testamentary instrument, that directs or permits the
982 trustee to distribute the net income of the trust to one or more
983 persons, in fixed proportions or in amounts or proportions
984 determined by the trustee and regardless of whether the trust
985 directs or permits the trustee to distribute the principal of
986 the trust to one or more such persons.
987 (4) "Net fair market value of a trust" means the fair
988 market value of the assets of the trust, less the reasonably
989 known noncontingent liabilities of the trust.
990 (5) "Unitrust" means a trust for which net income is a
991 unitrust amount. The term includes an express unitrust.
992 (6) "Unitrust amount" means an amount computed by
993 multiplying a determined value of a trust by a determined
994 percentage. For a unitrust administered under a unitrust policy,
995 the term means the applicable value multiplied by the unitrust
996 rate.
997 (7) "Unitrust policy" means a policy described in ss.
998 738.301-738.310 and adopted under s. 738.303.
999 (8) "Unitrust rate" means the rate used to compute the
1000 unitrust amount for a unitrust administered under a unitrust
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1001 policy.
1002 Section 11. Section 738.302, Florida Statutes, is amended
1003 to read:
1004 (Substantial rewording of section. See
1005 s. 738.302, F.S., for present text.)
1006 738.302 Applications; duties and remedies.—
1007 (1) Except as otherwise provided in subsection (2), ss.
1008 738.301-738.310 apply to all of the following:
1009 (a) An income trust, unless the terms of the trust
1010 expressly prohibit the use of ss. 738.301-738.310 by a specific
1011 reference to this paragraph or corresponding provision of prior
1012 law, or an explicit expression of intent that net income not be
1013 calculated as a unitrust amount.
1014 (b) An express unitrust, except to the extent that the
1015 terms of the trust explicitly:
1016 1. Prohibit the use of ss. 738.301-738.310 by a specific
1017 reference to this paragraph or corresponding provision of prior
1018 law;
1019 2. Prohibit conversion to an income trust; or
1020 3. Limit changes to the method of calculating the unitr ust
1021 amount.
1022 (c) A unitrust that had been converted from an income
1023 trust.
1024 (2) The provisions of ss. 738.301-738.310 do not apply to
1025 a trust described in s. 170(f)(2)(B), s. 642(c)(5), s. 664(d),
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1026 s. 2702(a)(3)(A)(ii) or (iii), or s. 2702(b) of the Intern al
1027 Revenue Code.
1028 (3) An income trust to which ss. 738.301-738.310 apply
1029 under paragraph (1)(a) may be converted to a unitrust under ss.
1030 738.301-738.310 regardless of the terms of the trust concerning
1031 distributions. Conversion to a unitrust under ss. 738.301-
1032 738.310 does not affect other terms of the trust concerning
1033 distributions of income or principal.
1034 (4) Sections 738.301-738.310 apply to an estate only to
1035 the extent that a trust is a beneficiary of the estate. To the
1036 extent of the trust's interest in the estate, the estate may be
1037 administered as a unitrust, the administration of the estate as
1038 a unitrust may be discontinued, or the percentage or method used
1039 to calculate the unitrust amount may be changed, in the same
1040 manner as for a trust under those sections.
1041 (5) The provisions of ss. 738.301-738.310 do not create a
1042 duty to take or consider action under ss. 738.301-738.310 or to
1043 inform a beneficiary about the applicability of ss. 738.301-
1044 738.310.
1045 (6) A fiduciary that in good faith takes or fails to take
1046 an action under ss. 738.301-738.310 is not liable to a person
1047 affected by the action or inaction.
1048 Section 12. Section 738.303, Florida Statutes, is amended
1049 to read:
1050 (Substantial rewording of section. See
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1051 s. 738.303, F.S., for present text.)
1052 738.303 Authority of fiduciary.—
1053 (1) By complying with subsections (2) and (6), and without
1054 court approval, a fiduciary may do any of the following:
1055 (a) Convert an income trust to a unitrust if the fiduciary
1056 adopts in a record a unitrust policy for the trust which
1057 provides:
1058 1. That in administering the trust, the net income of the
1059 trust will be a unitrust amount rather than net income
1060 determined without regard to ss. 738.301-738.310; and
1061 2. The percentage and method used to calculate the
1062 unitrust amount.
1063 (b) Change the percentage or method used to calculate a
1064 unitrust amount for a unitrust if the fiduciary adopts in a
1065 record a unitrust policy or an amendment or replacement of a
1066 unitrust policy providing charges in the percentage or method
1067 used to calculate the unitrust amount.
1068 (c) Convert a unitrust to an income trust if the fiduciary
1069 adopts in a record a determination that, in administering the
1070 trust, the net income of the trust will be net income determined
1071 without regard to ss. 738.301-738.310 rather than a unitrust
1072 amount.
1073 (2) A fiduciary may take an action under subsection (1) if
1074 all of the following apply:
1075 (a) The fiduciary determines that the action will assist
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1076 the fiduciary to administer a trust impartially.
1077 (b) The fiduciary sends a notice in a record to the
1078 qualified beneficiaries determined under ss. 736.0103 and
1079 736.0110 in the manner required by s. 738.304, describing and
1080 proposing to take the action.
1081 (c) The fiduciary sends a copy of the notice under
1082 paragraph (b) to each settlor of the trust which is:
1083 1. If an individual, living; or
1084 2. If not an individual, in existence.
1085 (d) At least one member of each class of the qualified
1086 beneficiaries determined under ss. 736.0103 and 736.0110, other
1087 than the Attorney General, receiving the notice under paragraph
1088 (b) is:
1089 1. If an individual, legally competent;
1090 2. If not an individual, in existence; or
1091 3. Represented in the manner provided in s. 738.304(2).
1092 (e) The fiduciary does not receive, by the date specified
1093 in the notice under s. 738.304(4)(e), an objection in a record
1094 to the action proposed under paragraph (b) from a person to
1095 which the notice under paragraph (b) is sent.
1096 (3) If a fiduciary receives, not later than the date
1097 stated in the notice under s. 738.304(4)(e), an objection in a
1098 record described in s. 738.304(4)(d) to a proposed action, the
1099 fiduciary or a beneficiary may request the court to have the
1100 action taken as proposed, taken with modifications, or
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1101 prevented. A person described in s. 738.304(1) may oppose the
1102 proposed action in the proceeding under this subsection
1103 regardless of whether the person:
1104 (a) Consented under s. 738.304(3); or
1105 (b) Objected under s. 738.304(4)(d).
1106 (4) If, after sending a notice under paragraph (2)(b), a
1107 fiduciary decides not to take the action proposed in the notice,
1108 the fiduciary must notify in a record each person described in
1109 s. 738.304(1) of the decision not to take the action and the
1110 reasons for the decision.
1111 (5) If a beneficiary requests in a record that a fiduciary
1112 take an action described in subsection (1) and the fiduciary
1113 declines to act or does not act within 60 days after receiving
1114 the request, the beneficiary may request the court to direct the
1115 fiduciary to take the action requested.
1116 (6) In deciding whether and how to take an action
1117 authorized in subsection (1), or whether and how to respond to a
1118 request by a beneficiary under subsection (5), a fiduciary must
1119 consider all factors relevant to the trust and beneficiaries,
1120 including the relevant factors listed in s. 738.201(5).
1121 (7) A fiduciary may release or delegate the power to
1122 convert an income trust to a unitrust under paragraph (1)(a),
1123 change the percentage or method used to calculate a unitrust
1124 amount under paragraph (1)(b), or convert a unitrust to an
1125 income trust under paragraph (1)(c), for a reason described in
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1126 s. 738.203(7) and in the manner described in s. 738.203(8).
1127 Section 13. Section 738.304, Florida Statutes, is created
1128 to read:
1129 738.304 Notice.—
1130 (1) A notice required by s. 738.303(2)(b) must be sent in
1131 a manner authorized under s. 736.0109 to all of the following:
1132 (a) The qualified beneficiaries as defined in s. 736.0103,
1133 other than the Attorney General.
1134 (b) Each person that is granted a power over the trust by
1135 the terms of the trust, to the extent that the power is
1136 exercisable when the person is not then serving as a trustee:
1137 1. Including all of the following:
1138 a. Power over the investment, management, or distribution
1139 of trust property or other matters of trust administration.
1140 b. Power to appoint or remove a trustee or person
1141 described in this paragraph.
1142 2. Excluding all of the following:
1143 a. Power of appointment.
1144 b. Power of a beneficiary over the trust, to the extent
1145 that the exercise or nonexercise of the power affects the
1146 beneficial interest of the beneficiary or another beneficiary
1147 represented by the beneficiary under ss. 736.0301-736.0306 with
1148 respect to the exercise or nonexercise of the power.
1149 c. Power over the trust if the terms of the trust provide
1150 that the power is held in a nonfiduciary capacity and the power
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1151 must be held in a nonfiduciary capacity to achieve a tax
1152 objective under the Internal Revenue Code.
1153 (c) Each person that is granted a power by the terms of
1154 the trust to appoint or remove a trustee or person described in
1155 paragraph (b) to the extent that the power is exercisable when
1156 the person that exercises the power is not serving as a trustee
1157 or person described in paragraph (b).
1158 (2) The representation provisions of ss. 736.0301 -736.0306
1159 apply to notice under this section.
1160 (3) A person may consent in a record at any time to action
1161 proposed under s. 738.303(2)(b). A notice required by s.
1162 738.303(2)(b) need not be sent to a person that consents under
1163 this subsection.
1164 (4) A notice required under s. 738.303(2)(b) must include
1165 all of the following:
1166 (a) The action proposed under s. 738.303(2)(b).
1167 (b) For a conversion of an income trust to a unitrust, a
1168 copy of the unitrust policy adopted under s. 738.303(1)(a).
1169 (c) For a change in the percentage or method used to
1170 calculate the unitrust amount, a copy of the unitrust policy or
1171 amendment or replacement of the unitrust policy adopted under s.
1172 738.303(1)(b).
1173 (d) A statement that the person to which the notice is
1174 sent may object to the proposed action by stating in a record
1175 the basis for the objection and sending or delivering the record
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1176 to the fiduciary.
1177 (e) The date by which an objection under paragraph (d)
1178 must be received by the fiduciary, which must be at least 30
1179 days after the date the notice is sent.
1180 (f) The date on which the action is proposed to be taken
1181 and the date on which the action is proposed to take effect.
1182 (g) The name and contact information of the fiduciary.
1183 (h) The name and contact information of a person that may
1184 be contacted for additional information.
1185 Section 14. Section 738.305, Florida Statutes, is created
1186 to read:
1187 738.305 Unitrust policy.—
1188 (1) In administering a unitrust under ss. 738.301 -738.310,
1189 a fiduciary shall follow a unitrust policy adopted under s.
1190 738.303(1)(a) or (b) or amended or replaced under s.
1191 738.303(1)(b).
1192 (2) A unitrust policy must provide all of the following:
1193 (a) The unitrust rate or method for determining the
1194 unitrust rate under s. 738.306.
1195 (b) The method for determining the applicable value under
1196 s. 738.307.
1197 (c) The rules described in ss. 738.306-738.310 which apply
1198 in the administration of the unitrust, whether the rules are:
1199 1. Mandatory as provided in ss. 738.307(1) and (3),
1200 738.308(1), and 738.310; or
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1201 2. Optional as provided in ss. 738.306, 738.307(2), and
1202 738.308(2), to the extent that the fiduciary elects to adopt
1203 those rules.
1204 (3) A unitrust policy may do any of the following:
1205 (a) Provide methods and standards for:
1206 1. Determining the timing of the distributions;
1207 2. Making distributions in cash or in kind or partly in
1208 cash and partly in kind; or
1209 3. Correcting an underpayment or overpayment to a
1210 beneficiary based on the unitrust amount if there is an error in
1211 calculating the unitrust amount.
1212 (b) Specify sources and the order of sources, including
1213 categories of income for federal income tax purposes, from which
1214 distributions of a unitrust amount are paid.
1215 (c) Provide other standards and rules that the fiduciary
1216 determines serve the interests of the beneficiaries.
1217 Section 15. Section 738.306, Florida Statutes, is created
1218 to read:
1219 738.306 Unitrust rate.—
1220 (1) A unitrust rate must be at least 3 percent and not
1221 more than 5 percent. Within those limits, the unitrust rate may
1222 be:
1223 (a) A fixed unitrust rate; or
1224 (b)1. A unitrust rate that is determined for each period
1225 using:
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1226 a. A market index or other published data; or
1227 b. A mathematical blend of market indices or other
1228 published data over a stated number of preceding periods.
1229 2. If the rate calculated under this paragraph would be
1230 less than 3, the rate is 3; and if the rate calculated would be
1231 more than 5, the rate is 5.
1232 (2) Within the limits of subsection (1), a unitrust policy
1233 may provide for any of the following:
1234 (a) A limit on how much the unitrust rate determined under
1235 paragraph (1)(b) may increase over the unitrust rate for the
1236 preceding period or a mathematical blend of unitrust rates over
1237 a stated number of preceding periods.
1238 (b) A limit on how much the unitrust rate determined under
1239 paragraph (1)(b) may decrease below the unitrust rate for the
1240 preceding period or a mathematical blend of unitrust rates over
1241 a stated number of preceding periods.
1242 (c) A mathematical blend of any of the unitrust rates
1243 determined under paragraph (1)(b) and paragraphs (a) and (b).
1244 (3) If the fiduciary is not an independent person, the
1245 percentage used to calculate the unitrust amount is the rate
1246 determined under s. 7520(a)(2) of the Internal Revenue Code in
1247 effect for the month the conversion under this section becomes
1248 effective and for each January thereafter; however, if the rate
1249 determined under s. 7520(a)(2) of the Internal Revenue Code
1250 exceeds 5 percent, the unitrust rate is 5 percent, and if the
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1251 rate determined under s. 7520(a)(2) of the Internal Revenue Code
1252 is less than 3 percent, the unitrust rate is 3 percent.
1253 Section 16. Section 738.307, Florida Statutes, is created
1254 to read:
1255 738.307 Applicable value.—
1256 (1) A unitrust policy must provide the method for
1257 determining the fair market value of an asset for the purpose of
1258 determining the unitrust amount, including all of the following:
1259 (a) The frequency of valuing the asset, which need not
1260 require a valuation in every period.
1261 (b) The date for valuing the asset in each period in which
1262 the asset is valued.
1263 (2) Except as otherwise provided in s. 738.309, a unitrust
1264 policy may provide methods for determining the amount of the net
1265 fair market value of the trust to take into account in
1266 determining the applicable value, including any of the
1267 following:
1268 (a) Obtaining an appraisal of an asset for which fair
1269 market value is not readily available.
1270 (b) Excluding specific assets or groups or types of assets
1271 in addition to those described in subsection (3).
1272 (c) Making other exceptions or modifications of the
1273 treatment of specific assets or groups or types of assets.
1274 (d) Including identification and treatment of cash or
1275 property held for distribution.
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1276 (e) Using an average of fair market values over a stated
1277 number of preceding periods, not to exceed 3 calendar years.
1278 (f) Determining the reasonable known liabilities of the
1279 trust, including treatment of liabilities to conform with the
1280 treatment of assets under paragraphs (a)-(e).
1281 (3) The following property may not be included in
1282 determining the value of the trust:
1283 (a) Any residential property or any tangible personal
1284 property that, as of the first business day of the current
1285 valuation year, one or more current beneficiaries of the trust
1286 have or have had the right to occupy or have or have had the
1287 right to possess or control, other than in his or her capacity
1288 as trustee of the trust. Instead, the right of occupancy or the
1289 right to possession and control is the unitrust amount with
1290 respect to such property; however, the unitrust amount must be
1291 adjusted to take into account partial distributions from or
1292 receipt into the trust of such property during the valuation
1293 year;
1294 (b) Any asset specifically given to a beneficiary and the
1295 return on investment on such property, which return on
1296 investment must be distributable to the beneficiary; and
1297 (c) Any asset while held in an estate.
1298 Section 17. Section 738.308, Florida Statutes, is created
1299 to read:
1300 738.308 Period.—
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1301 (1) A unitrust policy must provide the period used under
1302 ss. 738.306 and 738.307. The period must be the calendar year.
1303 (2) A unitrust policy may provide standards for:
1304 (a) Using fewer preceding periods under s. 738.306(1)(b)1.
1305 or (2)(a) or (b) if:
1306 1. The trust was not in existence in a preceding period;
1307 or
1308 2. Market indices or other published data are not
1309 available for a preceding period;
1310 (b) Using fewer preceding periods under 738.307(2)(e) if:
1311 1. The trust was not in existence in a preceding period;
1312 or
1313 2. Fair market values are not available for a preceding
1314 period; and
1315 (c) Prorating a unitrust amount on a daily basis for a
1316 part of a period in which the trust or the administration of the
1317 trust as a unitrust or the interest of any beneficiary commences
1318 or terminates.
1319 Section 18. Section 738.309, Florida Statutes, is created
1320 to read:
1321 738.309 Express unitrust.—
1322 (1) This section applies to a trust that, by its governing
1323 instrument, requires or allows income or net income to be
1324 calculated as a unitrust amount.
1325 (2) The trustee of an express unitrust may determine the
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1326 unitrust amount by reference to the net fair market value of the
1327 unitrust's assets in 1 or more years.
1328 (3) Distribution of a unitrust amount is considered a
1329 distribution of all of the net income of an express unitrust and
1330 is considered to be an income interest.
1331 (4) The unitrust amount is considered to be a reasonable
1332 apportionment of the total return of an express unitrust.
1333 (5) An express unitrust that provides or allows a
1334 distribution based on a unitrust rate in excess of 5 percent per
1335 year of the net fair market value of the unitrust assets is
1336 considered a distribution of all of the income of the unitrust
1337 to the extent that the distribution exceeds 5 percent per year
1338 and a distribution of principal of the unitrust.
1339 (6) An express unitrust may provide a mechanism for
1340 changing the unitrust rate, similar to the mechanism provided
1341 under s. 738.306, based upon the factors noted in that section,
1342 and may provide for a conversion from a unitrust to an income
1343 trust or a reconversion of an income trust to a unitrust under
1344 s. 738.303.
1345 (7) If an express unitrust does not specifically or by
1346 reference to s. 738.306 prohibit a power to change the unitrust
1347 rate or to convert to an income trust under s. 738.303, the
1348 trustee must have such power.
1349 (8) The governing instrument of an express unitrust may
1350 grant the trustee discretion to adopt a consistent practice of
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1351 treating capital gains as part of the unitrust amount to the
1352 extent that the unitrust amount exceeds the income determined as
1353 if the trust were not an express unitrust, or the governing
1354 instrument may specify the ordering of classes of income.
1355 (9) Unless the terms of the express unitrust specifically
1356 provide otherwise as provided in subsection (8), the
1357 distribution of a unitrust amount is considered a distribution
1358 made from the following sources, which are listed in order of
1359 priority:
1360 (a) Net accounting income determined under this chapter as
1361 if the trust were not a unitrust;
1362 (b) Ordinary income not allocable to net accounting
1363 income;
1364 (c) Net realized short-term capital gains;
1365 (d) Net realized long-term capital gains; and
1366 (e) The principal of the trust.
1367 (10) The governing instrument of an express unitrust may
1368 provide that the trustee may exclude assets used by the
1369 unitrust's beneficiary, including, but not limited to, a
1370 residence property or tangible personal property, from the net
1371 fair market value of the unitrust's assets for the purposes of
1372 computing the unitrust amount. The use of these assets may be
1373 considered equivalent to income or to the unitrust amount.
1374 Section 19. Section 738.310, Florida Statutes, is created
1375 to read:
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1376 738.310 Other rules.—Following the conversion of an income
1377 trust to a unitrust, the trustee shall consider the unitrust
1378 amount as paid from the following sources, which are listed in
1379 order of priority:
1380 (1) Net accounting income determined under this chapter as
1381 if the trust were not a unitrust;
1382 (2) Ordinary income not allocable to net accounting
1383 income;
1384 (3) Net realized short-term capital gains;
1385 (4) Net realized long-term capital gains; and
1386 (5) The principal of the trust.
1387 Section 20. Section 738.401, Florida Statutes, is amended
1388 to read:
1389 738.401 Character of receipts from entity.—
1390 (1) For purposes of this section, the term:
1391 (a) "Capital distribution" means an entity distribution of
1392 money which is a:
1393 1. Return of capital; or
1394 2. Distribution in total or partial liquidation of the
1395 entity.
1396 (b) "Entity":
1397 1. Means a corporation, partnership, limited liability
1398 company, regulated investment company, real estate investment
1399 trust, common trust fund, or any other organization or
1400 arrangement in which a fiduciary owns or holds has an interest,
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1401 regardless of whether the entity is a taxpayer for federal
1402 income tax purposes; and
1403 2. Does not include:
1404 a. A trust or estate to which s. 738.402 applies;
1405 b. A business or other activity to which s. 738.403
1406 applies which is not conducted by an entity described in
1407 subparagraph 1.;
1408 c. An asset-backed security; or
1409 d. An instrument or arrangement to which s. 738.416
1410 applies other than a trust or estate to which s. 738.402
1411 applies, a business or activity to which s. 738.403 applies, or
1412 an asset-backed security to which s. 738.608 applies.
1413 (c) "Entity distribution" means a payment or transfer by
1414 an entity to a person in the person's capacity as an owner or
1415 holder of an interest in the entity.
1416 (d) "Lookback period" means the accounting period and the
1417 preceding two accounting periods or, if less, the number of
1418 accounting periods, or portion of accounting periods, that the
1419 interest in the entity has been held by the fiduciary.
1420 (2) In this section, an attribute or action of an entity
1421 includes an attribute or action of any other entity in which the
1422 initial entity owns or holds an interest, including an interest
1423 owned or held indirectly through another entity.
1424 (3) Except as otherwise provided in paragraphs (4)(b),
1425 (c), and (d) this section, a fiduciary shall allocate to income:
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1426 (a) Money received in an entity distribution; and
1427 (b) Tangible personal property of nominal value received
1428 from the money received from an entity.
1429 (4)(3) Except as otherwise provided in this section, A
1430 fiduciary shall allocate the following receipts from an entity
1431 to principal:
1432 (a) Property received in an entity distribution which is
1433 not:
1434 1. other than Money; or
1435 2. Tangible personal property of nominal value.
1436 (b) Money received in an entity one distribution or a
1437 series of related distributions in an exchange for part or all
1438 of the fiduciary's a trust's or estate's interest in the entity
1439 to the extent that the entity distribution reduces the
1440 fiduciary's interest in the entity relative to the interest of
1441 other persons that own or hold interests in the entity.
1442 (c) Money received in an entity distribution that is a
1443 capital distribution, to the extent not allocated to income
1444 total or partial liquidation of the entity.
1445 (d) Money received in an entity distribution from an
1446 entity that is a regulated investment company or a real estate
1447 investment trust if the money received represents short -term or
1448 long-term capital gain realized within the entity.
1449 (e) Money received from an entity listed on a public stock
1450 exchange during any year of the trust or estate which exceeds 10
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1451 percent of the fair market value of the trust's or estate's
1452 interest in the entity on the first day of that year. The amount
1453 to be allocated to principal must be reduced to the extent that
1454 the cumulative distributions from the entity to the trust or
1455 estate allocated to income do not exceed a cumulative annual
1456 return of 3 percent of the fair market value of the interest in
1457 the entity at the beginning of each year or portion of a year
1458 for the number of years or portion of years in the period that
1459 the interest in the entity has been held by the trust or estate.
1460 If a trustee has exercised a power to adjust under s. 738.104
1461 during any period the interest in the entity has been held by
1462 the trust, the trustee, in determining the total income
1463 distributions from that entity, must take into account the
1464 extent to which the exercise of that power resulted in income to
1465 the trust from that entity for that period. If the income of the
1466 trust for any period has been computed under s. 738.1041, the
1467 trustee, in determining the total income distributions from that
1468 entity for that period, must take into account the portion of
1469 the unitrust amount paid as a result of the ownership of the
1470 trust's interest in the entity for that period.
1471 (5)(4) If a fiduciary elects, or continues an election
1472 made by its predecessor, to reinvest dividends in shares of
1473 stock of a distributing corporation or fund, whether evidenced
1474 by new certificates or entries on the books of the distributing
1475 entity, the new shares retain their character as income.
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1476 (6)(5) Except as otherwise provided in subsections (10)
1477 and (11), money received in an entity distribution is a capital
1478 distribution Money is received in partial liquidation:
1479 (a) To the extent that the entity, at or near the time of
1480 the entity a distribution, indicates that such money is a
1481 capital distribution in partial liquidation; or
1482 (b) To the extent that the total amount of money and
1483 property received by the fiduciary in the entity in a
1484 distribution or a series of related entity distributions is or
1485 will be greater than from an entity that is not listed on a
1486 public stock exchange exceeds 20 percent of the fiduciary's
1487 trust's or estate's pro rata share of the entity's gross assets,
1488 as shown by the entity's year-end financial statements
1489 immediately preceding the initial receipt.
1490
1491 This subsection does not apply to an entity to which subsection
1492 (7) applies.
1493 (7)(6) In the case of a capital distribution, the amount
1494 received in an entity distribution allocated to principal must
1495 be reduced to the extent that the cumulative distributions from
1496 the entity to the fiduciary Money may not be taken into account
1497 in determining any excess under paragraph (5)(b), to the extent
1498 that the cumulative distributions from the entity to the trust
1499 or the estate allocated to income do not exceed the greater of:
1500 (a) A cumulative annual return of 3 percent of the
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1501 entity's carrying value computed at the beginning of each
1502 accounting period, or portion of an accounting period, during
1503 the lookback period for the number of years or portion of years
1504 that the entity was held by the fiduciary. If a fiduciary
1505 trustee has exercised a power to adjust under s. 738.203 during
1506 the lookback period, the fiduciary s. 738.104 during any period
1507 the interest in the entity has been held by the trust, the
1508 trustee, in determining the total income distributions from that
1509 entity, must take into account the extent to which the exercise
1510 of the power resulted in income to the fiduciary trust from that
1511 entity for that period. If the income of a fiduciary during the
1512 lookback trust for any period has been computed under ss.
1513 738.301-738.310, the fiduciary pursuant to s. 738.1041, the
1514 trustee, in determining the total income distributions from the
1515 entity for that period, must take into account the portion of
1516 the unitrust amount paid as a result of the ownership of the
1517 trust's interest in the entity for that period; or
1518 (b) In If the case of an entity is treated as a
1519 partnership, subchapter S corporation, or a disregarded entity
1520 under pursuant to the Internal Revenue Code of 1986, as amended,
1521 the amount of income tax attributable to the fiduciary's trust's
1522 or estate's ownership share of the entity, based on its pro rata
1523 share of the taxable income of the entity that distributes the
1524 money, during the lookback period for the number of years or
1525 portion of years that the interest in the entity was held by the
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1526 fiduciary, calculated as if all of the that tax was incurred by
1527 the fiduciary.
1528 (8) If a fiduciary receives additional information about
1529 the application of this section to an entity distribution before
1530 the fiduciary has paid part of the entity distribution to a
1531 beneficiary, the fiduciary may consider the additional
1532 information before making the payment to the beneficiary and may
1533 change a decision to make the payment to the beneficiary.
1534 (9) If a fiduciary receives additional information about
1535 the application of this section to an entity distribution after
1536 the fiduciary has paid part of the entity distribution to a
1537 beneficiary, the fiduciary is not required to change or recover
1538 the payment to the beneficiary but may consider that information
1539 in determining whether to exercise its other powers, including
1540 but not limited to the power to adjust under s. 738.203.
1541 (10)(7) The following applies to money or property
1542 received by a private trustee as a distribution from an
1543 investment entity described in this subsection:
1544 (a) The trustee shall first treat as income of the trust
1545 all of the money or property received from the investment entity
1546 in the current accounting period year which would be considered
1547 income under this chapter if the trustee had directly held the
1548 trust's pro rata share of the assets of the investment entity.
1549 For this purpose, all distributions received in the current
1550 accounting period year must be aggregated.
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1551 (b) The trustee shall next treat as income of the trust
1552 any additional money or property received in the current
1553 accounting period year which would have been considered income
1554 in the prior 2 accounting periods years under paragraph (a) if
1555 additional money or property had been received from the
1556 investment entity in any of those prior 2 accounting periods
1557 years. The amount to be treated as income must shall be reduced
1558 by any distributions of money or property made by the investment
1559 entity to the trust during the current and the prior 2
1560 accounting periods years which were treated as income under this
1561 paragraph.
1562 (c) The remainder of the distribution, if any, is treated
1563 as principal.
1564 (d) As used in this subsection, the term:
1565 1. "Investment entity" means an entity, other than a
1566 business activity conducted by the trustee described in s.
1567 738.403 or an entity that is listed on a public stock exchange,
1568 which is treated as a partnership, subchapter S corporation, or
1569 disregarded entity under pursuant to the Internal Revenue Code
1570 of 1986, as amended, and which normally derives 50 percent or
1571 more of its annual cumulative net income from interest,
1572 dividends, annuities, royalties, rental activity, or other
1573 passive investments, including income from the sale or exchange
1574 of such passive investments.
1575 2. "Private trustee" means a trustee who is a natural
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1576 person, but is not an independent person as set forth in s.
1577 738.102 only if the trustee is unable to use the power to adjust
1578 between income and principal with respect to receipts from
1579 entities described in this subsection pursuant to s. 738.104. A
1580 bank, trust company, or other commercial trustee is not
1581 considered a private trustee.
1582 (11) A fiduciary shall allocate to principal any money and
1583 property the fiduciary receives in a distribution or series of
1584 related distributions from a public entity which are greater
1585 than 10 percent of the fair market value of the fiduciary's
1586 interest in the public entity on the first day of the accounting
1587 period. The amount to be allocated to principal must be reduced
1588 to the extent that the cumulative distributions from the entity
1589 to the fiduciary allocated to income do not exceed a cumulative
1590 annual return of 3 percent of the fair market value of the
1591 interest in the entity at the beginning of each accounting
1592 period, or portion of an accounting period, during the lookback
1593 period. If a fiduciary has exercised a power to adjust under s.
1594 738.203 during the lookback period, the fiduciary, in
1595 determining the total income distributions from that entity,
1596 must take into account the extent to which the exercise of that
1597 power resulted in income to the fiduciary from that entity for
1598 that period. If the income of the fiduciary during the lookback
1599 period has been computed under ss. 738.301-738.310, the
1600 fiduciary, in determining the total income distribution from
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1601 that entity for that period, must take into account the portion
1602 of the unitrust amount paid as a result of the ownership of the
1603 trust's interest in the entity for that period. As used in this
1604 subsection, the term "public entity" means an entity listed on a
1605 public stock exchange.
1606 (12)(8) This section must shall be applied before ss.
1607 738.506 and 738.507 ss. 738.705 and 738.706 and does not modify
1608 or change any of the provisions of those sections.
1609 Section 21. Section 738.402, Florida Statutes, is amended
1610 to read:
1611 738.402 Distribution from trust or estate.—A fiduciary
1612 shall allocate to income an amount received as a distribution of
1613 income, including a unitrust distribution under ss. 738.301-
1614 738.310, from a trust or an estate in which the fiduciary trust
1615 has an interest, other than an interest a purchased in a trust
1616 that is an investment entity, and shall interest and allocate to
1617 principal an amount received as a distribution of principal from
1618 the such a trust or estate. If a fiduciary purchases, or
1619 receives from a settlor, an interest in a trust that is an
1620 investment entity, or a decedent or donor transfers an interest
1621 in such a trust to a fiduciary, s. 738.401, s. 738.415, or s.
1622 738.416 or s. 738.608 applies to a receipt from the trust.
1623 Section 22. Section 738.403, Florida Statutes, is amended
1624 to read:
1625 738.403 Business and other activity activities conducted
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1626 by fiduciary.—
1627 (1) This section applies to If a fiduciary who conducts a
1628 business or other activity conducted by a fiduciary if the
1629 fiduciary determines that it is in the best interests of
1630 interest of all the beneficiaries to account separately for the
1631 business or other activity instead of:
1632 (a) Accounting for the business or other activity as part
1633 of the fiduciary's trust's or estate's general accounting
1634 records; or
1635 (b) Conducting the business or other activity through an
1636 entity described in s. 738.401(1)(b)., the
1637 (2) A fiduciary may account separately under this section
1638 maintain separate accounting records for the transactions of a
1639 the business or another other activity, regardless of whether or
1640 not the assets of the such business or other activity are
1641 segregated from other trust or estate assets held by the
1642 fiduciary.
1643 (3)(2) A fiduciary who accounts separately under this
1644 section for a business or other activity:
1645 (a) May determine:
1646 1. The extent to which the net cash receipts of the
1647 business or other activity must be retained for:
1648 a. Working capital;
1649 b. The acquisition or replacement of fixed assets; and
1650 c. Other reasonably foreseeable needs of the business or
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1651 other activity; and working capital, the acquisition or
1652 replacement of fixed assets, and other reasonably foreseeable
1653 needs of the business or activity, and
1654 2. The extent to which the remaining net cash receipts are
1655 accounted for as principal or income in the fiduciary's trust's
1656 or estate's general accounting records for the trust.
1657 (b) May make a determination under paragraph (a)
1658 separately and differently from the fiduciary's decisions
1659 concerning distributions of income or principal; and
1660 (c) Shall account for the net amount received from the
1661 sale of an asset of If a fiduciary sells assets of the business
1662 or other activity, other than a sale in the ordinary course of
1663 the business or other activity, the fiduciary must account for
1664 the net amount received as principal in the fiduciary's trust's
1665 or estate's general accounting records for the trust, to the
1666 extent the fiduciary determines that the net amount received is
1667 no longer required in the conduct of the business or other
1668 activity.
1669 (4)(3) Activities for which a fiduciary may account
1670 separately under this section maintain separate accounting
1671 records include:
1672 (a) Retail, manufacturing, service, and other traditional
1673 business activities.
1674 (b) Farming.
1675 (c) Raising and selling livestock and other animals.
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1676 (d) Managing Management of rental properties.
1677 (e) Extracting Extraction of minerals and other natural
1678 resources.
1679 (f) Growing and cutting timber operations.
1680 (g) An activity Activities to which s. 738.414, s.
1681 738.415, or s. 738.416 s. 738.607 applies.
1682 (h) Any other business conducted by the fiduciary.
1683 Section 23. Section 738.404, Florida Statutes, is created
1684 to read:
1685 738.404 Principal receipts.—A fiduciary shall allocate to
1686 principal:
1687 (1) To the extent not allocated to income under this
1688 chapter, an asset received from any of the following:
1689 (a) An individual during the individual's lifetime.
1690 (b) An estate.
1691 (c) A trust on termination of an income interest.
1692 (d) A payor under a contract naming the fiduciary as
1693 beneficiary.
1694 (2) Except as otherwise provided in ss. 738.401-738.416,
1695 money or other property received from the sale, exchange,
1696 liquidation, or change in the form of a principal asset.
1697 (3) An amount recovered from a third party to reimburse
1698 the fiduciary because of a disbursement described in s.
1699 738.502(1) or for another reason to the extent not based on the
1700 loss of income.
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1701 (4) Proceeds of property taken by eminent domain except
1702 that proceeds awarded for loss of income in an accounting period
1703 are income if a current income beneficiary had a mandatory
1704 income interest during the period.
1705 (5) Net income received in an accounting period during
1706 which there is no beneficiary to which a fiduciary may or must
1707 distribute income.
1708 (6) Other receipts as provided in ss. 738.408-738.416.
1709 Section 24. Section 738.405, Florida Statutes, is created
1710 to read:
1711 738.405 Rental property.—To the extent that a fiduciary
1712 does not account for the management of rental property as a
1713 business under s. 738.403, the fiduciary shall allocate to
1714 income an amount received as rent of real or personal property,
1715 including an amount received for cancellation or renewal of a
1716 lease. An amount received as a refundable deposit, including a
1717 security deposit or a deposit that is to be applied as rent for
1718 future periods:
1719 (1) Must be added to principal and held subject to the
1720 terms of the lease, except as otherwise provided by law other
1721 than this chapter; and
1722 (2) Is not allocated to income or available for
1723 distribution to a beneficiary until the fiduciary's contractual
1724 obligations have been satisfied with respect to that amount.
1725 Section 25. Section 738.406, Florida Statutes, is created
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1726 to read:
1727 738.406 Receipt on obligation to be paid in money.—
1728 (1) This section does not apply to an obligation to which
1729 s. 738.409, s. 738.410, s. 738.411, s. 738.412, s. 738.414, s.
1730 738.415, or s. 738.416 applies.
1731 (2) A fiduciary shall allocate to income, without
1732 provision for amortization of premium, an amount received as
1733 interest on an obligation to pay money to the fiduciary,
1734 including an amount received as consideration for prepaying
1735 principal.
1736 (3) A fiduciary shall allocate to principal an amount
1737 received from the sale, redemption, or other disposition of an
1738 obligation to pay money to the fiduciary.
1739 (4) A fiduciary shall allocate to income the increment in
1740 value of a bond or other obligation for the payment of money
1741 bearing no stated interest but payable or redeemable, at
1742 maturity or another future time, in an amount that exceeds the
1743 amount in consideration of which it was issued. If the increment
1744 in value accrues and becomes payable pursuant to a fixed
1745 schedule of appreciation, it may be distributed to the
1746 beneficiary who was the income beneficiary at the time of
1747 increment from the first principal cash available or, if none is
1748 available, when the increment is realized by sale, redemption,
1749 or other disposition. If unrealized increment is distributed as
1750 income but out of principal, the principal must be reimbursed
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1751 for the increment when realized. If, in the reasonable judgment
1752 of the fiduciary, exercised in good faith, the ultimate payment
1753 of the bond principal is in doubt, the fiduciary may withhold
1754 the payment of incremental interest to the income beneficiary.
1755 Section 26. Section 738.407, Florida Statutes, is created
1756 to read:
1757 738.407 Insurance policy or contract.—
1758 (1) This section does not apply to a contract to which s.
1759 738.409 applies.
1760 (2) Except as otherwise provided in subsection (3), a
1761 fiduciary shall allocate to principal the proceeds of a life
1762 insurance policy or other contract received by the fiduciary as
1763 beneficiary, including a contract that insures against damage
1764 to, destruction of, or loss of title to an asset. The fiduciary
1765 shall allocate dividends on an insurance policy to income to the
1766 extent that premiums on the policy are paid from income and to
1767 principal to the extent premiums on the policy are paid from
1768 principal.
1769 (3) A fiduciary shall allocate to income proceeds of a
1770 contract that insures the fiduciary against loss of:
1771 (a) Occupancy or other use by a current income
1772 beneficiary;
1773 (b) Income; or
1774 (c) Subject to s. 738.403, profits from a business.
1775 Section 27. Section 738.408, Florida Statutes, is created
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1776 to read:
1777 738.408 Insubstantial allocation not required.—
1778 (1) If a fiduciary determines that an allocation between
1779 income and principal required by s. 738.409, s. 738.410, s.
1780 738.411, s. 738.412, or s. 738.415 is insubstantial, the
1781 fiduciary may allocate the entire amount to principal, unless s.
1782 738.203(5) applies to the allocation.
1783 (2) A fiduciary may presume an allocation is insubstantial
1784 under subsection (1) if:
1785 (a) The amount of the allocation would increase or
1786 decrease net income in an accounting period, as determined
1787 before the allocation, by less than 10 percent; and
1788 (b) The asset producing the receipt to be allocated has a
1789 carrying value less than 10 percent of the total carrying val ue
1790 of the assets owned or held by the fiduciary at the beginning of
1791 the accounting period.
1792 (3) The power to make a determination under subsection (1)
1793 may be:
1794 (a) Exercised by a cofiduciary in the manner described in
1795 s. 738.203(6); or
1796 (b) Released or delegated for a reason described in s.
1797 738.203(7) and in the manner described in s. 738.203(8).
1798 Section 28. Section 738.409, Florida Statutes, is created
1799 to read:
1800 738.409 Deferred compensation, annuity, or similar
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1801 payment.—
1802 (1) As used in this section, the term:
1803 (a) "Internal income of the separate fund" means the
1804 amount determined under subsection (2).
1805 (b) "Marital trust" means a trust:
1806 1. Of which the settlor's surviving spouse is the only
1807 current income beneficiary and is entitled to a distribution of
1808 all the current net income of the trust; and
1809 2. That qualifies for a marital deduction with respect to
1810 the settlor's estate under the Internal Revenue Code or
1811 comparable law of any state because:
1812 a. An election to qualify for a marital deduction under s.
1813 2056(b)(7) of the Internal Revenue Code has been made;
1814 b. The trust qualified for a marital deduction under s.
1815 2056(b)(5) of the Internal Revenue Code; or
1816 c. The trust otherwise qualifies for a marital deduction.
1817 (c) "Nonseparate fund" means an annuity, a deferred
1818 compensation plan, a pension plan, or other fund for which the
1819 value of the participant's or account owner's right to receive
1820 benefits can be determined only by the occurrence of a date or
1821 event as defined in the instrument governing the fund.
1822 (d) "Payment" means an amount a fiduciary may receive over
1823 a fixed number of years or during the life of one or more
1824 individuals because of services rendered or property transferred
1825 to the payor in exchange for future amounts the fiduciary may
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1826 receive. The term includes an amount received in money or
1827 property from the payor's general assets or from a separate fund
1828 created by the payor.
1829 (e) "Percent calculated" means a percent equal to the rate
1830 determined under s. 7520 of the Internal Revenue Code in effect
1831 for the month preceding the beginning of the accounting period;
1832 however, if the percent calculated exceeds 5 percent, it must be
1833 reduced to 5 percent, and if the percent calculated is less than
1834 3 percent, it must be increased to 3 percent. Notwithstanding
1835 the preceding sentence, a fiduciary who is an independent person
1836 as defined in s. 738.102 may set the percent calculated at a
1837 percentage no less than 3 percent and no greater than 5 percent.
1838 (f) "Separate fund" includes a private or commercial
1839 annuity, an individual retirement account, and a pension,
1840 profit-sharing, stock-bonus, stock ownership plan, or other
1841 deferred compensation fund holding assets exclusively for the
1842 benefit of a participant or account owner.
1843 (2) For each accounting period, the following rules apply
1844 to a separate fund:
1845 (a) The fiduciary may determine the internal income of the
1846 separate fund as if the separate fund were a trust subject to
1847 this chapter.
1848 (b) Alternatively, the fiduciary may deem the internal
1849 income of the separate fund to equal the percent calculated of
1850 the value of the separate fund according to the most recent
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1851 statement of value preceding the beginning of the accounting
1852 period. The fiduciary is not liable for good faith reliance upon
1853 any valuation supplied by the person or persons in possession of
1854 the fund. If the fiduciary makes or terminates an election under
1855 this paragraph, the fiduciary must make such disclosure in a
1856 trust disclosure document that satisfies the requirements of s.
1857 736.1008(4)(c).
1858 (c) If the fiduciary cannot determine the value of the
1859 separate fund under paragraph (b), the value of the separate
1860 fund is deemed to equal the present value of s. 7520 of the
1861 Internal Revenue Code for the month preceding the beginning of
1862 the accounting period for which the computation is made.
1863 (d) The fiduciary may elect the method of determining the
1864 income of the fund pursuant to this subsection and may change
1865 the method of determining income of the fund for any future
1866 accounting period.
1867 (3) A fiduciary shall allocate a payment received from a
1868 separate fund during an accounting period to income, to the
1869 extent of the internal income of the separate fund during the
1870 period, and allocate the balance to principal.
1871 (4) The fiduciary of a marital trust shall:
1872 (a) Withdraw from a separate fund the amount the current
1873 income beneficiary of the trust requests the fiduciary to
1874 withdraw, not greater than the amount by which the internal
1875 income of the separate fund during the accounting period exceeds
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1876 the amount the fiduciary otherwise receives from the separate
1877 fund during the period.
1878 (b) Transfer from principal to income the amount the
1879 current income beneficiary requests the fiduciary to transfe r,
1880 but not greater than the amount by which the internal income of
1881 the separate fund during the period exceeds the amount the
1882 fiduciary receives from the separate fund during the period
1883 after the application of paragraph (a).
1884 (c) Distribute to the current income beneficiary as
1885 income:
1886 1. The amount of the internal income of the separate fund
1887 received or withdrawn during the period; and
1888 2. The amount transferred from principal to income under
1889 paragraph (b).
1890 (5) For a trust, other than a marital trust, of which one
1891 or more current income beneficiaries are entitled to a
1892 distribution of all the current net income, the fiduciary shall
1893 transfer from principal to income the amount by which the
1894 internal income of the separate fund during the accounting
1895 period exceeds the amount the fiduciary receives from the
1896 separate fund during the period.
1897 (6) The fiduciary of a nonseparate fund shall calculate
1898 internal income of the fund as the percent calculated of the
1899 present value of the right to receive the remaining payments as
1900 determined under s. 7520(a)(2) of the Internal Revenue Code for
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1901 the month preceding the beginning of the accounting period.
1902 (7) If a fiduciary owns a separate fund or a nonseparate
1903 fund before January 1, 2025, the fiduciary may determine
1904 internal income, allocate payments, and account for unwithdrawn
1905 internal income as provided in this section or in the manner
1906 used by the fiduciary before January 1, 2025. Such fiduciary is
1907 not required to consider subsection (5). If the fiduciary
1908 acquires a separate fund or a nonseparate fund on or after
1909 January 1, 2025, the fiduciary must calculate internal income,
1910 allocate payments, and account for unwithdrawn internal income
1911 as provided in this section.
1912 Section 29. Section 738.603, Florida Statutes, is
1913 transferred, renumbered as section 738.410, Florida Statutes,
1914 and amended to read:
1915 738.410 738.603 Liquidating asset.—
1916 (1) As used in For purposes of this section, the term
1917 "liquidating asset" means an asset whose value the value of
1918 which will diminish or terminate because the asset is expected
1919 to produce receipts for a period of limited time duration. The
1920 term includes a leasehold, patent, copyright, royalty right, and
1921 right to receive payments during a period of for more than 1
1922 year under an arrangement that does not provide for the payment
1923 of interest on the unpaid balance. The term does not include a
1924 payment subject to s. 738.602, resources subject to s. 738.604,
1925 timber subject to s. 738.605, an activity subject to s. 738.607,
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1926 an asset subject to s. 738.608, or any asset for which the
1927 fiduciary establishes a reserve for depreciation under s.
1928 738.703.
1929 (2) This section does not apply to a receipt that is
1930 subject to s. 738.401, s. 738.409, s. 738.411, s. 738.412, s.
1931 738.414, s. 738.415, s. 738.416, or s. 738.503.
1932 (3) A fiduciary shall allocate to income a receipt
1933 produced by a liquidating asset to the extent that the receipt
1934 does not exceed 5 percent of the receipts from the carrying
1935 value of the asset at the beginning of the accounting period and
1936 allocate a liquidating asset and the balance to principal the
1937 balance of the receipt.
1938 (4) The amount Amounts allocated to principal shall reduce
1939 the carrying value of the liquidating asset, but not below zero.
1940 Amounts received in excess of the remaining carrying value must
1941 be allocated to principal.
1942 Section 30. Section 738.604, Florida Statutes, is
1943 transferred, renumbered as section 738.411, Florida Statutes,
1944 and amended to read:
1945 738.411 738.604 Minerals, water, and other natural
1946 resources.—
1947 (1) To the extent that If a fiduciary does not account for
1948 a receipt accounts for receipts from an interest in minerals,
1949 water, or other natural resources as a business under s. 738.403
1950 pursuant to this section, the fiduciary shall allocate the
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1951 receipt such receipts as follows:
1952 (a) To income, to the extent received:
1953 1. If received As nominal delay rental or nominal annual
1954 rent on a lease;
1955 2. As a factor for interest or the equivalent of interest
1956 under an agreement creating a production payment; or
1957 3. On account of an interest in renewable water;, a
1958 receipt shall be allocated to income.
1959 (b) To principal, if received from a production payment, a
1960 receipt shall be allocated to income if and to the extent that
1961 subparagraph (a)2. does not apply; or the agreement creating the
1962 production payment provides a factor for interest or its
1963 equivalent. The balance shall be allocated to principal.
1964 (c) Between income and principal equitably, to the extent
1965 received:
1966 1. On account of an interest in nonrenewable water ;
1967 2. If an amount received As a royalty, shut-in-well
1968 payment, take-or-pay payment, or bonus; or, or delay rental is
1969 more than nominal, 90 percent shall be allocated to principal
1970 and the balance to income.
1971 3.(d) If an amount is received From a working interest or
1972 any other interest not provided for in paragraph (a) or,
1973 paragraph (b) or subparagraph 1. or subparagraph 2., or
1974 paragraph (c), 90 percent of the net amount received shall be
1975 allocated to principal and the balance to income.
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1976 (2) An amount received on account of an interest in water
1977 that is renewable shall be allocated to income. If the water is
1978 not renewable, 90 percent of the amount shall be allocated to
1979 principal and the balance to income.
1980 (3) This section chapter applies to an interest owned or
1981 held by a fiduciary regardless of whether or not a settlor
1982 decedent or donor was extracting minerals, water, or other
1983 natural resources before the fiduciary owned or held the
1984 interest became subject to the trust or estate.
1985 (3) An allocation of a receipt under paragraph (1)(c) is
1986 presumed to be equitable if the amount allocated to principal is
1987 equal to the amount allowed by the Internal Revenue Code as a
1988 deduction for depletion of the interest.
1989 (4) If a fiduciary trust or estate owns or holds an
1990 interest in minerals, water, or other natural resources before
1991 January 1, 2025 on January 1, 2003, the fiduciary may allocate
1992 receipts from the interest as provided in this section chapter
1993 or in the manner used by the fiduciary before January 1, 2025
1994 January 1, 2003. If the fiduciary trust or estate acquires an
1995 interest in minerals, water, or other natural resources on or
1996 after January 1, 2025 January 1, 2003, the fiduciary must shall
1997 allocate receipts from the interest as provided in this section
1998 chapter.
1999 Section 31. Section 738.605, Florida Statutes, is
2000 transferred, renumbered as section 738.412, Florida Statutes,
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2001 and amended to read:
2002 738.412 738.605 Timber.—
2003 (1) To the extent that If a fiduciary does not account
2004 accounts for receipts from the sale of timber and related
2005 products as a business under s. 738.403 pursuant to this
2006 section, the fiduciary shall allocate the such net receipts as
2007 follows:
2008 (a) To income, to the extent that the amount of timber cut
2009 removed from the land does not exceed the rate of growth of the
2010 timber during the accounting periods in which a beneficiary has
2011 a mandatory income interest;
2012 (b) To principal, to the extent that the amount of timber
2013 cut removed from the land exceeds the rate of growth of the
2014 timber or the net receipts are from the sale of standing timber;
2015 (c) To or Between income and principal if the net receipts
2016 are from the lease of land used for growing and cutting timber
2017 timberland or from a contract to cut timber from land owned by a
2018 trust or estate by determining the amount of timber cut removed
2019 from the land under the lease or contract and applying the rules
2020 in paragraphs (a) and (b); or
2021 (d) To principal, to the extent that advance payments,
2022 bonuses, and other payments are not allocated under pursuant to
2023 paragraph (a), paragraph (b), or paragraph (c).
2024 (2) In determining net receipts to be allocated under
2025 pursuant to subsection (1), a fiduciary shall deduct and
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2026 transfer to principal a reasonable amount for depletion.
2027 (3) This section chapter applies to land owned or held by
2028 a fiduciary regardless of whether or not a settlor decedent or
2029 donor was cutting harvesting timber from the land property
2030 before the fiduciary owned or held the property became subject
2031 to the trust or estate.
2032 (4) If a fiduciary trust or estate owns or holds an
2033 interest in land used for growing and cutting timber before
2034 January 1, 2025 timberland on January 1, 2003, the fiduciary may
2035 allocate net receipts from the sale of timber and related
2036 products as provided in this section chapter or in the manner
2037 used by the fiduciary before January 1, 2025 January 1, 2003. If
2038 the fiduciary trust or estate acquires an interest in land used
2039 for growing and cutting timber on or after January 1, 2025
2040 timberland after January 1, 2003, the fiduciary must shall
2041 allocate net receipts from the sale of timber and related
2042 products as provided in this section chapter.
2043 Section 32. Section 738.606, Florida Statutes, is
2044 transferred, renumbered as section 738.413, Florida Statutes,
2045 and amended to read:
2046 738.413 738.606 Marital deduction property not productive
2047 of income.—
2048 (1) If a trust received property for which a gift or
2049 estate tax marital deduction was under the Internal Revenue Code
2050 or comparable law of any state is allowed, for all or if part of
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2051 a trust received property satisfying, or if assets are
2052 transferred to a trust that satisfies the requirements of s.
2053 732.2025(2)(a) and (c), and such property has assets have been
2054 used in whole or in part to satisfy an election by a surviving
2055 spouse under s. 732.2125, and the settlor's spouse holds a
2056 mandatory income interest in the trust, the spouse may require
2057 the trustee, to the extent that the trust assets otherwise do
2058 consist of property that, in the aggregate, does not provide the
2059 spouse with sufficient income from or use of the trust assets to
2060 qualify for the deduction, or to satisfy an election by a
2061 surviving spouse under s. 732.2125, to make the property
2062 productive of income within a reasonable time. The trustee may:
2063 (a) Convert property to property productive of income
2064 within a reasonable time;
2065 (b) Exercise the power to adjust under s. 738.203;
2066 (c) Exercise the power to convert to or from a unitrust
2067 under s. 738.303; or
2068 (d) Exercise the fiduciary's authority under the terms of
2069 the trust to otherwise provide the surviving spouse with
2070 sufficient income from the trust assets, or the use of the trust
2071 assets, to qualify for the marital deduction, or to satisfy an
2072 election by a surviving spouse under s. 732.2125.
2073 (2) The trustee may decide which action or combination of
2074 actions listed in subsection (1) to take.
2075 (3) Subsection (1) shall apply, and if amounts the trustee
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2076 transfers from principal to income under s. 738.104 and
2077 distributes to the spouse from principal pursuant to the terms
2078 of the trust are insufficient to provide the spouse with the
2079 beneficial enjoyment required to obtain the marital deduction,
2080 even though, in the case of an elective share trust under s.
2081 732.2025(2), a marital deduction is not made or is only
2082 partially made, the spouse may require the trustee of such
2083 marital trust or elective share trust to make property
2084 productive of income, convert property within a reasonable time,
2085 or exercise the power conferred by ss. 738.104 and 738.1041.
2086 (4) The terms of a trust as defined in s. 738.102 may not
2087 supersede this section unless such terms explicitly reference
2088 this section The trustee may decide which action or combination
2089 of actions to take.
2090 (2) In cases not governed by subsection (1), proceeds from
2091 the sale or other disposition of an asset are principal without
2092 regard to the amount of income the asset produces during any
2093 accounting period.
2094 Section 33. Section 738.607, Florida Statutes, is
2095 transferred, renumbered as section 738.414, Florida Statutes,
2096 and amended to read:
2097 738.414 738.607 Derivatives or and options.—
2098 (1) As used in For purposes of this section, the term
2099 "derivative" means a contract, an or financial instrument, or
2100 other arrangement, or a combination of contracts, and financial
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2101 instruments, or other arrangements, of which the value, rights,
2102 and obligations are, in whole or in part, dependent on or
2103 derived from an underlying which gives a trust the right or
2104 obligation to participate in some or all changes in the price of
2105 a tangible or intangible asset, a or group of tangible or
2106 intangible assets, an index, or an occurrence of an event. The
2107 term includes stocks, fixed income securities, and financial
2108 instruments and arrangements based on indices, commodities,
2109 interest rates, weather-related events, and credit-default
2110 events assets, or changes in a rate, an index of prices or
2111 rates, or other market indicator for an asset or a group of
2112 assets.
2113 (2) To the extent that a fiduciary does not account for a
2114 transaction in derivatives as a business under s. 738.403 for
2115 transactions in derivatives, the fiduciary shall allocate 10
2116 percent of to principal receipts from the transaction and 10
2117 percent of and disbursements made in connection with the
2118 transaction to income and allocate the balance to principal
2119 those transactions.
2120 (3) Subsection (4) applies if:
2121 (a) A fiduciary:
2122 1. If a fiduciary Grants an option to buy property from a
2123 the trust, regardless of or estate whether or not the trust or
2124 estate owns the property when the option is granted;,
2125 2. Grants an option that permits another person to sell
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2126 property to the trust; or
2127 3. estate, or Acquires an option to buy property for the
2128 trust or estate or an option to sell an asset owned by the trust
2129 or estate;, and
2130 (b) The fiduciary or other owner of the asset is required
2131 to deliver the asset if the option is exercised, an amount
2132 received for granting the option shall be allocated to
2133 principal. An amount paid to acquire the option shall be paid
2134 from principal.
2135 (4) If this subsection applies, the fiduciary must
2136 allocate 10 percent to income and allocate the balance to
2137 principal of the following amounts:
2138 (a) An amount received for granting the option;
2139 (b) An amount paid to acquire the option; and
2140 (c) A Gain or loss realized on upon the exercise,
2141 exchange, settlement, offset, closing, or expiration of the
2142 option of an option, including an option granted to a grantor of
2143 the trust or estate for services rendered, shall be allocated to
2144 principal.
2145 Section 34. Section 738.608, Florida Statutes, is
2146 transferred, renumbered as section 738.415, Florida Statutes,
2147 and amended to read:
2148 738.415 738.608 Asset-backed securities.—
2149 (1) Except as otherwise provided in subsection (2), a
2150 fiduciary shall allocate to income a receipt from or related to
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2151 an asset-backed security, as defined in s. 738.102, to the
2152 extent that the payor identifies the payment as being from For
2153 purposes of this section, "asset-backed security" means an asset
2154 the value of which is based upon the right given the owner to
2155 receive distributions from the proceeds of financial assets that
2156 provide collateral for the security. The term includes an asset
2157 that gives the owner the right to receive from the collateral
2158 financial assets only the interest or other current return and
2159 allocate to principal the balance of the receipt or only the
2160 proceeds other than interest or current return. The term does
2161 not include an asset to which s. 738.401 or s. 738.602 applies.
2162 (2) If a fiduciary receives one or more payments in
2163 exchange for part or all of the fiduciary's interest in an
2164 asset-backed security, including a liquidation or redemption of
2165 the fiduciary's interest in the security trust or estate
2166 receives a payment from interest or other current return and
2167 from other proceeds of the collateral financial assets, the
2168 fiduciary must shall allocate to income 10 percent of receipts
2169 from the transaction and 10 percent of disbursements made in
2170 connection with the transaction, and allocate to principal the
2171 portion of the payment which the payor identifies as being from
2172 interest or other current return and allocate the balance of the
2173 receipts and disbursements payment to principal.
2174 (3) If a trust or estate receives one or more payments in
2175 exchange for the trust's or estate's entire interest in an
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2176 asset-backed security during a single accounting period, the
2177 fiduciary shall allocate the payments to principal. If a payment
2178 is one of a series of payments that will result in the
2179 liquidation of the trust's or estate's interest in the security
2180 over more than a single accounting period, the fiduciary shall
2181 allocate 10 percent of the payment to income and the balance to
2182 principal.
2183 Section 35. Section 738.416, Florida Statutes, is created
2184 to read:
2185 738.416 Other financial instrument or arrangement. —A
2186 fiduciary shall allocate receipts from or related to a financial
2187 instrument or arrangement not otherwise addressed by this
2188 chapter. The allocation must be consistent with ss. 738.414 and
2189 738.415.
2190 Section 36. Section 738.501, Florida Statutes, is amended
2191 to read:
2192 (Substantial rewording of section. See
2193 s. 738.501, F.S., for present text.)
2194 738.501 Disbursement from income.—Subject to s. 738.504,
2195 and except as otherwise provided in s. 738.601(3)(b) or (c), a
2196 fiduciary shall disburse from income:
2197 (1) One-half of:
2198 (a) The regular compensation of the fiduciary and of any
2199 person providing investment advisory, custodial, or other
2200 services to the fiduciary to the extent that income is
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2201 sufficient; and
2202 (b) An expense for an accounting, judicial or nonjudicial
2203 proceeding, or other matter that involves both income and
2204 successive interests to the extent income is sufficient.
2205 (2) The balance of the disbursements described in
2206 subsection (1), to the extent that a fiduciary who is an
2207 independent person determines that making those disbursements
2208 from income would be in the interests of the beneficiaries.
2209 (3) Any other ordinary expense incurred in connection with
2210 administration, management, or preservation of property and
2211 distribution of income, including interest, an ordinary repair,
2212 a regularly recurring tax assessed against principal, and an
2213 expense of an accounting, judicial or nonjudicial proceeding, or
2214 other matter that involves primarily an income interest, to the
2215 extent that income is sufficient.
2216 (4) A premium on insurance covering loss of a principal
2217 asset or income from or use of the asset.
2218 Section 37. Section 738.502, Florida Statutes, is amended
2219 to read:
2220 (Substantial rewording of section. See
2221 s. 738.502, F.S., for present text.)
2222 738.502 Disbursement from principal.—
2223 (1) Subject to s. 738.505, and except as otherwise
2224 provided in s. 738.601(3)(b), a fiduciary shall disburse all of
2225 the following from principal:
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2226 (a) The balance of the disbursements described in s.
2227 738.501(1) and (3), after application of s. 738.501(2).
2228 (b) The fiduciary's compensation calculated on principal
2229 as a fee for acceptance, distribution, or termination.
2230 (c) A payment of an expense to prepare for or execute a
2231 sale or other disposition of property.
2232 (d) A payment on the principal of a trust debt.
2233 (e) A payment of an expense of an accounting, judicial or
2234 nonjudicial proceeding, or other matter that involves primarily
2235 principal, including a proceeding to construe the terms of the
2236 trust or protect property.
2237 (f) A payment of a premium for insurance, including title
2238 insurance, not described in s. 738.501(4) of which the fiduciary
2239 is the owner and beneficiary.
2240 (g) A payment of estate, inheritance, and other transfer
2241 taxes, including penalties, apportioned to the trust.
2242 (h) A payment related to environmental matters including:
2243 1. Reclamation;
2244 2. Assessing environmental conditions;
2245 3. Remedying and removing environmental contamination;
2246 4. Monitoring remedial activities and the release of
2247 substances;
2248 5. Preventing future releases of substances;
2249 6. Collecting amounts from persons liable or potentially
2250 liable for the costs of the activities described in
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2251 subparagraphs 1.-5.;
2252 7. Penalties imposed under environmental laws or
2253 regulations;
2254 8. Other actions to comply with environmental laws or
2255 regulations;
2256 9. Statutory or common law claims by third parties; and
2257 10 Defending claims based on environmental matters.
2258 (i) A payment of a premium for insurance for matters
2259 described in paragraph (h).
2260 (2) If a principal asset is encumbered with an obligation
2261 that requires income from the asset to be paid directly to a
2262 creditor, the fiduciary must transfer from principal to income
2263 an amount equal to the income paid to the creditor in reduction
2264 of the principal balance of the obligation.
2265 Section 38. Section 738.503, Florida Statutes, is amended
2266 to read:
2267 (Substantial rewording of section. See
2268 s. 738.503, F.S., for present text.)
2269 738.503 Transfers from income to principal for
2270 depreciation.—
2271 (1) For purposes of this section, "depreciation" means a
2272 reduction in value due to wear, tear, decay, corrosion, or
2273 gradual obsolescence of a tangible asset having a useful life of
2274 more than 1 year.
2275 (2) A fiduciary may transfer to principal a reasonable
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2276 amount of the net cash receipts from a principal asset that is
2277 subject to depreciation but may not transfer any amount for
2278 depreciation:
2279 (a) Of the part of real property used or available for use
2280 by a beneficiary as a residence;
2281 (b) Of tangible personal property held or made available
2282 for the personal use or enjoyment of a beneficiary; or
2283 (c) Under this section, to the extent that the fiduciary
2284 accounts:
2285 1. Under s. 738.410 for the asset; or
2286 2. Under s. 738.403 for the business or other activity in
2287 which the asset is used.
2288 (3) An amount transferred to principal under this section
2289 need not be separately held.
2290 Section 39. Section 738.504, Florida Statutes, is amended
2291 to read:
2292 (Substantial rewording of section. See
2293 s. 738.504, F.S., for present text.)
2294 738.504 Reimbursement of income from principal.—
2295 (1) If a fiduciary makes or expects to make an income
2296 disbursement described in subsection (2), the fiduciary may
2297 transfer an appropriate amount from principal to income in one
2298 or more accounting periods to reimburse income.
2299 (2) To the extent that the fiduciary has not been and does
2300 not expect to be reimbursed by a third party, income
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2301 disbursements to which subsection (1) applies include:
2302 (a) An amount chargeable to principal but paid from income
2303 because principal is illiquid;
2304 (b) A disbursement made to prepare property for sale,
2305 including improvements and commissions; and
2306 (c) A disbursement described in s. 738.502(1).
2307 (3) If an asset whose ownership gives rise to an income
2308 disbursement becomes subject to a successive interest after an
2309 income interest ends, the fiduciary may continue to make
2310 transfers under subsection (1).
2311 Section 40. Section 738.704, is transferred, renumbered as
2312 section 738.505, Florida Statutes, and amended to read:
2313 738.505 738.704 Reimbursement of principal from income
2314 Transfers from income to reimburse principal.—
2315 (1) If a fiduciary makes or expects to make a principal a
2316 principal disbursement described in subsection (2) this section,
2317 the fiduciary may transfer an appropriate amount from income to
2318 principal in one or more accounting periods to reimburse
2319 principal or to provide a reserve for future principal
2320 disbursements.
2321 (2) Principal disbursements to which subsection (1)
2322 applies include the following, but only To the extent that a the
2323 fiduciary has not been and does not expect to be reimbursed by a
2324 third party, principal disbursements to which subsection (1)
2325 applies include:
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2326 (a) An amount chargeable to income but paid from principal
2327 because income is not sufficient; the amount is unusually large.
2328 (b) The cost of an improvement to principal, whether a
2329 change to an existing asset or the construction of a new asset,
2330 including a special assessment; Disbursements made to prepare
2331 property for rental, including tenant allowances, leasehold
2332 improvements, and broker's commissions.
2333 (c) A disbursement made to prepare property for rental,
2334 including tenant allowances, leasehold improvements, and
2335 commissions; Disbursements described in s. 738.702(1)(g).
2336 (d) A periodic payment on an obligation secured by a
2337 principal asset, to the extent the amount transferred from
2338 income to principal for depreciation is less than the periodic
2339 payment; and
2340 (e) A disbursement described in s. 738.502(1).
2341 (3) If an the asset whose the ownership of which gives
2342 rise to a principal disbursement the disbursements becomes
2343 subject to a successive income interest after an income interest
2344 ends, the a fiduciary may continue to make transfers under
2345 transfer amounts from income to principal as provided in
2346 subsection (1).
2347 (4) To the extent principal cash is not sufficient to pay
2348 the principal balance of payments due on mortgaged property,
2349 income may be applied to such payment in order to avoid a
2350 default on any mortgage or security interest securing the
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2351 property. Income shall be reimbursed for such payments out of
2352 the first available principal cash. If the asset the ownership
2353 of which gives rise to the disbursements described in this
2354 subsection becomes subject to a successive income interest after
2355 an income interest ends, all rights of the initial income
2356 interest shall lapse, and amounts remaining due from principal
2357 shall not be a lien on the assets of the trust.
2358 Section 41. Section 738.705, Florida Statutes, is
2359 transferred, renumbered as section 738.506, Florida Statutes,
2360 and amended to read:
2361 738.506 738.705 Income taxes.—
2362 (1) A tax required to be paid by a fiduciary which is
2363 based on receipts allocated to income must shall be paid from
2364 income.
2365 (2) A tax required to be paid by a fiduciary which is
2366 based on receipts allocated to principal must shall be paid from
2367 principal, even if the tax is called an income tax by the taxing
2368 authority.
2369 (3) Subject to subsection (4) and ss. 738.504, 738.505,
2370 and 738.507, a tax required to be paid by a fiduciary on a the
2371 trust's or estate's share of an entity's taxable income in an
2372 accounting period must shall be paid from proportionately:
2373 (a) From Income and principal proportionately to the
2374 allocation between income and principal of to the extent
2375 receipts from the entity in the period are allocated to income.
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2376 (b) From principal to the extent receipts from the entity
2377 are allocated to principal.
2378 (c) From Principal to the extent that the tax exceeds the
2379 income taxes payable by the trust or estate exceed the total
2380 receipts from the entity in the period.
2381 (4) After applying subsections (1), (2), and (3), a
2382 fiduciary shall adjust income or principal receipts, to the
2383 extent the taxes that the fiduciary pays are reduced because of
2384 a deduction for a payment made to a beneficiary.
2385 (5) Subject to the limitations and excluded assets
2386 provided under s. 736.08145, a reimbursement of state or federal
2387 income tax elected to be made by a fiduciary pursuant to s.
2388 736.08145 must be allocated and paid under paragraphs (3)(a) and
2389 (b) After applying subsections (1)-(3), the fiduciary shall
2390 adjust income or principal receipts to the extent that the
2391 trust's or estate's income taxes are reduced, but not
2392 eliminated, because the trust or estate receives a deduction for
2393 payments made to a beneficiary. The amount distributable to that
2394 beneficiary as income as a result of this adjustment shall be
2395 equal to the cash received by the trust or estate, reduced, but
2396 not below zero, by the entity's taxable income allocable to the
2397 trust or estate multiplied by the trust's or estate's income tax
2398 rate. The reduced amount shall be divided by the difference
2399 between 1 and the trust's or estate's income tax rate in order
2400 to determine the amount distributable to that beneficiary as
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2401 income before giving effect to other receipts or disbursements
2402 allocable to that beneficiary's interest.
2403 Section 42. Section 738.706, Florida Statutes, is
2404 transferred, renumbered as section 738.507, Florida Statutes,
2405 and amended to read:
2406 738.507 738.706 Adjustment Adjustments between principal
2407 and income because of taxes.—
2408 (1) A fiduciary may make an adjustment adjustments between
2409 principal and income and principal to offset the shifting of
2410 economic interests or tax benefits between current income
2411 beneficiaries and successor remainder beneficiaries which arises
2412 arise from:
2413 (a) An election or decision Elections and decisions, other
2414 than those described in paragraph (b), that the fiduciary makes
2415 from time to time regarding a tax matter, other than a decision
2416 to claim an income tax deduction to which subsection (2) applies
2417 matters;
2418 (b) An income tax or any other tax that is imposed on upon
2419 the fiduciary or a beneficiary as a result of a transaction
2420 involving the fiduciary or a distribution by from the fiduciary
2421 estate or trust; or
2422 (c) The Ownership by the fiduciary an estate or trust of
2423 an interest in an entity a part of whose taxable income,
2424 regardless of whether or not distributed, is includable in the
2425 taxable income of the fiduciary estate, trust, or a beneficiary;
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2426 or
2427 (d) An election or decision a fiduciary makes to reimburse
2428 any tax under s. 736.08145.
2429 (2) If the amount of an estate tax marital deduction or
2430 charitable contribution deduction is reduced because a fiduciary
2431 deducts an amount paid from principal for income tax purposes
2432 instead of deducting it such amount for estate tax purposes,
2433 and, as a result, estate taxes paid from principal are increased
2434 and income taxes paid by a fiduciary or a an estate, trust, or
2435 beneficiary are decreased, the fiduciary shall charge each
2436 estate, trust, or beneficiary that benefits from the decrease in
2437 income tax to shall reimburse the principal from which the
2438 increase in estate tax is paid. The total reimbursement must
2439 shall equal the increase in the estate tax, to the extent that
2440 the principal used to pay the increase would have qualified for
2441 a marital deduction or charitable contribution deduction but for
2442 the payment. The proportionate share of the reimbursement for
2443 each fiduciary estate, trust, or beneficiary whose income taxes
2444 are reduced must shall be the same as its such estate's,
2445 trust's, or beneficiary's proportionate share of the total
2446 decrease in income tax. An estate or trust shall reimburse
2447 principal from income.
2448 (3) A fiduciary that charges a beneficiary under
2449 subsection (2) may offset the charge by obtaining payment from
2450 the beneficiary, withholding an amount from future distributions
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2451 to the beneficiary, or adopting another method or combination of
2452 methods.
2453 Section 43. Section 738.508, Florida Statutes, is created
2454 to read:
2455 738.508 Apportionment of property expenses between tenant
2456 and remainderman.—
2457 (1) For purposes of this section, the term:
2458 (a) "Remainderman" means the holder of the remainder
2459 interests after the expiration of a tenant's estate in property.
2460 (b) "Tenant" means the holder of an estate for life or
2461 term of years in real property or personal property, or both.
2462 (2) If a trust has not been created, expenses shall be
2463 apportioned between the tenant and remainderman as follows:
2464 (a) The following expenses are allocated to and shall be
2465 paid by the tenant:
2466 1. All ordinary expenses incurred in connection with the
2467 administration, management, or preservation of the property,
2468 including interest, ordinary repairs, regularly recurring taxes
2469 assessed against the property, and expenses of a proceeding or
2470 other matter that concerns primarily the tenant's estate or use
2471 of the property.
2472 2. Recurring premiums on insurance covering the loss of
2473 the property or the loss of income from or use of the property.
2474 3. Any of the expenses described in subparagraph (b)3.
2475 which are attributable to the use of the property by the tenant.
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2476 (b) The following expenses are allocated to and shall be
2477 paid by the remainderman:
2478 1. Payments on the principal of a debt secured by the
2479 property, except to the extent that the debt is for expenses
2480 allocated to the tenant.
2481 2. Expenses of a proceeding or other matter that concerns
2482 primarily the title to the property, other than title to the
2483 tenant's estate.
2484 3. Except as provided in subparagraph (a)3., expenses
2485 related to environmental matters, including reclamation,
2486 assessing environmental conditions, remedying and removing
2487 environmental contamination, monitoring remedial activities and
2488 the release of substances, preventing future releases of
2489 substances, collecting amounts from persons liable or
2490 potentially liable for the costs of such activities, penalties
2491 imposed under environmental laws or regulations and other
2492 payments made to comply with those laws or regulations,
2493 statutory or common law claims by third parties, and defending
2494 claims based on environmental matters.
2495 4. Extraordinary repairs.
2496 (c) If the tenant or remainderman incurred an expense for
2497 the benefit of his or her own estate without consent or
2498 agreement of the other, he or she must pay such expense in full.
2499 (d) Except as provided in paragraph (c), the cost of, or
2500 special taxes or assessments for, an improvement representing an
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2501 addition of value to property forming part of the principal
2502 shall be paid by the tenant if the improvement is not reasonably
2503 expected to outlast the estate of the tenant. In all other
2504 cases, only a part shall be paid by the tenant while the
2505 remainder shall be paid by the remainderman. The part payable by
2506 the tenant is ascertainable by taking that percentage of the
2507 total that is found by dividing the present value of the
2508 tenant's estate by the present value of an estate of the same
2509 form as that of the tenant, except that it is limited for a
2510 period corresponding to the reasonably expected duration of the
2511 improvement. The computation of present values of the estates
2512 shall be made by using the rate determined under s. 7520(a)(2)
2513 of the Internal Revenue Code then in effect and, in the case of
2514 an estate for life, the official mortality tables then in effect
2515 under s. 7520 of the Internal Revenue Code. Other evidence of
2516 duration or expectancy may not be considered.
2517 (3) This section does not apply to the extent that it is
2518 inconsistent with the instrument creating the estates, the
2519 agreement of the parties, or the specific direction of the
2520 Internal Revenue Code taxing or other applicable law.
2521 (4) The common law applicable to tenants and remaindermen
2522 supplements this section, except as modified by this section or
2523 other laws.
2524 Section 44. Section 738.601, Florida Statutes, is amended
2525 to read:
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2526 (Substantial rewording of section. See
2527 s. 738.601, F.S., for present text.)
2528 738.601 Determination and distribution of net income.—
2529 (1) This section applies when:
2530 (a) The death of an individual results in the creation of
2531 an estate or trust; or
2532 (b) An income interest in a trust terminates, whether the
2533 trust continues or is distributed.
2534 (2) A fiduciary of an estate or trust with an income
2535 interest that terminates shall determine, under subsection (6)
2536 and ss. 738.401-738.508 and 738.701-738.703, the amount of net
2537 income and net principal receipts received from property
2538 specifically given to a beneficiary. The fiduciary shall
2539 distribute the net income and net principal receipts to the
2540 beneficiary who is to receive the specific property.
2541 (3) A fiduciary shall determine the income and net income
2542 of an estate or income interest in a trust which terminates,
2543 other than the amount of net income determined under subsection
2544 (2), under ss. 738.401-738.508 and 738.701-738.703, and by:
2545 (a) Including in net income all income from property used
2546 or sold to discharge liabilities.
2547 (b) Paying from income or principal, in the fiduciary's
2548 discretion, fees of attorneys, accountants, and fiduciaries;
2549 court costs and other expenses of administration; and interest
2550 on estate and inheritance taxes and other taxes imposed because
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2551 of the decedent's death, but the fiduciary may pay the expenses
2552 from income of property passing to a trust for which the
2553 fiduciary claims an estate tax marital or charitable deduction
2554 under the Internal Revenue Code or comparable law of any state
2555 only to the extent that:
2556 1. The payment of the those expenses from income will not
2557 cause the reduction or loss of the deduction; or
2558 2. The fiduciary makes an adjustment under s. 738.507(2);
2559 and
2560 (c) Paying from principal other disbursements made or
2561 incurred in connection with the settlement of the estate or the
2562 winding up of an income interest that terminates, including:
2563 1. To the extent authorized by the decedent's will, the
2564 terms of the trust, or applicable law, debts, funeral expenses,
2565 disposition of remains, family allowances, estate and
2566 inheritance taxes, and other taxes imposed because of the
2567 decedent's death; and
2568 2. Related penalties apportioned by the decedent's will,
2569 the terms of the trust, or applicable law to the estate or
2570 income interest that terminates.
2571 (4) If a decedent's will or the terms of a trust provide
2572 for the payment of interest or the equivalent of interest to a
2573 beneficiary who receives a pecuniary amount outright, the
2574 fiduciary shall make the payment from net income determined
2575 under subsection (3) or from principal to the extent that net
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2576 income is insufficient.
2577 (5) A fiduciary shall distribute net income remaining
2578 after payments required by subsection (4) in the manner
2579 described in s. 738.602 to all other beneficiaries, including a
2580 beneficiary who receives a pecuniary amount in trust, even if
2581 the beneficiary holds an unqualified power to withdraw assets
2582 from the trust or other presently exercisable general power of
2583 appointment over the trust.
2584 (6) A fiduciary may not reduce principal or income
2585 receipts from property described in subsection (2) because of a
2586 payment described in s. 738.501 or s. 738.502 to the extent that
2587 the decedent's will, the terms of the trust, or applicable law
2588 requires the fiduciary to make the payment from assets other
2589 than the property or that the fiduciary recovers or expects to
2590 recover the payment from a third party. The net income and
2591 principal receipts from the property must be determined by
2592 including the amount the fiduciary receives or pays regarding
2593 the property, whether the amount accrued or became due before,
2594 on, or after the date of the decedent's death or an income
2595 interest's terminating event, and making a reasonable provision
2596 for an amount the estate or income interest may become obligated
2597 to pay after the property is distributed.
2598 Section 45. Section 738.602, Florida Statutes, is amended
2599 to read:
2600 (Substantial rewording of section. See
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2601 s. 738.602, F.S., for present text.)
2602 738.602 Distribution to successor beneficiary.—
2603 (1) Except to the extent that ss. 738.301-738.310 apply
2604 for a beneficiary that is a trust, each beneficiary described in
2605 s. 738.601(5) is entitled to receive a share of the net income
2606 equal to the beneficiary's fractional interest in undistributed
2607 principal assets, using carrying values as of the distribution
2608 date. If a fiduciary makes more than one distribution of assets
2609 to beneficiaries to which this section applies, each
2610 beneficiary, including a beneficiary who does not receive part
2611 of the distribution, is entitled, as of each distribution date,
2612 to a share of the net income the fiduciary received after the
2613 decedent's death, an income interest's other terminating event,
2614 or the preceding distribution by the fiduciary.
2615 (2) In determining a beneficiary's share of net income
2616 under subsection (1), the following rules apply:
2617 (a) The beneficiary is entitled to receive a share of the
2618 net income equal to the beneficiary's fractional interest in the
2619 undistributed principal assets immediately before the
2620 distribution date.
2621 (b) The beneficiary's fractional interest under paragraph
2622 (a) must be calculated:
2623 1. On the aggregate carrying value of the assets as of the
2624 distribution date; and
2625 2. Reduced by:
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2626 a. Any liabilities of the estate or trust;
2627 b. Property specifically given to a beneficiary under the
2628 decedent's will or the terms of the trust; and
2629 c. Property required to pay pecuniary amounts not in
2630 trust.
2631 (c) If a disproportionate distribution of principal is
2632 made to any beneficiary, the respective fractional interests of
2633 all beneficiaries in the undistributed principal assets must be
2634 recomputed by:
2635 1. Adjusting the carrying value of the principal assets to
2636 their fair market value before the distribution;
2637 2. Reducing the fractional interest of the recipient of
2638 the disproportionate distribution in the remaining principal
2639 assets by the fair market value of the principal distribution;
2640 and
2641 3. Recomputing the fractional interests of all
2642 beneficiaries in the remaining principal assets based upon the
2643 now restated carrying values.
2644 (d) The distribution date under paragraph (a) may be the
2645 date as of which the fiduciary calculates the value of the
2646 assets if that date is reasonably near the date on which the
2647 assets are distributed. All distributions to a beneficiary must
2648 be valued based on the assets' fair market value on the date of
2649 the distribution.
2650 (3) To the extent that a fiduciary does not distribute
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2651 under this section all the collected but undistributed net
2652 income to each beneficiary as of a distribution date, the
2653 fiduciary shall maintain records showing the interest of each
2654 beneficiary in the net income.
2655 (4) If this section applies to income from an asset, a
2656 fiduciary may apply the requirements in this section to net gain
2657 or loss realized from the disposition of the asset after the
2658 decedent's date of death, an income interest's terminating
2659 event, or the preceding distribution by the fiduciary.
2660 (5) The carrying value or fair market value of trust
2661 assets shall be determined on an asset-by-asset basis and is
2662 conclusive if reasonable and determined in good faith.
2663 Determinations of fair market value based on appraisals
2664 performed within 2 years before or after the valuation date are
2665 presumed reasonable. The values of trust assets are conclusively
2666 presumed to be reasonable and determined in good faith unless
2667 proven otherwise in a proceeding commenced by or on behalf of a
2668 person interested in the trust within the time provided in s.
2669 736.1008.
2670 Section 46. Section 738.701, Florida Statutes, is amended
2671 to read:
2672 (Substantial rewording of section. See
2673 s. 738.701, F.S., for present text.)
2674 738.701 When right to income begins and ends.—
2675 (1) An income beneficiary is entitled to net income in
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2676 accordance with the terms of the trust from the date an income
2677 interest begins. The income interest begins on the date
2678 specified in the terms of the trust or, if no date is specified,
2679 on the date an asset becomes subject to:
2680 (a) The trust for the current income beneficiary; or
2681 (b) A successive interest for a successor beneficiary.
2682 (2) An asset becomes subject to a trust under paragraph
2683 (1)(a):
2684 (a) For an asset that is transferred to the trust during
2685 the settlor's life, on the date the asset is transferred;
2686 (b) For an asset that becomes subject to the trust because
2687 of a decedent's death, on the date of the decedent's death, even
2688 if there is an intervening period of administration of the
2689 decedent's estate; or
2690 (c) For an asset that is transferred to a fiduciary by a
2691 third party because of a decedent's death, on the date of the
2692 decedent's death.
2693 (3) An asset becomes subject to a successive interest
2694 under paragraph (1)(b) on the day after the preceding income
2695 interest ends, as determined under subsection (4), even if there
2696 is an intervening period of administration to wind up the
2697 preceding income interest.
2698 (4) An income interest ends on the day before an income
2699 beneficiary dies or another terminating event occurs, or on the
2700 last day of a period during which there is no beneficiary to
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2701 which a fiduciary may or must distribute income.
2702 Section 47. Section 738.702, Florida Statutes, is amended
2703 to read:
2704 (Substantial rewording of section. See
2705 s. 738.702, F.S., for present text.)
2706 738.702 Apportionment of receipts and disbursements when
2707 decedent dies or income interest begins.—
2708 (1) A fiduciary shall allocate an income receipt or
2709 disbursement, other than a receipt to which s. 738.601(2)
2710 applies, to principal if its due date occurs before the date on
2711 which:
2712 (a) For an estate, the decedent died; or
2713 (b) For a trust or successive interest, an income interest
2714 begins.
2715 (2) If the due date of a periodic income receipt or
2716 disbursement occurs on or after the date on which a decedent
2717 died or an income interest begins, a fiduciary must allocate the
2718 receipt or disbursement to income.
2719 (3) If an income receipt or disbursement is not periodic
2720 or has no due date, a fiduciary must treat the receipt or
2721 disbursement under this section as accruing from day to day. The
2722 fiduciary shall allocate to principal the portion of the receipt
2723 or disbursement accruing before the date on which a decedent
2724 died or an income interest begins, and shall allocate to income
2725 the balance.
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2726 (4) A receipt or disbursement is periodic under
2727 subsections (2) and (3) if:
2728 (a) The receipt or disbursement must be paid at regular
2729 intervals under an obligation to make payments; or
2730 (b) The payor customarily makes payments at regular
2731 intervals.
2732 (5) An item of income or an obligation is due under this
2733 section on the date the payor is required to make a payment. If
2734 a payment date is not stated, there is no due date.
2735 (6) Distributions to shareholders or other owners from an
2736 entity to which s. 738.401 applies are due:
2737 (a) On the date fixed by or on behalf of the entity for
2738 determining the persons entitled to receive the distribution;
2739 (b) If no date is fixed, on the date of the decision by or
2740 on behalf of the entity to make the distribution; or
2741 (c) If no date is fixed and the fiduciary does not know
2742 the date of the decision by or on behalf of the entity to make
2743 the distribution, on the date the fiduciary learns of the
2744 decision.
2745 (7) Section 733.817 controls over any provision of this
2746 chapter to the contrary.
2747 Section 48. Section 738.703, Florida Statutes, is amended
2748 to read:
2749 (Substantial rewording of section. See
2750 s. 738.703, F.S., for present text.)
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2751 738.703 Apportionment when income interest ends.—
2752 (1) As used in this section, the term "undistributed
2753 income" means net income received on or before the date on which
2754 an income interest ends. The term does not include an item of
2755 income or expense which is due or accrued or net income that has
2756 been added or is required to be added to principal under the
2757 terms of the trust.
2758 (2) Except as otherwise provided in subsection (3), when a
2759 mandatory income interest of a beneficiary ends, the fiducia ry
2760 shall pay the beneficiary's share of the undistributed income
2761 that is not disposed of under the terms of the trust to the
2762 beneficiary or, if the beneficiary does not survive the date the
2763 interest ends, to the beneficiary's estate.
2764 (3) If a beneficiary has an unqualified power to withdraw
2765 more than 5 percent of the value of a trust immediately before
2766 an income interest ends:
2767 (a) The fiduciary shall allocate to principal the
2768 undistributed income from the portion of the trust which may be
2769 withdrawn; and
2770 (b) Subsection (2) applies only to the balance of the
2771 undistributed income.
2772 (4) When a fiduciary's obligation to pay a fixed annuity
2773 or a fixed fraction of the value of assets ends, the fiduciary
2774 shall prorate the final payment as required to preserve income
2775 tax, gift tax, estate tax, or other tax benefits.
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2776 Section 49. Section 738.801, Florida Statutes, is amended
2777 to read:
2778 (Substantial rewording of section. See
2779 s. 738.801, F.S., for present text.)
2780 738.801 Uniformity of application and construction.—In
2781 applying and construing this act, consideration shall be given
2782 to the need to promote uniformity of the law with respect to its
2783 subject matter among states that enact it.
2784 Section 50. Section 738.802, Florida Statutes, is amended
2785 to read:
2786 (Substantial rewording of section. See
2787 s. 738.802, F.S., for present text.)
2788 738.802 Relation to Electronic Signatures in Global and
2789 National Commerce Act.—This chapter modifies, limits, or
2790 supersedes the Electronic Signatures in Global and National
2791 Commerce Act, 15 U.S.C. ss. 7001 et seq., but does not modify,
2792 limit, or supersede section 101(c) of that act, 15 U.S.C. s.
2793 7001(c), or authorize electronic delivery of any of the notices
2794 described in s. 103(b) of that act, 15 U.S.C. s. 7003(b). This
2795 chapter does not modify, limit, or supersede s. 117.285.
2796 Section 51. Section 738.803, Florida Statutes, is amended
2797 to read:
2798 738.803 Severability.—If any provision of this chapter or
2799 its application to any person or circumstance is held invalid,
2800 the invalidity does shall not affect other provisions or
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2801 applications of this chapter which can be given effect without
2802 the invalid provision or application, and to this end the
2803 provisions of this chapter are severable.
2804 Section 52. Section 738.804, Florida Statutes, is amended
2805 to read:
2806 738.804 Application.—Except as provided in the terms of
2807 the trust instrument, the will, or this chapter, this chapter
2808 shall apply to any receipt or expense received or incurred and
2809 any disbursement made after January 1, 2025 January 1, 2003, by
2810 any trust or decedent's estate, whether established before or
2811 after January 1, 2025 January 1, 2003, and whether the asset
2812 involved was acquired by the trustee or personal representative
2813 before or after January 1, 2025 January 1, 2003. Receipts or
2814 expenses received or incurred and disbursements made before
2815 January 1, 2025, must January 1, 2003, shall be governed by the
2816 law of this state in effect at the time of the event, except as
2817 otherwise expressly provided in the will or terms of the trust
2818 or in this chapter.
2819 Section 53. This act shall take effect January 1, 2025.
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HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1219 Dental Insurance Claims
SPONSOR(S): Black
TIED BILLS: IDEN./SIM. BILLS: SB 892
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Herrera Lloyd
2) Select Committee on Health Innovation
3) Commerce Committee
SUMMARY ANALYSIS
Health insurance serves a vital role in protecting individuals from financial hardships caused by accidents,
illnesses, or disabilities. Managed care, often utilized by health insurers through preferred provider
organizations (PPOs) and health maintenance organizations (HMOs), integrates healthc are delivery and
financing to provide cost-effective medical services within controlled networks.
In Florida, the Office of Insurance Regulation (OIR), overseen by the Financial Services Commission (FSC),
supervises insurance entities, examining insurers and ensuring compliance with regulations, including market
conduct examinations. Both HMOs and Prepaid Limited Health Service Organizations (PLHSOs) operate
within this regulatory framework.
Dental insurance is subject to regulation by OIR and the Department of Financial Services, guaranteeing
adherence to laws and fair practices. Dental plans typically cover preventive care and common procedures,
available through individual or group plans.
The bill, applicable to health insurers, PLHSOs, and HMOs, introduces the following changes:
Prohibits mandating credit card payments as the sole means of reimbursement for dental services,
along with requirements for insurers to provide written notice before electronic fund transfers, and
setting limits on associated fees.
Provides criteria for claims denial under prior authorizations, including circumstances such as benefit
limitations, inadequate documentation, and changes in patient condition.
Mandates enforcement by the OIR, stating certain specified provisions cannot be waived, and any
conflicting clauses are voided.
The bill may have a positive impact on state government revenue and local governments. It has an
indeterminate positive and negative direct economic impact on the private sector and state government
expenditures.
The bill provides an effective date of July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Health Insurance
Health insurance is the insurance of human beings against bodily injury or disablement by accident or
sickness, including the expenses associated with such injury, disablement, or sickness. 1 Individuals
purchase health insurance coverage with the purpose of managing anticipated expenses related to
health or protecting themselves from unexpected medical bills or large health care costs. Managed
care is the most common delivery system for medical care today by health insurers. 2 Managed care
systems combine the delivery and financing of health care services by limiting the choice of doctors
and hospitals.3 In return for this limited choice, however, medical care is less costly due to the managed
care network’s ability to control health care services. Some common forms of managed care are
preferred provider organizations 4 (PPO) and health maintenance organizations 5 (HMO).
Office of Insurance Regulation
The Office of Insurance Regulation (OIR) regulates specified insurance products, insurers and other
risk bearing entities in Florida.6 The Financial Services Commission (FSC), composed of the
Governor, the Attorney General, the Chief Financial Officer, and the Commissioner of Agriculture,
serves as the OIR agency head for purposes of rulemaking. Further, the FSC appoints the OIR
Commissioner.
As part of their regulatory oversight, the OIR may suspend or revoke an insurer’s certificate of authority
under certain conditions.7 The OIR is responsible for examining the affairs, transactions, accounts,
records, and assets of each insurer that holds a certificate of authority to transact insurance business in
Florida.8 As part of the examination process, all persons being examined must make available to the
OIR the accounts, records, documents, files, information, assets, and matters in their possession or
control that relate to the subject of the examination.9 The OIR is also authorized to conduct market
conduct examinations to determine compliance with applicable provisions of the Insurance Code. 10
The Agency for Health Care Administration
The Agency for Health Care Administration (AHCA) is the chief health policy and planning entity for the
state.11 AHCA is responsible for health facilities licensure, inspection, and regulatory enforcement;
investigation of consumer complaints related to health care facilities and managed care plans; the
implementation of the Certificate of Need program; the operation of the Florida Center for Health
Information and Policy Analysis; the administration of the Medicaid program; the administration of the
contracts with the Florida Healthy Kids Corporation; the certification of health maintenance
organizations and prepaid health clinics; and other duties prescribed by statute or agreement. 12 The
head of AHCA is the Secretary, who is appointed by the Governor, subject to confirmation by the
Senate.13
1 S. 624.603, F.S.
2 Florida Department of Financial Services , Health Insurance and Health Maintenance Organizations, A Guide for Consumers, available
at: https://www.myfloridacfo.com/docs-sf/consumer-services-libraries/ (last visited Jan. 26, 2024).
3 Id.
4 S. 627.6471, F.S.
5 Part I of ch. 641, F.S.
6 S. 20.121(3)(a), F.S.
7 S. 624.418, F.S
8 S. 624, 316(1)(a), F.S.
9 S. 624.318(2), F.S.
10 The Code is comprised of chs. 624-632, 634-636, 641, 642, 648, and 651, F.S. See S. 624.3161, F.S.
11 AHCA, Ab out the Agency for Health Care Administration, https://ahca.myflorida.com/about-the-agency-for-health-care-administration
(last visited Jan. 26, 2024).
12 Id.
13 Id.
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Health Maintenance Organizations
Health Maintenance Organizations (HMOs) in Florida operate within a regulatory framework overseen
by OIR. To offer health insurance plans in Florida, HMOs must obtain a license from the OIR. 14
Managed care plans are the primary offerings of HMOs in Florida. These plans provide comprehensive
healthcare services to members for a fixed monthly premium. 15 Members typically select a primary care
physician from within the HMO's network, who serves as the main point of contact for all healthcare
needs and referrals to specialists.16
HMOs maintain networks of healthcare providers, including primary care physicians, specialists,
hospitals, and other healthcare facilities.17 Members are generally required to receive care from within
the HMO's network, with exceptions for emergencies or authorized out-of-network care.18
Florida law provides various consumer protections for individuals enrolled in HMO plans, including
guaranteed access to emergency services, coverage for essential health benefits mandated by the
Affordable Care Act, and the right to appeal coverage decisions made by the HMO. 19
Prepaid Limited Health Service Organizations Contracts
Prepaid limited health service organizations (PLHSO) provide limited health services to enrollees
through an exclusive panel of providers in exchange for a prepayment authorized under ch. 636, F.S.
Limited health services include:
Ambulance;
Dental;
Vision;
Mental health;
Substance abuse;
Chiropractic;
Podiatric; and
Pharmaceutical.
Provider arrangements for prepaid limited health service organizations are authorized in s. 636.035,
F.S., and must comply with the requirements in that section.
Regulation of Dental Practice in Florida
Dental insurance in Florida operates within a regulatory framework overseen by state agencies such as
the OIR and the Florida Department of Financial Services (DFS). These agencies ensure that dental
insurance plans comply with state laws and regulations to protect consumers and ensure fair practices
within the industry.
Dental insurance typically covers a portion of the cost of preventive care, such as routine cleanings and
check-ups, as well as restorative treatments like fillings and extractions.20 Some plans may also offer
coverage for more extensive procedures like root canals, crowns, and orthodontic treatment, although
coverage levels and limitations can vary widely depending on the specific plan. 21
14 S. 641.21(1), F.S.
15 Medicare, What’s an HMO? https://www.medicare.gov/health-drug-plans/health-plans/. (last visited Jan. 26, 2024).
16 Id.
17 S. 641.19(12), F.S.
18 Medicare, What’s an HMO?, https://www.medicare.gov/health-drug-plans/health-plans/. (last visited Jan. 26, 2024).
19 Consumer Services, Health Insurance & HMO Overview, https://www.myfloridacfo.com/division/consumers/understanding-
insurance/health-insurance-and-hmo-overview (last visited Jan. 26, 2024).
20 HealthPartners, What Does Dental Insurance Cover?, https://www.healthpartners.com/blog/what-does-dental-insurance-cover/ (last
visited Jan. 26, 2024).
21 Id.
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Consumers in Florida have the option to purchase dental insurance plans on the individual market or
through group plans offered by employers or other organizations. 22 The availability and cost of dental
insurance coverage can vary depending on factors such as age, location, and the extent of coverage
desired.23 In addition to traditional dental insurance plans, some Florida residents may also have
access to dental discount plans or health savings accounts (HSAs) that can help offset the cost of
dental care.24
Dentists
A dentist is licensed to examine, diagnose, treat, and care for conditions within the human oral cavity
and its adjacent tissues and structures.25 Dentists may delegate certain tasks 26 to dental hygienists and
dental assistants, but a patient’s “dentist of record” retains primary responsibility for all dental treatment
on the patient.27
Any person wishing to practice dentistry in this state must meet specified requirements and apply to the
Department of Health (DOH) for licensure. Applicants must sit for and pass three examinations prior to
licensure:28
The National Board of Dental Examiners dental examination (NBDE);
A practical examination, which is the American Dental Licensing Examination developed by the
American Board of Dental Examiners, Inc.;29 and
A written examination on Florida laws and rules regulating the practice of dentistry and dental
hygiene.
To qualify to take the Florida dental licensure examination, an applicant must be 18 years of age or
older, be a graduate of a dental school accredited by the American Dental Association or be a student
in the final year of a program at an accredited institution, and have successfully completed the NBDE
dental examination.30
Dentists must maintain professional liability insurance or provide proof of professional responsibility. If
the dentist obtains professional liability insurance, the coverage must be at least $100,000 per claim,
with a minimum annual aggregate of at least $300,000. 31 Alternatively, a dentist may maintain an
unexpired, irrevocable letter of credit in the amount of $100,000 per claim, with a minimum aggregate
availability of credit of at least $300,000.32 The professional liability insurance must provide coverage
for the actions of any dental hygienist supervised by the dentist. 33 However, a dentist may be exempt
from maintaining professional liability insurance if he or she: 34
Practices exclusively for the federal government or the State of Florida or its agencies or
subdivisions;
Is not practicing in this state;
Practices only in conjunction with his or her teaching duties at an accredited school of dentistry
or in its main teaching hospitals; or
Demonstrates to the Board that he or she has no malpractice exposure in this state.
22 Health Care, Dental Coverage in the Marketplace, https://www.healthcare.gov/coverage/dental-coverage/ (last visited Jan. 26, 2024).
23
Id.
24 MyBenefits, Health Savings Account, https://www.mybenefits.myflorida.com/health/savings_and_spending_accounts (last visited Jan.
26, 2024).
25 S. 466.003(2)-(3), F.S.
26 S. 466.024, F.S.
27 S. 466.018, F.S.
28 S. 466.006, F.S.
29 Rule 64B5-2.013, F.A.C.
30 S. 466.006(2), F.S.
31 Rule 64B5-17.011(1), F.A.C.
32 Rule 64B5-17.011(2), F.A.C.
33 Rule 64B5-17.011(4), F.A.C.
34 Rule 64B5-17.011(3), F.A.C.
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There are currently 17,193 dentists with active licenses to practice in Florida. 35 There are 41 out-of-
state registered telehealth dentists.36
Effect of the bill
The bill, which applies to health insurers, Prepaid Limited Health Service Organizations, and Health
Maintenance Organizations (HMOs), regulates payment methods, claims denials, and provider
contracts related to dental insurance reimbursement in Florida.
Regulation of Payment Methods and Notification Requirements
The bill prohibits these entities from mandating credit card payment as the sole method of reimbursing
dentists for services provided to insured individuals. Additionally, it establishes a requirement for
insurers to provide written notice to dentists at least ten days prior to making payments through
electronic funds transfer, outlining any associated fees and presenting alternative payment methods
with clear instructions for selection. The bill imposes limitations on the fees that insurers can charge
dentists for transmitting payments through Automated Clearing House transfers, while permitting
reasonable fees for related value-added services.
Criteria for Denial of Subsequently Submitted Claims under Prior Authorization
The bill prohibits denials on any claim subsequently submitted by a dentist licensed under ch. 466 for
procedures specifically included in a prior authorization, unless certain circumstances apply for each
denied procedure. These circumstances include:
benefit limitations being reached subsequent to the issuance of the prior authorization;
inadequate documentation to support the originally authorized claim;
changes in the patient's condition or provision of new procedures post-authorization that render
the prior authorized procedure medically unnecessary;
changes in the patient's condition or provision of new procedures that would have required
disapproval under the terms and conditions of the patient's plan at the time of prior
authorization; or
denial due to reasons such as responsibility of another payor for payment, prior payment to the
dentist for the procedures in question, fraudulent claim submission, or patient ineligibility at the
time of service.
Regulation of Fee Determination and Definition of Covered Services in Provider Contracts
The bill clarifies the term “covered services” to improve readability and understandability.
Enforcement and Non-Waiver Provisions
Additionally, the bill specifies that these provisions cannot be waived or nullified by contract, and any
contractual clause conflicting with it is considered null and void. Enforcement authority is granted to the
OIR, and the FSC may adopt rules for implementation.
The bill provides an effective date of July 1, 2024.
B. SECTION DIRECTORY:
Section 1: Amends s. 627.6131, F.S., relating to payment of claims.
Section 2: Amends s. 627.6474, F.S., relating to provider contracts.
Section 3: Amends s. 636.032, F.S., relating to acceptable payments.
35 See, Department of Health License Verification web search. Available at https://mqa-
internet.doh.state.fl.us/MQASearchServices/HealthCareProviders (last visited January 26, 2024).
36 Id.
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Section 4: Amends s. 636.035, F.S., relating to provider agreements
Section 5: Amends s. 641.315, F.S., relating to provider contracts.
Section 6: Providing an effective date of July 1, 2024.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
The bill may positively affect state government expenditures by potentially reducing administrative
costs associated with overseeing dental insurance reimbursement and managing disputes related
to claims denials.
However, there could also be negative impacts on state government expenditures. For example, if
the bill increases regulatory oversight or enforcement activities by state agencies such as OIR, it
could result in additional administrative costs for the government. Moreover, if the provisions lead to
an increase in appeals or legal challenges related to denied claims, it could necessitate additional
resources for adjudication processes, potentially adding to state expenditures.
Furthermore, an increase in premium costs for state agencies providing primary dental coverage,
resulting from reimbursement requirements stipulated in the bill, could adversely affect state
government expenditures.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
The bill could negatively impact local government expenditures due to potential increases in
premium costs for state agencies providing primary dental coverage, resulting from the
reimbursement requirements outlined in the bill.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may have an indeterminate economic impact on the private sector. While the bill establishes
specific criteria for claims denial and service coverage, which could improve clarity for providers,
compliance may result in costs. These costs include investments in systems and staff training by
insurers, PLHSOs, and HMOs to ensure compliance.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to affect county or municipal governments.
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2. Other:
None.
B. RULE-MAKING AUTHORITY:
None.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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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 1219 2024
1 A bill to be entitled
2 An act relating to dental insurance claims; amending
3 s. 627.6131, F.S.; prohibiting a contract between a
4 health insurer and a dentist from containing certain
5 restrictions on payment methods; requiring a health
6 insurer to make certain notifications before paying a
7 claim to a dentist through electronic funds transfer;
8 prohibiting a health insurer from charging a fee to
9 transmit a payment to a dentist through ACH transfer
10 unless the dentist has consented to such fee;
11 authorizing a health insurer to charge reasonable fees
12 for other value-added services related to the ACH
13 transfer; providing construction; authorizing the
14 Office of Insurance Regulation of the Financial
15 Services Commission to enforce certain provisions;
16 authorizing the commission to adopt rules; prohibiting
17 a health insurer from denying claims for procedures
18 included in a prior authorization; providing
19 exceptions; providing construction; authorizing the
20 office to enforce certain provisions; authorizing the
21 commission to adopt rules; amending s. 627.6474, F.S.;
22 revising the definition of the term "covered
23 services"; amending s. 636.032, F.S.; prohibiting a
24 contract between a prepaid limited health service
25 organization and a dentist from containing certain
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26 restrictions on payment methods; requiring the prepaid
27 limited health service organization to make certain
28 notifications before paying a claim to a dentist
29 through electronic funds transfer; prohibiting a
30 prepaid limited health service organization from
31 charging a fee to transmit a payment to a dentist
32 through ACH transfer unless the dentist has consented
33 to such fee; authorizing the prepaid limited health
34 service organization to charge reasonable fees for
35 other value-added services related to the ACH
36 transfer; providing construction; authorizing the
37 office to enforce certain provisions; authorizing the
38 commission to adopt rules; amending s. 636.035, F.S.;
39 revising the definition of the term "covered
40 services"; prohibiting a prepaid limited health
41 service organization from denying claims for
42 procedures included in a prior authorization;
43 providing exceptions; providing construction;
44 authorizing the office to enforce certain provisions;
45 authorizing the commission to adopt rules; amending s.
46 641.315, F.S.; revising the definition of the term
47 "covered service"; prohibiting a contract between a
48 health maintenance organization and a dentist from
49 containing certain restrictions on payment methods;
50 requiring the health maintenance organization to make
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51 certain notifications before paying a claim to a
52 dentist through electronic funds transfer; prohibiting
53 a health maintenance organization from charging a fee
54 to transmit a payment to a dentist through ACH
55 transfer unless the dentist has consented to such fee;
56 authorizing the health maintenance organization to
57 charge reasonable fees for other value-added services
58 related to the ACH transfer; providing construction;
59 authorizing the office to enforce certain provisions;
60 authorizing the commission to adopt rules; prohibiting
61 a health maintenance organization from denying claims
62 for procedures included in a prior authorization;
63 providing exceptions; providing construction;
64 authorizing the office to enforce certain provisions;
65 authorizing the commission to adopt rules; providing
66 an effective date.
67
68 Be It Enacted by the Legislature of the State of Florida:
69
70 Section 1. Subsections (20) and (21) are added to section
71 627.6131, Florida Statutes, to read:
72 627.6131 Payment of claims.—
73 (20)(a) A contract between a health insurer and a dentist
74 licensed under chapter 466 for the provision of services to an
75 insured may not specify credit card payment as the only
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76 acceptable method for payments from the health insurer to the
77 dentist.
78 (b) At least 10 days before a health insurer pays a claim
79 to a dentist through electronic funds transfer, including, but
80 not limited to, virtual credit card payments, the health insurer
81 shall notify the dentist in writing of all of the following:
82 1. The fees, if any, associated with the electronic funds
83 transfer.
84 2. The available methods of payment of claims by the
85 health insurer, with clear instructions to the dentist on how to
86 select an alternative payment method.
87 (c) A health insurer that pays a claim to a dentist
88 through Automated Clearing House (ACH) transfer may not charge a
89 fee solely to transmit the payment to the dentist unless the
90 dentist has consented to the fee. A health insurer may charge
91 reasonable fees for other value-added services related to the
92 ACH transfer, including, but not limited to, transaction
93 management, data management, and portal services.
94 (d) This subsection may not be waived, voided, or
95 nullified by contract, and any contractual clause in conflict
96 with this subsection or which purports to waive any requirements
97 of this subsection is null and void.
98 (e) The office has all rights and powers to enforce this
99 subsection as provided by s. 624.307.
100 (f) The commission may adopt rules to implement this
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101 subsection.
102 (21)(a) A health insurer may not deny any claim
103 subsequently submitted by a dentist licensed under chap ter 466
104 for procedures specifically included in a prior authorization
105 unless at least one of the following circumstances applies for
106 each procedure denied:
107 1. Benefit limitations, such as annual maximums and
108 frequency limitations not applicable at the time of the prior
109 authorization, are reached subsequent to issuance of the prior
110 authorization.
111 2. The documentation provided by the person submitting the
112 claim fails to support the claim as originally authorized.
113 3. Subsequent to the issuance of the prior authorization,
114 new procedures are provided to the patient or a change in the
115 condition of the patient occurs such that the prior authorized
116 procedure would no longer be considered medically necessary,
117 based on the prevailing standard of care.
118 4. Subsequent to the issuance of the prior authorization,
119 new procedures are provided to the patient or a change in the
120 patient's condition occurs such that the prior authorized
121 procedure would at that time have required disapproval pursuant
122 to the terms and conditions for coverage under the patient's
123 plan in effect at the time the prior authorization was issued.
124 5. The denial of the claim was due to one of the
125 following:
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126 a. Another payor is responsible for payment.
127 b. The dentist has already been paid for the procedures
128 identified in the claim.
129 c. The claim was submitted fraudulently, or the prior
130 authorization was based in whole or material part on erroneous
131 information provided to the health insurer by the dentist,
132 patient, or other person not related to the insurer.
133 d. The person receiving the procedure was not eligible to
134 receive the procedure on the date of service and the health
135 insurer did not know, and with the exercise of reasonable care
136 could not have known, of his or her ineligibility.
137 (b) This subsection may not be waived, voided, or
138 nullified by contract, and any contractual clause in conflict
139 with this subsection or which purports to waive any requirements
140 of this subsection is null and void.
141 (c) The office has all rights and powers to enforce this
142 subsection as provided by s. 624.307.
143 (d) The commission may adopt rules to implement this
144 subsection.
145 Section 2. Subsection (2) of section 627.6474, Florida
146 Statutes, is amended to read:
147 627.6474 Provider contracts.—
148 (2) A contract between a health insurer and a dentist
149 licensed under chapter 466 for the provision of services to an
150 insured may not contain a provision that requires the dentist to
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151 provide services to the insured under such contract at a fee set
152 by the health insurer unless such services are covered services
153 under the applicable contract. As used in this subsection, the
154 term "covered services" means dental care services for which a
155 reimbursement is available under the insured's contract,
156 notwithstanding or for which a reimbursement would be available
157 but for the application of contractual limitations, such as
158 deductibles, coinsurance, waiting periods, annual or lifetime
159 maximums, frequency limitations, alternative benefit payments,
160 or any other limitation.
161 Section 3. Section 636.032, Florida Statutes, is amended
162 to read:
163 636.032 Acceptable payments.—
164 (1) Each prepaid limited health service organization may
165 accept from government agencies, corporations, groups, or
166 individuals payments covering all or part of the cost of
167 contracts entered into between the prepaid limited health
168 service organization and its subscribers.
169 (2)(a) A contract between a prepaid limited health service
170 organization and a dentist licensed under chapter 466 for the
171 provision of services to a subscriber may not specify credit
172 card payment as the only acceptable method for payments from the
173 prepaid limited health service organization to the dentist.
174 (b) At least 10 days before a limited health service
175 organization pays a claim to a dentist through electronic funds
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176 transfer, including, but not limited to, virtual credit card
177 payments, the prepaid limited health service organization shall
178 notify the dentist in writing of all of the following:
179 1. The fees, if any, that are associated with the
180 electronic funds transfer.
181 2. The available methods of payment of claims by the
182 prepaid limited health service organization, with clear
183 instructions to the dentist on how to select an alternative
184 payment method.
185 (c) A prepaid limited health service organization that
186 pays a claim to a dentist through Automatic Clearing House (ACH)
187 transfer may not charge a fee solely to transmit the payment to
188 the dentist unless the dentist has consented to the fee. A
189 prepaid limited health service organization may charge
190 reasonable fees for other value-added services related to the
191 ACH transfer, including, but not limited to, transaction
192 management, data management, and portal services.
193 (d) This subsection may not be waived, voided, or
194 nullified by contract, and any contractual clause in conflict
195 with this subsection or which purports to waive any requirements
196 of this subsection is null and void.
197 (e) The office has all rights and powers to enforce this
198 subsection as provided by s. 624.307.
199 (f) The commission may adopt rules to implement this
200 subsection.
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201 Section 4. Subsection (13) of section 636.035, Florida
202 Statutes, is amended, and subsection (15) is added to that
203 section, to read:
204 636.035 Provider arrangements.—
205 (13) A contract between a prepaid limited health service
206 organization and a dentist licensed under chapter 466 for the
207 provision of services to a subscriber of the prepaid limited
208 health service organization may not contain a provision that
209 requires the dentist to provide services to the subscriber of
210 the prepaid limited health service organization at a fee set by
211 the prepaid limited health service organization unless such
212 services are covered services under the applicable contract. As
213 used in this subsection, the term "covered services" means
214 dental care services for which a reimbursement is available
215 under the subscriber's contract, notwithstanding or for which a
216 reimbursement would be available but for the application of
217 contractual limitations such as deductibles, coinsurance,
218 waiting periods, annual or lifetime maximums, frequency
219 limitations, alternative benefit payments, or any other
220 limitation.
221 (15)(a) A prepaid limited health service organization may
222 not deny any claim subsequently submitted by a dentist licensed
223 under chapter 466 for procedures specifically included in a
224 prior authorization unless at least one of the following
225 circumstances applies for each procedure denied:
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226 1. Benefit limitations, such as annual maximums and
227 frequency limitations not applicable at the time of the prior
228 authorization, are reached subsequent to issuance of the prior
229 authorization.
230 2. The documentation provided by the person submitting the
231 claim fails to support the claim as originally authorized.
232 3. Subsequent to the issuance of the prior authorization,
233 new procedures are provided to the patient or a change in the
234 condition of the patient occurs such that the prior authorized
235 procedure would no longer be considered medically necessary,
236 based on the prevailing standard of care.
237 4. Subsequent to the issuance of the prior authorization,
238 new procedures are provided to the patient or a change in the
239 patient's condition occurs such that the prior authorized
240 procedure would at that time have required disapproval pursuant
241 to the terms and conditions for coverage under the patient's
242 plan in effect at the time the prior authorization was issued.
243 5. The denial of the dental service claim was due to one
244 of the following:
245 a. Another payor is responsible for payment.
246 b. The dentist has already been paid for the procedures
247 identified in the claim.
248 c. The claim was submitted fraudulently, or the prior
249 authorization was based in whole or material part on erroneous
250 information provided to the prepaid limited health service
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251 organization by the dentist, patient, or other person not
252 related to the organization.
253 d. The person receiving the procedure was not eligible to
254 receive the procedure on the date of service and the prepaid
255 limited health service organization did not know, and with the
256 exercise of reasonable care could not have known, of his or her
257 ineligibility.
258 (b) This subsection may not be waived, voided, or
259 nullified by contract, and any contractual clause in conflict
260 with this subsection or which purports to waive any requirements
261 of this subsection is null and void.
262 (c) The office has all rights and powers to enforce this
263 subsection as provided by s. 624.307.
264 (d) The commission may adopt rules to implement this
265 subsection.
266 Section 5. Subsection (11) of section 641.315, Florida
267 Statutes, is amended, and subsections (13) and (14) are added to
268 that section, to read:
269 641.315 Provider contracts.—
270 (11) A contract between a health maintenance organization
271 and a dentist licensed under chapter 466 for the provision of
272 services to a subscriber of the health maintenance organization
273 may not contain a provision that requires the dentist to provide
274 services to the subscriber of the health maintenance
275 organization at a fee set by the health maintenance organization
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276 unless such services are covered services under the applicable
277 contract. As used in this subsection, the term "covered
278 services" means dental care services for which a reimbursement
279 is available under the subscriber's contract, notwithstanding or
280 for which a reimbursement would be available but for the
281 application of contractual limitations such as deductibles,
282 coinsurance, waiting periods, annual or lifetime maximums,
283 frequency limitations, alternative benefit payments, or any
284 other limitation.
285 (13)(a) A contract between a health maintenance
286 organization and a dentist licensed under chapter 466 for the
287 provision of services to a subscriber of the health maintenance
288 organization may not specify credit card payment as the only
289 acceptable method for payments from the health maintenance
290 organization to the dentist.
291 (b) At least 10 days before a health maintenance
292 organization pays a claim to a dentist through electronic funds
293 transfer, including, but not limited to, virtual credit card
294 payments, the health maintenance organization shall n otify the
295 dentist in writing of all of the following:
296 1. The fees, if any, that are associated with the
297 electronic funds transfer.
298 2. The available methods of payment of claims by the
299 health maintenance organization, with clear instructions to the
300 dentist on how to select an alternative payment method.
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301 (c) A health maintenance organization that pays a claim to
302 a dentist through Automated Clearing House (ACH) transfer may
303 not charge a fee solely to transmit the payment to the dentist
304 unless the dentist has consented to the fee. A health
305 maintenance organization may charge reasonable fees for other
306 value-added services related to the ACH transfer, including, but
307 not limited to, transaction management, data management, and
308 portal services.
309 (d) This subsection may not be waived, voided, or
310 nullified by contract, and any contractual clause in conflict
311 with this subsection or which purports to waive any requirements
312 of this subsection is null and void.
313 (e) The office has all rights and powers to enforce this
314 subsection as provided by s. 624.307.
315 (f) The commission may adopt rules to implement this
316 subsection.
317 (14)(a) A health maintenance organization may not deny any
318 claim subsequently submitted by a dentist licensed under chapter
319 466 for procedures specifically included in a prior
320 authorization unless at least one of the following circumstances
321 applies for each procedure denied:
322 1. Benefit limitations, such as annual maximums and
323 frequency limitations not applicable at the time of the prior
324 authorization, are reached subsequent to issuance of the prior
325 authorization.
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326 2. The documentation provided by the person submitting the
327 claim fails to support the claim as originally authorized.
328 3. Subsequent to the issuance of the prior authorization,
329 new procedures are provided to the patient or a change in the
330 condition of the patient occurs such that the prior authorized
331 procedure would no longer be considered medically necessary,
332 based on the prevailing standard of care.
333 4. Subsequent to the issuance of the prior authorization,
334 new procedures are provided to the patient or a change in the
335 patient's condition occurs such that the prior authorized
336 procedure would at that time have required disapproval pursuant
337 to the terms and conditions for coverage under the patient's
338 plan in effect at the time the prior authorization was issued.
339 5. The denial of the claim was due to one of the
340 following:
341 a. Another payor is responsible for payment.
342 b. The dentist has already been paid for the procedures
343 identified in the claim.
344 c. The claim was submitted fraudulently, or the prior
345 authorization was based in whole or material part on erroneous
346 information provided to the health maintenance organization by
347 the dentist, patient, or other person not related to the
348 organization.
349 d. The person receiving the procedure was not eligible to
350 receive the procedure on the date of service and the health
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351 maintenance organization did not know, and with the exercise of
352 reasonable care could not have known, of his or her
353 ineligibility.
354 (b) The subsection may not be waived, voided, or nullified
355 by contract, and any contractual clause in conflict with this
356 subsection or which purports to waive any requirements of this
357 subsection is null and void.
358 (c) The office has all rights and powers to enforce this
359 subsection as provided by s. 624.307.
360 (d) The commission may adopt rules to implement this
361 subsection.
362 Section 6. This act shall take effect July 1, 2024.
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INSURANCE & BANKING SUBCOMMITTEE
HB 1219 by Rep. Black
Dental Insurance Claims
AMENDMENT SUMMARY
February 1, 2024
Amendment 1 by Rep. Black (Line 90): The amendment removes a proposed authorization
for health insurers to charge a fee for value-added services related to ACH transfers.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Black offered the following:
4
5 Amendment (with title amendment)
6 Remove lines 90-308 and insert:
7 dentist has consented to the fee.
8 (d) This subsection may not be waived, voided, or
9 nullified by contract, and any contractual clause in conflict
10 with this subsection or which purports to waive any requirements
11 of this subsection is null and void.
12 (e) The office has all rights and powers to enforce this
13 subsection as provided by s. 624.307.
14 (f) The commission may adopt rules to implement this
15 subsection.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
16 (21)(a) A health insurer may not deny any claim
17 subsequently submitted by a dentist licensed under chapter 466
18 for procedures specifically included in a prior authorization
19 unless at least one of the following circumstances applies for
20 each procedure denied:
21 1. Benefit limitations, such as annual maximums and
22 frequency limitations not applicable at the time of the prior
23 authorization, are reached subsequent to issuance of the prior
24 authorization.
25 2. The documentation provided by the person submitting the
26 claim fails to support the claim as originally authorized.
27 3. Subsequent to the issuance of the prior authorization,
28 new procedures are provided to the patient or a change in the
29 condition of the patient occurs such that the prior authorized
30 procedure would no longer be considered medically necessary,
31 based on the prevailing standard of care.
32 4. Subsequent to the issuance of the prior authorization,
33 new procedures are provided to the patient or a change in the
34 patient's condition occurs such that the prior authorized
35 procedure would at that time have required disapproval pursua nt
36 to the terms and conditions for coverage under the patient's
37 plan in effect at the time the prior authorization was issued.
38 5. The denial of the claim was due to one of the
39 following:
40 a. Another payor is responsible for payment.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
41 b. The dentist has already been paid for the procedures
42 identified in the claim.
43 c. The claim was submitted fraudulently, or the prior
44 authorization was based in whole or material part on erroneous
45 information provided to the health insurer by the dentist,
46 patient, or other person not related to the insurer.
47 d. The person receiving the procedure was not eligible to
48 receive the procedure on the date of service and the health
49 insurer did not know, and with the exercise of reasonable care
50 could not have known, of his or her ineligibility.
51 (b) This subsection may not be waived, voided, or
52 nullified by contract, and any contractual clause in conflict
53 with this subsection or which purports to waive any requirements
54 of this subsection is null and void.
55 (c) The office has all rights and powers to enforce this
56 subsection as provided by s. 624.307.
57 (d) The commission may adopt rules to implement this
58 subsection.
59 Section 2. Subsection (2) of section 627.6474, Florida
60 Statutes, is amended to read:
61 627.6474 Provider contracts.—
62 (2) A contract between a health insurer and a dentist
63 licensed under chapter 466 for the provision of services to an
64 insured may not contain a provision that requires the dentist to
65 provide services to the insured under such contract at a fee set
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
66 by the health insurer unless such services are covered services
67 under the applicable contract. As used in this subsection, the
68 term "covered services" means dental care services for which a
69 reimbursement is available under the insured's contract,
70 notwithstanding or for which a reimbursement would be available
71 but for the application of contractual limitations, such as
72 deductibles, coinsurance, waiting periods, annual or lifetime
73 maximums, frequency limitations, alternative benefit payments,
74 or any other limitation.
75 Section 3. Section 636.032, Florida Statutes, is amended
76 to read:
77 636.032 Acceptable payments.—
78 (1) Each prepaid limited health service organization may
79 accept from government agencies, corporations, groups, or
80 individuals payments covering all or part of the cost of
81 contracts entered into between the prepaid limited health
82 service organization and its subscribers.
83 (2)(a) A contract between a prepaid limited health service
84 organization and a dentist licensed under chapter 466 for the
85 provision of services to a subscriber may not specify credit
86 card payment as the only acceptable method for payments from the
87 prepaid limited health service organization to the dentist.
88 (b) At least 10 days before a limited health service
89 organization pays a claim to a dentist through electronic funds
90 transfer, including, but not limited to, virtual credit card
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
91 payments, the prepaid limited health service organization shall
92 notify the dentist in writing of all of the following:
93 1. The fees, if any, that are associated with the
94 electronic funds transfer.
95 2. The available methods of payment of claims by the
96 prepaid limited health service organization, with clear
97 instructions to the dentist on how to select an alternative
98 payment method.
99 (c) A prepaid limited health service organization that
100 pays a claim to a dentist through Automatic Clearing House (ACH)
101 transfer may not charge a fee solely to transmit the payment to
102 the dentist unless the dentist has consented to the fee.
103 (d) This subsection may not be waived, voided, or
104 nullified by contract, and any contractual clause in conflict
105 with this subsection or which purports to waive any requirements
106 of this subsection is null and void.
107 (e) The office has all rights and powers to enforce this
108 subsection as provided by s. 624.307.
109 (f) The commission may adopt rules to implement this
110 subsection.
111 Section 4. Subsection (13) of section 636.035, Florida
112 Statutes, is amended, and subsection (15) is added to that
113 section, to read:
114 636.035 Provider arrangements.—
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
115 (13) A contract between a prepaid limited health service
116 organization and a dentist licensed under chapter 466 for the
117 provision of services to a subscriber of the prepaid limited
118 health service organization may not contain a provision that
119 requires the dentist to provide services to the subscriber of
120 the prepaid limited health service organization at a fee set by
121 the prepaid limited health service organization unless such
122 services are covered services under the applicable contract. As
123 used in this subsection, the term "covered services" means
124 dental care services for which a reimbursement is available
125 under the subscriber's contract, notwithstanding or for which a
126 reimbursement would be available but for the application of
127 contractual limitations such as deductibles, coinsurance,
128 waiting periods, annual or lifetime maximums, frequency
129 limitations, alternative benefit payments, or any other
130 limitation.
131 (15)(a) A prepaid limited health service organization may
132 not deny any claim subsequently submitted by a dentist licensed
133 under chapter 466 for procedures specifically included in a
134 prior authorization unless at least one of the following
135 circumstances applies for each procedure denied:
136 1. Benefit limitations, such as annual maximums and
137 frequency limitations not applicable at the time of the prior
138 authorization, are reached subsequent to issuance of the prior
139 authorization.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
140 2. The documentation provided by the person submitting the
141 claim fails to support the claim as originally authorized.
142 3. Subsequent to the issuance of the prior authorization,
143 new procedures are provided to the patient or a change in the
144 condition of the patient occurs such that the prior authorized
145 procedure would no longer be considered medically necessary,
146 based on the prevailing standard of care.
147 4. Subsequent to the issuance of the prior authorization,
148 new procedures are provided to the patient or a change in the
149 patient's condition occurs such that the prior authorized
150 procedure would at that time have required disapproval pursuant
151 to the terms and conditions for coverage under the patient's
152 plan in effect at the time the prior authorization was issued.
153 5. The denial of the dental service claim was due to one
154 of the following:
155 a. Another payor is responsible for payment.
156 b. The dentist has already been paid for the procedures
157 identified in the claim.
158 c. The claim was submitted fraudulently, or the prior
159 authorization was based in whole or material part on erroneous
160 information provided to the prepaid limited health service
161 organization by the dentist, patient, or other person not
162 related to the organization.
163 d. The person receiving the procedure was not eligible to
164 receive the procedure on the date of service and the prepaid
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
165 limited health service organization did not know, and with the
166 exercise of reasonable care could not have known, of his or her
167 ineligibility.
168 (b) This subsection may not be waived, voided, or
169 nullified by contract, and any contractual clause in conflict
170 with this subsection or which purports to waive any requirements
171 of this subsection is null and void.
172 (c) The office has all rights and powers to enforce this
173 subsection as provided by s. 624.307.
174 (d) The commission may adopt rules to implement this
175 subsection.
176 Section 5. Subsection (11) of section 641.315, Florida
177 Statutes, is amended, and subsections (13) and (14) are added to
178 that section, to read:
179 641.315 Provider contracts.—
180 (11) A contract between a health maintenance organization
181 and a dentist licensed under chapter 466 for the provision of
182 services to a subscriber of the health maintenance organization
183 may not contain a provision that requires the dentist to provide
184 services to the subscriber of the health maintenance
185 organization at a fee set by the health maintenance organiza tion
186 unless such services are covered services under the applicable
187 contract. As used in this subsection, the term "covered
188 services" means dental care services for which a reimbursement
189 is available under the subscriber's contract, notwithstanding or
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
190 for which a reimbursement would be available but for the
191 application of contractual limitations such as deductibles,
192 coinsurance, waiting periods, annual or lifetime maximums,
193 frequency limitations, alternative benefit payments, or any
194 other limitation.
195 (13)(a) A contract between a health maintenance
196 organization and a dentist licensed under chapter 466 for the
197 provision of services to a subscriber of the health maintenance
198 organization may not specify credit card payment as the only
199 acceptable method for payments from the health maintenance
200 organization to the dentist.
201 (b) At least 10 days before a health maintenance
202 organization pays a claim to a dentist through electronic funds
203 transfer, including, but not limited to, virtual credit card
204 payments, the health maintenance organization shall notify the
205 dentist in writing of all of the following:
206 1. The fees, if any, that are associated with the
207 electronic funds transfer.
208 2. The available methods of payment of claims by the
209 health maintenance organization, with clear instructions to the
210 dentist on how to select an alternative payment method.
211 (c) A health maintenance organization that pays a claim to
212 a dentist through Automated Clearing House (ACH) transfer may
213 not charge a fee solely to transmit the payment to the dentist
214 unless the dentist has consented to the fee.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
215
216 -----------------------------------------------------
217 T I T L E A M E N D M E N T
218 Remove lines 11-58 and insert:
219 providing construction; authorizing the Office of Insur ance
220 Regulation of the Financial Services Commission to enforce
221 certain provisions; authorizing the commission to adopt rules;
222 prohibiting a health insurer from denying claims for procedures
223 included in a prior authorization; providing exceptions;
224 providing construction; authorizing the office to enforce
225 certain provisions; authorizing the commission to adopt rules;
226 amending s. 627.6474, F.S.; revising the definition of the term
227 "covered services"; amending s. 636.032, F.S.; prohibiting a
228 contract between a prepaid limited health service organization
229 and a dentist from containing certain restrictions on payment
230 methods; requiring the prepaid limited health service
231 organization to make certain notifications before paying a claim
232 to a dentist through electronic funds transfer; prohibiting a
233 prepaid limited health service organization from charging a fee
234 to transmit a payment to a dentist through ACH transfer unless
235 the dentist has consented to such fee; providing construction;
236 authorizing the office to enforce certain provisions;
237 authorizing the commission to adopt rules; amending s. 636.035,
238 F.S.; revising the definition of the term "covered services";
239 prohibiting a prepaid limited health service organization from
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1219 (2024)
Amendment No. 1
240 denying claims for procedures included in a prior authorization;
241 providing exceptions; providing construction; authorizing the
242 office to enforce certain provisions; authorizing the commission
243 to adopt rules; amending s. 641.315, F.S.; revising the
244 definition of the term "covered service"; prohibiting a contract
245 between a health maintenance organization and a dentist from
246 containing certain restrictions on payment methods; requiring
247 the health maintenance organization to make certain
248 notifications before paying a claim to a dentist through
249 electronic funds transfer; prohibiting a health maintenance
250 organization from charging a fee to transmit a payment to a
251 dentist through ACH transfer unless the dentist has consented to
252 such fee; providing construction;
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HB 1263
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1263 My Safe Florida Home Program
SPONSOR(S): LaMarca
TIED BILLS: IDEN./SIM. BILLS: SB 7028
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenberry Lloyd
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
The My Safe Florida Home (MSFH) Program was created in 2006 within the Department of Financial Services (DFS)
to perform mitigation inspections of site-built, single-family, residential properties (inspections), and mitigation grants
(grants) to eligible applicants to make their homes less vulnerable to hurricane damage. The MSFH Program received
$250 million in appropriations for the Fiscal Year 2006-2007, but was not funded again until 2022. Since then, the
Legislature has provided approximately $433 million in subsequent additional funding to the MSFH Program.
Mitigation inspections are limited to homesteaded properties. Funds may be used to inspect townhouses to
determine if opening protection mitigation would help decrease the risk of hurricane damage and grant funds may
be used to pay for such opening protection mitigation if warranted . The value of the mitigation grant-eligible
homes is currently $700,000. While initially limited to homes within the wind-borne debris region, the MSFH
Program is currently a statewide program.
The bill makes additional changes to the MSFH Program. It allows homeowners to submit subsequent mitigation
inspection and grant applications for the same home if certain criteria are met. Pursuant to the bill, DFS may request
that an applicant provide additional information if the application contains errors or omissions. An application is
considered withdrawn if an applicant does not respond to a request for additional information within 60 days.
In order to receive grant funds, homeowners must agree to provide DFS with information from their homeowners’
insurers that identifies discounts in premiums have received as a result of improvements made with grant funds.
The bill eliminates the requirement that DFS maintain a list of participating contractors for the grant portion of the
MSFH Program. Participants in the program may choose any properly licensed contractor to perform the
improvements.
The bill specifies that grant-funded opening protection improvements includes exterior doors, garage doors,
windows, and skylights. Current law allows DFS to require that improvements be made to all openings, including
exterior doors, and garage doors as a condition of reimbursing a homeowner approved for a grant. The bill adds
windows and skylights to the list of openings that must be improved in their entirety for a homeowner to be
reimbursed.
The bill requires that, for the first 60 days DFS accepts inspection and grant applications following any
legislative appropriation, DFS must prioritize the review and approval of applications by low- and moderate-
income persons and those applicants who are at least 60 years old.
The bill has no impact on local government revenues or expenditures or state government revenues. It has a
significant impact on state expenditures. The bill may have a positive direct economic impact on the private sector.
The bill is effective on July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h1263.IBS
DATE: 1/30/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
In 2006, the Legislature created the My Safe Florida Home (MSFH) Program within the Department of
Financial Services (DFS) with the intent that the Program provide trained and certified inspectors to
perform inspections for owners of site-built, single-family, residential properties (mitigation inspections)
and grants to eligible applicants, subject to funding availability. 1 The purpose of the MSFH Program
was to “develop and implement a comprehensive and coordinated approach for hurricane damage
mitigation.”2 The MSFH program allowed DFS to undertake a public outreach and advertising campaign
to inform consumers of the availability, and benefits, of the mitigation inspections and grants. 3 It
required the development of brochures for distribution to general contractors, roofing contractors, and
real estate brokers and sales associates to explain the benefits of residential hurricane damage
mitigation to homeowners.4
Hurricane Mitigation Inspections
The purpose of the mitigation inspections was to determine:
What mitigation measures were needed;
What insurance premium discounts might have been available; and
What improvements to existing residential properties were needed to reduce the properties’
susceptibility to hurricane damage.5
The mitigation inspections had to include, at a minimum:
A report that summarized the results and identified recommended improvements the
homeowner could take to mitigate hurricane damage;
A range of cost estimates regarding the recommended mitigation improvements; and
Insurer-specific information regarding premium discounts correlated to current and
recommended hurricane mitigation improvements.6
DFS was required to maintain a list of hurricane mitigation inspectors who were authorized to conduct
the mitigation inspections for the MSFH Program.7 DFS entered contracts with wind certification entities
to provide mitigation inspections. In order to be eligible for the contracts, the entities had to use
hurricane mitigation inspectors who, at a minimum:
Were certified building inspectors;
Were licensed as general or residential contractors;
Were licensed and professional engineers and had passed the appropriate equivalency test of
the building code training program;
Were licensed professional architects; or
Had at least two years of experience in residential construction or residential building inspection
and had received specialized training in hurricane mitigation procedures. 8
1 S. 215.5586, F.S.
2 Id.
3 S. 215.5586(3), F.S.
4 S. 215.5586(7), F.S.
5 S. 215.5586(1)(a), F.S.
6 Id.
7 S. 215.55186(6), F.S.
8 S. 215.5586(1)(b), F.S.
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Mitigation Grants
The purpose of the mitigation grants component of the MSFH Program was to retrofit single-family
homes to make them less vulnerable to hurricane damage. 9 To be eligible for a grant, the following
criteria must have been met:
The homeowner must have had a homestead exemption on the home to be retrofitted;
The home must have had an insured value of $300,000 or less, unless the homeowner was
classified as a low-income person;
The home must have undergone an acceptable hurricane mitigation inspection after May 1,
2007;
The home must have been located in the “wind-borne debris region” as defined in the
International Building Code; and
The building permit application for initial construction of the home must have been made before
March 1, 2002.10
In addition, the homeowner had to match the grant award on a dollar-for-dollar basis up to $10,000, for
the actual cost of the mitigation project, and the state’s contribution could not exceed $5,000. 11 Low-
income homeowners were eligible for grants of up to $5,000, and were not required to provide a
matching amount to receive a grant.12 Matching fund grants were also available to local governments
and nonprofit entities for projects to reduce hurricane damages to single-family homes.13
Grants could be used on previously-inspected existing structures or on rebuilds.14 If recommended by a
hurricane mitigation inspection, grants could be used for the following improvements:
Opening protection.
Upgrading exterior doors, including garage doors.
Bracing gable ends.
Reinforcing roof-to-wall connections.
Improving the strength of roof-deck attachments.
Upgrading roof coverings from code to code plus.
Installing secondary water barrier for roofs.15
DFS was required to issue an annual report on the activities of the MSFH Program that accounted for
the use of any appropriated state funds, the number of inspections requested and performed, the
number of grant applications received, and the number and value of grants approved. 16
The MSFH Program was appropriated $250 million in Fiscal Year 2006-07.17 As of May 2009,
approximately $93 million in MSFH grants were allocated to 32,000 homes, and approximately 400,000
homes received a MSFH home inspection.18 DFS requested that Risk Management Solutions (RMS),
conduct an impact analysis of the MSFH program, and RMS released a report of the impact analysis on
May 14, 2009 (report).19 In the report, RMS concluded that the MSFH grants were beneficial to the
State of Florida, individual homeowners, and the insurance industry. 20 RMS indicated that the predicted
reduction in loss as a result of the grant projects completed far exceeded the grant money spent. 21
9 S. 215.5586(2), F.S.
10 Id.
11
Id.
12 Id.
13 Id.
14 Rebuilds were defined as site-built, single-family dwellings under construction to replace homes that were destroyed or significantly
damaged by hurricanes and deemed unlivable by a regulatory authority. S. 215.5586(2)(e), F.S.
15 S. 215.5586(2)(e), F.S.
16 S. 215.5586(10), F.S.
17 Risk Management Solutions, Analyzing the Effects of the My Safe Florida Home Program on Florida Insurance Risk , May 14, 2009,
https://www.ipcc.ch/apps/njlite/srex/njlite_download.php?id=5036 (last visited Jan. 26, 2024).
18 Id.
19 Id.
20 Id.
21 Id.
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While the MSFH Program was never repealed from law, additional funding was not provided until May
2022.
2022 Renewal of the MSFH Program
During the 2022D Special Session, the Legislature passed a property insurance bill (SB 2-D), in which
it renewed the funding for the MSFH Program by appropriating $150 million in nonrecurring funds from
General Revenue (GR) to DFS for the Program for the 2022-2023 fiscal year. The funds appropriated
were allocated as follows:
$115 million for mitigation grants.
$25 million for hurricane mitigation inspections.
$4 million for education and consumer awareness.
$1 million for public outreach for contractors and estate brokers and sales associates.
$5 million for administrative costs.
SB 2-D reappropriated any unexpended balance of funds from the appropriation remaining on June 30,
2023, to DFS for the 2023-2024 fiscal year to be used for the MSFH Program. The appropriation will
expire on October 1, 2024. SB 2-D gave DFS the authority to adopt emergency rules to implement the
MSFH Program.
SB 2-D made additional modifications to the MSFH Program. It required that an application for a
mitigation grant include a provision that requires an applicant to make his or her home available for
inspection once a mitigation project is completed. The bill changed the monetary limits for eligibility for
mitigation grants so that homes with an insured value of $500,000, or less, qualify for the program.
SB 2-D required that homes that receive mitigation grants have undergone home mitigation inspections
after July 1, 2008, and have received permits for initial construction before January 1, 2008. The
homeowner must also match grant funds on the basis of $1 from the homeowner for every $2 provided
by the state up to a maximum state contribution of $10,000 towards the actual cost of the mitigation
project undertaken on the eligible home.
The bill enhanced the reporting requirements for DFS under the MSFH Program by requiring that the
report include the following received by homeowners from insurers as a result of the mitigation funded
by the program:
The average annual amount of insurance premium discounts; and
The total annual amount of insurance premium discounts.
2022 MSFH Program Implementation
Following the passage of SB 2-D, DFS procured a vendor to administer the MSFH Program, qualified
inspectors to conduct mitigation inspections, and qualified contractors who agreed to provide mitigation
repairs and retrofitting under the grant portion of the Program.22 DFS compiled a list of approved
vendors that homeowners participating in the MSFH Program may choose for inspections and
mitigation work.23
On November 18, 2022, a web-based application for homeowners to request mitigation inspections and
grant funds went live.24 Between May 26, 2022 and February 28, 2023, 16,724 mitigation inspections
were completed and 2,979 grant applications were approved. 25
Inspectors completing mitigation inspections under the MSFH Program must complete the Uniform
Mitigation Verification Inspection Form (Inspection Form), as revised by the Office of Insurance
22 Florida Department of Financial Services, Agency Analysis of 2023 House Bill 881, p. 1 (Mar. 1, 2023).
23 Id.
24 Id.
25 Id.
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Regulation on January 12, 2023.26 The mitigation inspection report provided to the homeowner includes
the completed Inspection Form, as well as the information already required by statute, 27 including:
A summary of the results of the mitigation inspection identifying recommended improvements a
homeowner may undertake;
A range of cost estimates regarding the recommended improvements; and
Estimated property insurance premium discounts based on the mitigation measures the
homeowner has completed.28
2023 Developments to the MSFH Program
Following the significant interest in the program in 2022 and early 2023, the Legislature made
additional changes to the statutory framework for the MSFH Program during the 2023 Regular Session.
These changes included changes to the inspection and grant eligibility requirements, and program
management changes.
Single-family home eligibility for mitigation inspections was limited only to homesteaded properties. 29
Funds from the MSFH Program may now be used to inspect townhouses to determine if opening
protection mitigation would help decrease the risk of hurricane damage.30 If an inspection determines
that opening protection mitigation would decrease such risk, grant funds from the MSFH Program may
be used to pay for the mitigation.31 The value of the mitigation grant-eligible homes was also increased
from $500,000 to $700,000.32
The designation of a specific portion of the grant funds for low-income recipients was removed, but
increases the overall grant award for low-income recipients from $5,000 to $10,000.33 The program’s
geographic eligibility area was broadened to include otherwise in eligible homes outside the wind-borne
debris region, in effect making it a statewide program.
Among the project management changes implemented, home inspectors must be licensed, in addition
to certified.34 This requirement conforms with other statutory chapters that address home inspectors.
Funding for the MSFH Program
As of December 2023, the Legislature has appropriated a total of $433 million for the MSFH Program
since May 2022.35 In addition to the $150 million appropriated during the 2022D Special Session, this
includes $100 million in grant funding appropriated during the 2023 Regular Session and an additional
$176 million in grant funding appropriated during the 2023C Special Session. 36
26 Id.
27 S. 215.5586(1)(a), F.S.
28 Department of Financial Services, supra note 22, at 2.
29 The homestead requirement was already in place for the grant portion of the MSFH Program under s. 215.5586(2), F.S., prior to the
2023 Regular Session.
30 S. 215.5586(1)(a), F.S.
31 S. 215.5586(2)(f), F.S.
32 S. 215.5586(2)(e)2., F.S.
33 S. 215.5586(2)(h), F.S.
34 S. 215.5586, F.S.
35 Department of Financial Services, 2023 Annual Report of My Safe Florida Home, p. 1.
36 Id. at p. 6. The mitigation grant funding is by far the largest component of the MSFH Program.
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Results of the MSFH Program
Between November 2022, and December 2023, the MSFH Program has provided more than 94,000
homeowners with hurricane mitigation inspections and approved more than 23,000 grant applications.37
Over 73 percent of those homeowners who have completed participation in the grant component of the
MSFH Program have seen their homeowners insurance premiums drop or stabilize, and many are
paying premiums at or below the state average.38 According to DFS, upon applying to the MSFH
Program, the average premium of the applicants was 55.1 percent higher than the average Florida
homeowner’s premium.39 Based upon the decrease in premium following participation, DFS has
concluded that the MSFH Program participation is comprised of higher-than-average risk homeowners,
which is consistent with the goal of helping those with homes at greatest risk. 40
Effect of the Bill
The bill makes additional changes to improve the operation and effectiveness of the MSFH Program. It
allows homeowners to submit subsequent mitigation inspection and grant applications for the same
home if the following criteria are met:
The original application was denied or withdrawn due to errors or omissions in the application;
The original application was denied or withdrawn because the home did not meet the eligibility
criteria at the time of application, and the homeowner reasonably believes the home is now
eligible for an inspection or grant; or
The MSFH Program’s eligibility requirements have changed since the date of the original
application, and the homeowner reasonably believes the home is now eligible for an inspection
or grant.
Pursuant to the bill, DFS may request that an applicant provide additional information if the application
contains errors or omissions. DFS may consider an application withdrawn if it does not receive a
response to its request for additional information within 60 days of notifying the applicant of errors or
omissions.
The bill provides additional criteria for homes to be eligible for mitigation grants. Homeowners must
agree to provide DFS with information from their homeowners’ insurers that identifies premium
discounts received as a result of improvements made with grant funds.
The bill eliminates the requirement that DFS maintain a list of participating contractors for the grant
portion of the MSFH Program. Instead, participants in the program may choose any properly licensed
contractor to perform the improvements.
The bill specifies that opening protection that may be improved with grant funds from the MSFH
Program includes exterior doors, garage doors, windows, and skylights. Current law allows DFS to
require that improvements be made to all openings, including exterior doors, and garage doors as a
condition of reimbursing a homeowner approved for a grant. 41 The bill adds windows and skylights to
the list of openings that must be improved in their entirety for a homeowner to be reimbursed.
The bill requires that, for the first 60 days DFS accepts inspection and grant applications following any
legislative appropriation, DFS must prioritize the review and approval of applications in the following
order:
Low-income persons who are at least 60 years old;
All other low-income persons;
Moderate-income persons who are at least 60 years old;
37 Id. at p. 1. Because the grant portion of the MSFH Program is fulfilled based on reimbursement to homeowners after proof of
completion of mitigation projects, the money to fulfill these grants has been reserved, but not all of it has been paid to the homeowners
yet.
38 Id.
39 Id. at p. 2.
40 Id.
41 S. 215.5586(2)(f), F.S.
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All other moderate-income persons;42 and
All other applicants.
B. SECTION DIRECTORY:
Section 1. Amends s. 215.5586, F.S., relating to the My Safe Florida Home Program.
Section 2. Provides an appropriation for the MSFH Program of $100 million in grants and $7 million in
administrative costs.
Section 3. Provides an effective date of July 1, 2014.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
The bill contains significant state expenditures. It appropriates the following nonrecurring funds from
General Revenue to DFS for the MSFH Program:
$100 million for mitigation grants; and
$7 million for administrative costs related to the mitigation grants.
It also provides that DFS may not continue to accept grant applications or create a waiting list in
anticipation of additional funding unless the Legislature provides express authority to do so.
See Fiscal Comments.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
To the extent that homes that participate in the MSFH Program receive mitigation credits or premium
discounts under their property insurance policies and are less exposed to risk as a result of mitigation
retrofitting using grant funds, the MSFH Program will have a positive direct economic impact on
homeowners. Hurricane mitigation contractors may also see an increase in project activity.
42 The relevant definitions of low- and moderate-income persons are found in s. 420.0004, F.S.
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D. FISCAL COMMENTS:
While the bill contains appropriations of $100 million for mitigation grants and $7 million for
administrative costs related to the implementation of the grants, the House’s proposed General
Appropriations Act (GAA) for Fiscal Year 2024-2025,43 includes $200 million for mitigation grants,
approximately $17 million for mitigation inspections, and approximately $7 million for administrative
costs related to both components of the MSFH Program. Consideration could be given to eliminating
the appropriations in the bill and funding the program through the GAA.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
Lines 292–305: The bill may contain an invalid delegation of legislative authority. It directs DFS to
prioritize inspection and grant applications from low-income persons and those who are at least 60
years old for the first 60 days that the application period is open following any appropriation of funds
for the MSFH Program. While the bill provides details on the categories of applicants to be
prioritized, it does not give any instructions to DFS about how it is to accomplish the prioritization
process. Consideration should be given to either amending the bill to instruct DFS on how to
complete the process or to expressly give DFS rulemaking authority to create a prioritization
process.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking. However, see III.A.2., Other
Constitutional Issues.
C. DRAFTING ISSUES OR OTHER COMMENTS:
Lines 183-184 and 189-190: These lines provide redundant requirements for homes to undergo
mitigation inspections in order to be eligible for mitigation grants. An amendment is suggested to
eliminate the redundancy.
See also III.A.2., Other Constitutional Issues.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
43 See PCB APC 24-01 (2024).
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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 1263 2024
1 A bill to be entitled
2 An act relating to the My Safe Florida Home Program;
3 amending s. 215.5586, F.S.; revising legislative
4 intent; specifying eligibility requirements for
5 hurricane mitigation inspections under the program;
6 specifying requirements for a hurricane mitigation
7 inspection application; authorizing an applicant to
8 submit a subsequent hurricane mitigation inspection
9 application under certain conditions; authorizing the
10 Department of Financial Services to request certain
11 information; providing that an application is
12 considered withdrawn under certain circumstances;
13 authorizing an applicant to receive a home inspection
14 under the program without being eligible for a grant
15 or applying for a grant; specifying eligibility
16 requirements for hurricane mitigation grants; revising
17 application requirements for hurricane mitigation
18 grants; authorizing an applicant to submit a
19 subsequent hurricane mitigation grant application
20 under certain conditions; authorizing the department
21 to request certain information; providing that an
22 application is considered withdrawn under certain
23 circumstances; deleting and revising provisions
24 relating to the selection of hurricane mitigation
25 inspectors and contractors; authorizing, rather than
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26 requiring, matching fund grants to be made available
27 to certain entities; revising the improvements for
28 which grants may be used; requiring the department to
29 develop a process that ensures the most efficient
30 means to collect and verify inspection applications;
31 requiring the department, for a specified timeframe,
32 to prioritize applications in a specified order;
33 revising provisions regarding the development of
34 brochures; requiring the Citizens Property Insurance
35 Corporation to distribute such brochures to specified
36 persons; providing appropriations; providing an
37 effective date.
38
39 Be It Enacted by the Legislature of the State of Florida:
40
41 Section 1. Section 215.5586, Florida Statutes, as amended
42 by section 5 of chapter 2023-349, Laws of Florida, is amended to
43 read:
44 215.5586 My Safe Florida Home Program.—There is
45 established within the Department of Financial Services the My
46 Safe Florida Home Program. The department shall provide fiscal
47 accountability, contract management, and strategic leadership
48 for the program, consistent with this section. This section does
49 not create an entitlement for property owners or obligate the
50 state in any way to fund the inspection or retrofitting of
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51 residential property in this state. Implementation of this
52 program is subject to annual legislative appropriations. It is
53 the intent of the Legislature that, subject to the availability
54 of funds, the My Safe Florida Home Program provide licensed
55 inspectors to perform hurricane mitigation inspections of
56 eligible homes for owners of site-built, single-family,
57 residential properties and grants to eligible fund hurricane
58 mitigation projects on those homes applicants. The department
59 shall implement the program in such a manner that the total
60 amount of funding requested by accepted applications, whether
61 for inspections, grants, or other services or assistance, does
62 not exceed the total amount of available funds. If, after
63 applications are processed and approved, funds remain available,
64 the department may accept applications up to the available
65 amount. The program shall develop and implement a comprehensive
66 and coordinated approach for hurricane damage mitigation
67 pursuant to that may include the following requirements provided
68 in this section.:
69 (1) HURRICANE MITIGATION INSPECTIONS.—
70 (a) To be eligible for an inspection under the program:
71 1. A home must be a single-family, site-built, detached
72 residential property or a townhouse as defined in s. 481.203;
73 and
74 2. The homeowner must have been granted a homestead
75 exemption on the home under chapter 196.
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76 (b)1. An application for an inspection must contain a
77 signed or electronically verified statement made under penalty
78 of perjury that the applicant has submitted only one inspection
79 application on the home or that the application is allowed under
80 subparagraph 2., and must have documents attached to the
81 application which demonstrate that the applicant meets the
82 requirements of paragraph (a).
83 2. An applicant may submit a subsequent hurricane
84 mitigation inspection application for the same home only if:
85 a. The original hurricane mitigation inspection
86 application has been denied or withdrawn because of errors or
87 omissions in the application;
88 b. The original hurricane mitigation inspection
89 application was denied or withdrawn because the home did not
90 meet the eligibility criteria for an inspection at the time of
91 the previous application, and the homeowner reasonably believes
92 the home now is eligible for an inspection; or
93 c. The program's eligibility requirements for an
94 inspection have changed since the original application date, and
95 the applicant reasonably believes the home is eligible under the
96 new requirements.
97 3. The department may request that the applicant provide
98 additional information if the application contains apparent
99 errors or omissions. An application is considered withdrawn by
100 the applicant if the department does not receive a response to
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101 its request for additional information within 60 days after the
102 department notifies the applicant of any apparent errors or
103 omissions.
104 (c) An applicant meeting the requirements of this
105 subsection may receive an inspection of a home under the program
106 without being eligible for a grant under subsection (2) or
107 applying for such grant.
108 (d) Licensed inspectors are to provide home inspections of
109 homes meeting the requirements of this subsection site-built,
110 single-family, residential properties for which a homestead
111 exemption has been granted, to determine what mitigation
112 measures are needed, what insurance premium discounts may be
113 available, and what improvements to existing residential
114 properties are needed to reduce the property's vulnerability to
115 hurricane damage. An inspector may inspect a townhouse as
116 defined in s. 481.203 to determine if opening protection
117 mitigation as listed in subparagraph (2)(f)1. paragraph (2)(e)
118 would provide improvements to mitigate hurricane damage.
119 (e)(b) The department of Financial Services shall contract
120 with wind certification entities to provide hurricane mitigation
121 inspections. The inspections provided to homeowners, at a
122 minimum, must include:
123 1. A home inspection and report that summarizes the
124 results and identifies recommended improvements a homeowner may
125 take to mitigate hurricane damage.
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126 2. A range of cost estimates regarding the recommended
127 mitigation improvements.
128 3. Information regarding estimated premium discounts,
129 correlated to the current mitigation features and the
130 recommended mitigation improvements identified by the
131 inspection.
132 (f)(c) To qualify for selection by the department as a
133 wind certification entity to provide hurricane mitigation
134 inspections, the entity must, at a minimum, meet the following
135 requirements:
136 1. Use hurricane mitigation inspectors who are licensed or
137 certified as:
138 a. A building inspector under s. 468.607;
139 b. A general, building, or residential contractor under s.
140 489.111;
141 c. A professional engineer under s. 471.015;
142 d. A professional architect under s. 481.213; or
143 e. A home inspector under s. 468.8314 and who have
144 completed at least 3 hours of hurricane mitigation training
145 approved by the Construction Industry Licensing Board, which
146 training must include hurricane mitigation techniques,
147 compliance with the uniform mitigation verification form, and
148 completion of a proficiency exam.
149 2. Use hurricane mitigation inspectors who also have
150 undergone drug testing and a background screening. The
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151 department may conduct criminal record checks of inspectors used
152 by wind certification entities. Inspectors must submit a set of
153 fingerprints to the department for state and national criminal
154 history checks and must pay the fingerprint processing fee set
155 forth in s. 624.501. The fingerprints must be sent by the
156 department to the Department of Law Enforcement and forwarded to
157 the Federal Bureau of Investigation for processing. The results
158 must be returned to the department for screening. The
159 fingerprints must be taken by a law enforcement agency,
160 designated examination center, or other department-approved
161 entity.
162 3. Provide a quality assurance program including a
163 reinspection component.
164 (d) An application for an inspection must contain a signed
165 or electronically verified statement made under penalty of
166 perjury that the applicant has submitted only a single
167 application for that home.
168 (e) The owner of a site-built, single-family, residential
169 property or townhouse as defined in s. 481.203, for which a
170 homestead exemption has been granted, may apply for and receive
171 an inspection without also applying for a grant pursuant to
172 subsection (2) and without meeting the requirements of paragraph
173 (2)(a).
174 (2) HURRICANE MITIGATION GRANTS.—Financial grants shall be
175 used by homeowners to encourage single-family, site-built,
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176 owner-occupied, residential property owners to make improvements
177 recommended by an inspection which increase resistance retrofit
178 their properties to make them less vulnerable to hurricane
179 damage.
180 (a) For A homeowner is to be eligible for a hurricane
181 mitigation grant if all of, the following criteria are must be
182 met:
183 1. The home must be eligible for an inspection under
184 subsection (1) The homeowner must have been granted a homestead
185 exemption on the home under chapter 196.
186 2. The home must be a dwelling with an insured value of
187 $700,000 or less. Homeowners who are low-income persons, as
188 defined in s. 420.0004(11), are exempt from this requirement.
189 3. The home must undergo an acceptable hurricane
190 mitigation inspection as provided in subsection (1).
191 4. The building permit application for initial
192 construction of the home must have been made before January 1,
193 2008.
194 5. The homeowner must agree to make his or her home
195 available for inspection once a mitigation project is completed.
196 6. The homeowner must agree to provide to the department
197 information received from the homeowner's insurer identifying
198 the discounts realized by the homeowner because of the
199 mitigation improvements funded through the program.
200 (b)1. An application for a grant must contain a signed or
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201 electronically verified statement made under penalty of perjury
202 that the applicant has submitted only one grant a single
203 application or that the application is allowed under
204 subparagraph 2., and must have attached documents attached
205 demonstrating the applicant meets the requirements of this
206 paragraph (a).
207 2. An applicant may submit a subsequent grant application
208 if:
209 a. The original grant application was denied or withdrawn
210 because the application contained errors or omissions;
211 b. The original grant application was denied or withdrawn
212 because the home did not meet the eligibility criteria for a
213 grant at the time of the previous application, and the homeowner
214 reasonably believes that the home now is eligible for a grant;
215 or
216 c. The program's eligibility requirements for a grant have
217 changed since the original application date, and the applicant
218 reasonably believes that he or she is an eligible homeowner
219 under the new requirements.
220 3. The department may request that the applicant provide
221 additional information if the application contains apparent
222 errors or omissions. An application is considered withdrawn by
223 the applicant if the department does not receive a response to
224 its request for additional information within 60 days after the
225 department notifies the applicant of any apparent errors or
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226 omissions.
227 (c)(b) All grants must be matched on the basis of $1
228 provided by the applicant for $2 provided by the state up to a
229 maximum state contribution of $10,000 toward the actual cost of
230 the mitigation project, except as provided in paragraph (j).
231 (d)(c) The program shall create a process in which
232 contractors agree to participate and homeowners select from a
233 list of participating contractors. All hurricane mitigation
234 performed under the program must be based upon the securing of
235 all required local permits and inspections and must be performed
236 by properly licensed contractors. Hurricane mitigation
237 inspectors qualifying for the program may also participate as
238 mitigation contractors as long as the inspectors meet the
239 department's qualifications and certification requirements for
240 mitigation contractors.
241 (e)(d) Matching fund grants may shall also be made
242 available to local governments and nonprofit entities for
243 projects that will reduce hurricane damage to eligible homes
244 single-family, site-built, owner-occupied, residential property.
245 The department shall liberally construe those requirements in
246 favor of availing the state of the opportunity to leverage
247 funding for the My Safe Florida Home Program with other sources
248 of funding.
249 (f)(e) When recommended by a hurricane mitigation
250 inspection, grants for eligible homes may be used for the
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251 following improvements:
252 1. Opening protection, including exterior doors, garage
253 doors, windows, and skylights.
254 2. Exterior doors, including garage doors.
255 3. Reinforcing roof-to-wall connections.
256 3.4. Improving the strength of roof-deck attachments.
257 4.5. Secondary water resistance barrier for roof.
258 (g)(f) When recommended by a hurricane mitigation
259 inspection, grants for townhouses, as defined in s. 481.203, may
260 only be used for opening protection.
261 (h) The department may require that improvements be made
262 to all openings, including exterior doors, and garage doors,
263 windows, and skylights, as a condition of reimbursing a
264 homeowner approved for a grant. The department may adopt, by
265 rule, the maximum grant allowances for any improvement allowable
266 under paragraph (f) or paragraph (g) (e) or this paragraph.
267 (i)(g) Grants may be used on a previously inspected
268 existing structure or on a rebuild. A rebuild is defined as a
269 site-built, single-family dwelling under construction to replace
270 a home that was destroyed or significantly damaged by a
271 hurricane and deemed unlivable by a regulatory authority. The
272 homeowner must be a low-income homeowner as defined in paragraph
273 (j) (h), must have had a homestead exemption for that home
274 before the hurricane, and must be intending to rebuild the home
275 as that homeowner's homestead.
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276 (j)(h) Low-income homeowners, as defined in s.
277 420.0004(11), who otherwise meet the applicable requirements of
278 this subsection paragraphs (a), (c), (e), and (g) are eligible
279 for a grant of up to $10,000 and are not required to provide a
280 matching amount to receive the grant. The program may accept a
281 certification directly from a low-income homeowner that the
282 homeowner meets the requirements of s. 420.0004(11) if the
283 homeowner provides such certification in a signed or
284 electronically verified statement made under penalty of perjury.
285 (k)1.(i) The department shall develop a process that
286 ensures the most efficient means to collect and verify
287 inspection applications and grant applications to determine
288 eligibility. The department and may direct hurricane mitigation
289 inspectors to collect and verify grant application information
290 or use the Internet or other electronic means to collect
291 information and determine eligibility.
292 2. The department, for the first 60 days it accepts
293 inspection applications and grant applications after any
294 legislative appropriation funding inspections and grants, must
295 prioritize the review and approval of such applications in the
296 following order:
297 a. First, applications from low-income persons, as defined
298 in s. 420.0004, who are at least 60 years old;
299 b. Second, applications from all other low-income persons,
300 as defined in s. 420.0004;
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301 c. Third, applications from moderate-income persons, as
302 defined in s. 420.0004, who are at least 60 years old;
303 d. Fourth, applications from all other moderate-income
304 persons, as defined in s. 420.0004; and
305 e. Last, all other applications.
306 3. The program may accept a certification directly from a
307 low-income homeowner or moderate-income homeowner who meets the
308 requirements of s. 420.0004(11) or s. 420.0004(12) if the
309 homeowner provides such certification in a signed or
310 electronically verified statement made under penalty of perjury.
311 (3) EDUCATION, CONSUMER AWARENESS, AND OUTREACH.—
312 (a) The department may undertake a statewide multimedia
313 public outreach and advertising campaign to inform consumers of
314 the availability and benefits of hurricane inspections and of
315 the safety and financial benefits of residential hurricane
316 damage mitigation. The department may seek out and use local,
317 state, federal, and private funds to support the campaign.
318 (b) The program may develop brochures for distribution to
319 Citizens Property Insurance Corporation and other licensed
320 entities or nonprofits that work with the department to educate
321 the public on the benefits of the program, general contractors,
322 roofing contractors, and real estate brokers and sales
323 associates who are licensed under part I of chapter 475 which
324 provide information on the benefits to homeowners of residential
325 hurricane damage mitigation. Citizens Property Insurance
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326 Corporation must is encouraged to distribute the brochure to
327 policyholders of the corporation each year the program is
328 funded. Contractors are encouraged to distribute the brochures
329 to homeowners at the first meeting with a homeowner who is
330 considering contracting for home or roof repair or contracting
331 for the construction of a new home. Real estate brokers and
332 sales associates are encouraged to distribute the brochure to
333 clients before the purchase of a home. The brochures may be made
334 available electronically.
335 (4) FUNDING.—The department may seek out and leverage
336 local, state, federal, or private funds to enhance the financial
337 resources of the program.
338 (5) RULES.—The department of Financial Services shall
339 adopt rules pursuant to ss. 120.536(1) and 120.54 to govern the
340 program; implement the provisions of this section; including
341 rules governing hurricane mitigation inspections and grants,
342 mitigation contractors, and training of inspectors and
343 contractors; and carry out the duties of the department under
344 this section.
345 (6) HURRICANE MITIGATION INSPECTOR LIST.—The department
346 shall develop and maintain as a public record a current list of
347 hurricane mitigation inspectors authorized to conduct hurricane
348 mitigation inspections pursuant to this section.
349 (7) CONTRACT MANAGEMENT.—
350 (a) The department may contract with third parties for
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351 grants management, inspection services, contractor services for
352 low-income homeowners, information technology, educational
353 outreach, and auditing services. Such contracts are considered
354 direct costs of the program and are not subject to
355 administrative cost limits. The department shall contract with
356 providers that have a demonstrated record of successful business
357 operations in areas directly related to the services to be
358 provided and shall ensure the highest accountability for use of
359 state funds, consistent with this section.
360 (b) The department shall implement a quality assurance and
361 reinspection program that determines whether initial inspections
362 and home improvements are completed in a manner consist ent with
363 the intent of the program. The department may use valid random
364 sampling in order to perform the quality assurance portion of
365 the program.
366 (8) INTENT.—It is the intent of the Legislature that
367 grants made to residential property owners under this section
368 shall be considered disaster-relief assistance within the
369 meaning of s. 139 of the Internal Revenue Code of 1986, as
370 amended.
371 (9) REPORTS.—The department shall make an annual report on
372 the activities of the program that shall account for the use of
373 state funds and indicate the number of inspections requested,
374 the number of inspections performed, the number of grant
375 applications received, the number and value of grants approved,
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376 and the estimated average annual amount of insurance premium
377 discounts and total estimated annual amount of insurance premium
378 discounts homeowners received from insurers as a result of
379 mitigation funded through the program. The report must be
380 delivered to the President of the Senate and the Speaker of the
381 House of Representatives by February 1 of each year.
382 Section 2. (1) For the 2024-2025 fiscal year, the sum of
383 $100 million in nonrecurring funds is appropriated from the
384 General Revenue Fund to the Department of Financial Services to
385 provide mitigation grants pursuant to s. 215.5586(2), Florida
386 Statutes, under the My Safe Florida Home Program. The department
387 may not continue to accept applications or to create a waiting
388 list in anticipation of additional funding unless the
389 Legislature provides express authority to implement such
390 actions.
391 (2) For the 2024-2025 fiscal year, the sum of $7 million
392 in nonrecurring funds is appropriated from the General Revenue
393 Fund to the Department of Financial Services for administrative
394 costs related to implementation of mitigation grants pursuant to
395 s. 215.5586(2), Florida Statutes, under the My Safe Florida Home
396 Program.
397 Section 3. This act shall take effect July 1, 2024.
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INSURANCE & BANKING SUBCOMMITTEE
HB 1263 by Rep. LaMarca
My Safe Florida Home Program
AMENDMENT SUMMARY
February 1, 2024
Amendment 1 by Rep. LaMarca (Line 70): The amendment:
• requires a grant applicant to identify the project contractor by name and license number
and the program to verify the status of the contractor’s license.
• clarifies the process for prioritization of low-income grant applicants.
• specifies that a grant-funded project must be completed within 1 year, subject to a one-
time six month extension, or the grant is deemed abandoned and the funds revert to DFS.
• makes other technical and grammatical changes.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1263 (2024)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative LaMarca offered the following:
4
5 Amendment (with title amendment)
6 Remove lines 70-310 and insert:
7 (a) To be eligible for a hurricane mitigation inspection
8 under the program:
9 1. A home must be a single-family, detached residential
10 property or a townhouse as defined in s. 481.203;
11 2. A home must be site-built and owner-occupied; and
12 3. The homeowner must have been granted a homestead
13 exemption on the home under chapter 196.
14 (b)1. An application for a hurricane mitigation inspection
15 must contain a signed or electronically verified statement made
16 under penalty of perjury that the applicant has submitted only
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Bill No. HB 1263 (2024)
Amendment No. 1
17 one inspection application on the home or that the application
18 is allowed under subparagraph 2., and the application must have
19 documents attached which demonstrate that the applicant meets
20 the requirements of paragraph (a).
21 2. An applicant may submit a subsequent hurricane
22 mitigation inspection application for the same home only if:
23 a. The original hurricane mitigation inspection
24 application has been denied or withdrawn because of errors or
25 omissions in the application;
26 b. The original hurricane mitigation inspection
27 application was denied or withdrawn because the home did not
28 meet the eligibility criteria for an inspection at the time of
29 the previous application, and the homeowner reasonably believes
30 the home now is eligible for an inspection; or
31 c. The program's eligibility requirements for an
32 inspection have changed since the original application date, and
33 the applicant reasonably believes the home is eligible under the
34 new requirements.
35 (c) An applicant meeting the requirements of paragraph (a)
36 may receive an inspection of a home under the program without
37 being eligible for a grant under subsection (2) or applying for
38 such grant.
39 (d) Licensed inspectors are to provide home inspections of
40 eligible homes site-built, single-family, residential properties
41 for which a homestead exemption has been granted, to determine
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1263 (2024)
Amendment No. 1
42 what mitigation measures are needed, what insurance premium
43 discounts may be available, and what improvements to existing
44 residential properties are needed to reduce the property's
45 vulnerability to hurricane damage. An inspector may inspect a
46 townhouse as defined in s. 481.203 to determine if opening
47 protection mitigation as listed in subparagraph (2)(e)1.
48 paragraph (2)(e) would provide improvements to mitigate
49 hurricane damage.
50 (e)(b) The department of Financial Services shall contract
51 with wind certification entities to provide hurricane mitigation
52 inspections. The inspections provided to homeowners, at a
53 minimum, must include:
54 1. A home inspection and report that summarizes the
55 results and identifies recommended improvements a homeowner may
56 take to mitigate hurricane damage.
57 2. A range of cost estimates regarding the recommended
58 mitigation improvements.
59 3. Information regarding estimated premium discounts,
60 correlated to the current mitigation features and the
61 recommended mitigation improvements identified by the
62 inspection.
63 (f)(c) To qualify for selection by the department as a
64 wind certification entity to provide hurricane mitigation
65 inspections, the entity must, at a minimum, meet the following
66 requirements:
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1263 (2024)
Amendment No. 1
67 1. Use hurricane mitigation inspectors who are licensed or
68 certified as:
69 a. A building inspector under s. 468.607;
70 b. A general, building, or residential contractor under s.
71 489.111;
72 c. A professional engineer under s. 471.015;
73 d. A professional architect under s. 481.213; or
74 e. A home inspector under s. 468.8314 and who have
75 completed at least 3 hours of hurricane mitigation training
76 approved by the Construction Industry Licensing Board, which
77 training must include hurricane mitigation techniques,
78 compliance with the uniform mitigation verification form, and
79 completion of a proficiency exam.
80 2. Use hurricane mitigation inspectors who also have
81 undergone drug testing and a background screening. The
82 department may conduct criminal record checks of inspectors used
83 by wind certification entities. Inspectors must submit a set of
84 fingerprints to the department for state and national criminal
85 history checks and must pay the fingerprint processing fee set
86 forth in s. 624.501. The fingerprints must be sent by the
87 department to the Department of Law Enforcement and forwarded to
88 the Federal Bureau of Investigation for processing. The results
89 must be returned to the department for screening. The
90 fingerprints must be taken by a law enforcement agency,
91 designated examination center, or other department-approved
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Bill No. HB 1263 (2024)
Amendment No. 1
92 entity.
93 3. Provide a quality assurance program including a
94 reinspection component.
95 (d) An application for an inspection must contain a signed
96 or electronically verified statement made under penalty of
97 perjury that the applicant has submitted only a single
98 application for that home.
99 (e) The owner of a site-built, single-family, residential
100 property or townhouse as defined in s. 481.203, for which a
101 homestead exemption has been granted, may apply for and receive
102 an inspection without also applying for a grant pursuant to
103 subsection (2) and without meeting the requirements of paragraph
104 (2)(a).
105 (2) HURRICANE MITIGATION GRANTS.—Financial grants shall be
106 used by homeowners to encourage single-family, site-built,
107 owner-occupied, residential property owners to make improvements
108 recommended by an inspection which increase resistance retrofit
109 their properties to make them less vulnerable to hurricane
110 damage.
111 (a) For A homeowner is to be eligible for a hurricane
112 mitigation grant if all of, the following criteria are must be
113 met:
114 1. The home must be eligible for an inspection under
115 subsection (1) The homeowner must have been granted a homestead
116 exemption on the home under chapter 196.
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Bill No. HB 1263 (2024)
Amendment No. 1
117 2. The home must be a dwelling with an insured value of
118 $700,000 or less. Homeowners who are low-income persons, as
119 defined in s. 420.0004(11), are exempt from this requirement.
120 3. The home must undergo an acceptable hurricane
121 mitigation inspection as provided in subsection (1).
122 4. The building permit application for initial
123 construction of the home must have been made before January 1,
124 2008.
125 5. The homeowner must agree to make his or her home
126 available for inspection once a mitigation project is completed.
127 6. The homeowner must agree to provide to the department
128 information received from the homeowner's insurer identifying
129 the discounts realized by the homeowner because of the
130 mitigation improvements funded through the program.
131 (b)1. An application for a grant must contain a signed or
132 electronically verified statement made under penalty of perjury
133 that the applicant has submitted only one grant a single
134 application or that the application is allowed under
135 subparagraph 2., and the application must have attached
136 documents attached demonstrating that the applicant meets the
137 requirements of this paragraph (a).
138 2. An applicant may submit a subsequent grant application
139 if:
140 a. The original grant application was denied or withdrawn
141 because the application contained errors or omissions;
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Bill No. HB 1263 (2024)
Amendment No. 1
142 b. The original grant application was denied or withdrawn
143 because the home did not meet the eligibility criteria for a
144 grant at the time of the previous application, and the homeowner
145 reasonably believes that the home now is eligible for a grant;
146 or
147 c. The program's eligibility requirements for a grant have
148 changed since the original application date, and the applicant
149 reasonably believes that he or she is an eligible homeowne r
150 under the new requirements.
151 3. A grant application must include a statement from the
152 homeowner which contains the name and state license number of
153 the contractor that the homeowner acknowledges as the intended
154 contractor for the mitigation work. The program must
155 electronically verify that the contractor's state license number
156 is accurate and up to date before grant approval.
157 (c)(b) All grants must be matched on the basis of $1
158 provided by the applicant for $2 provided by the state up to a
159 maximum state contribution of $10,000 toward the actual cost of
160 the mitigation project, except as provided in paragraph (h).
161 (d)(c) The program shall create a process in which
162 contractors agree to participate and homeowners select from a
163 list of participating contractors. All hurricane mitigation
164 performed under the program must be based upon the securing of
165 all required local permits and inspections and must be performed
166 by properly licensed contractors. Hurricane mitigation
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Bill No. HB 1263 (2024)
Amendment No. 1
167 inspectors qualifying for the program may also participate as
168 mitigation contractors as long as the inspectors meet the
169 department's qualifications and certification requirements for
170 mitigation contractors.
171 (d) Matching fund grants shall also be made available to
172 local governments and nonprofit entities for projects that will
173 reduce hurricane damage to single-family, site-built, owner-
174 occupied, residential property. The department shall liberally
175 construe those requirements in favor of availing the state of
176 the opportunity to leverage funding for the My Safe Florida Home
177 Program with other sources of funding.
178 (e) When recommended by a hurricane mitigation inspection,
179 grants for eligible homes may be used for the following
180 improvements:
181 1. Opening protection, including exterior doors, garage
182 doors, windows, and skylights.
183 2. Exterior doors, including garage doors.
184 3. Reinforcing roof-to-wall connections.
185 3.4. Improving the strength of roof-deck attachments.
186 4.5. Secondary water resistance barrier for roof.
187 (f) When recommended by a hurricane mitigation inspection,
188 grants for townhouses, as defined in s. 481.203, may only be
189 used for opening protection.
190 (g) The department may require that improvements be made
191 to all openings, including exterior doors, and garage doors,
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1263 (2024)
Amendment No. 1
192 windows, and skylights, as a condition of reimbursing a
193 homeowner approved for a grant. The department may adopt, by
194 rule, the maximum grant allowances for any improvement allowable
195 under paragraph (e) or paragraph (f) (e) or this paragraph.
196 (g) Grants may be used on a previously inspected existing
197 structure or on a rebuild. A rebuild is defined as a site-built,
198 single-family dwelling under construction to replace a home that
199 was destroyed or significantly damaged by a hurricane and deemed
200 unlivable by a regulatory authority. The homeowner must be a
201 low-income homeowner as defined in paragraph (h), must have had
202 a homestead exemption for that home before the hurricane, and
203 must be intending to rebuild the home as that homeowner's
204 homestead.
205 (h) Low-income homeowners, as defined in s. 420.0004(11),
206 who otherwise meet the applicable requirements of this
207 subsection paragraphs (a), (c), (e), and (g) are eligible for a
208 grant of up to $10,000 and are not required to provide a
209 matching amount to receive the grant. The program may accept a
210 certification directly from a low-income homeowner that the
211 homeowner meets the requirements of s. 420.0004(11) if the
212 homeowner provides such certification in a signed or
213 electronically verified statement made under penalty of perjury.
214 (i)1. The department shall develop a process that ensures
215 the most efficient means to collect and verify inspection
216 applications and grant applications to determine eligibility.
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Bill No. HB 1263 (2024)
Amendment No. 1
217 The department and may direct hurricane mitigation inspectors to
218 collect and verify grant application information or use the
219 Internet or other electronic means to collect information and
220 determine eligibility.
221 2. The department shall prioritize the review and approval
222 of such inspection applications and grant applications in the
223 following order:
224 a. First, applications from low-income persons, as defined
225 in s. 420.0004, who are at least 60 years old;
226 b. Second, applications from all other low-income persons,
227 as defined in s. 420.0004;
228 c. Third, applications from moderate-income persons, as
229 defined in s. 420.0004, who are at least 60 years old;
230 d. Fourth, applications from all other moderate-income
231 persons, as defined in s. 420.0004; and
232 e. Last, all other applications.
233 3. The department shall start accepting inspection
234 applications and grant applications no earlier than the
235 effective date of a legislative appropriation funding
236 inspections and grants, as follows:
237 a. Initially, from applicants prioritized under sub-
238 subparagraph 2.a.;
239 b. From applicants prioritized under sub-subparagraph
240 2.b., beginning 15 days after the program initially starts
241 accepting applications;
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Bill No. HB 1263 (2024)
Amendment No. 1
242 c. From applicants prioritized under sub-subparagraph
243 2.c., beginning 30 days after the program initially starts
244 accepting applications;
245 d. From applicants described in sub-subparagraph 2.d.,
246 beginning 45 days after the program initially starts accepting
247 applications; and
248 e. From all other applicants, beginning 60 days after the
249 program initially starts accepting applications.
250 4. The program may accept a certification directly from a
251 low-income homeowner or moderate-income homeowner who meets the
252 requirements of s. 420.0004(11) or (12), respectively, if the
253 homeowner provides such certification in a signed or
254 electronically verified statement made under penalty of perjury.
255 (j) A homeowner who receives a grant shall finalize
256 construction and request a final inspection, or request an
257 extension for an additional 6 months, within 1 year after grant
258 approval. If a homeowner fails to comply with this para graph,
259 his or her application is deemed abandoned and the grant money
260 reverts to the department.
261 (3) REQUESTS FOR INFORMATION.—The department may request
262 that an applicant provide additional information. An application
263 is deemed withdrawn by the applicant if the department does not
264 receive a response to its request for additional information
265 within 60 days after the notification of any apparent error or
266 omission.
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1263 (2024)
Amendment No. 1
267
268 -----------------------------------------------------
269 T I T L E A M E N D M E N T
270 Remove lines 9-32 and insert:
271 application under certain conditions; authorizing applicants who
272 meet specified requirements to receive a home inspection under
273 the program without being eligible for, or applying for, a
274 grant; specifying eligibility requirements for hurricane
275 mitigation grants; revising application requirements for
276 hurricane mitigation grants; authorizing an applicant to submit
277 a subsequent hurricane mitigation grant application under
278 certain conditions; requiring that a grant application include
279 certain information; deleting and revising provisions relating
280 to the selection of hurricane mitigation inspectors and
281 contractors; deleting the requirement that matching fund grants
282 be made available to certain entities; revising improvements
283 that grants for eligible homes may be used; deleting the
284 authorization to use grants on rebuilds; requiring the
285 Department of Financial Services to develop a process that
286 ensures the most efficient means to collect and verify
287 inspection applications; requiring the department to prioritize
288 the review and approval of inspection and grant applications in
289 a specified order; requiring the department to start accepting
290 inspection and grant applications as specified in the act;
291 requiring homeowners to finalize construction and make certain
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1263 (2024)
Amendment No. 1
292 requests within a specified time; providing that an application
293 is deemed abandoned under certain circumstances; authorizing the
294 department to request certain information; providing that an
295 application is considered withdrawn under certain circumstances
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HB 1305
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1305 Florida Banking Institutions
SPONSOR(S): Maggard
TIED BILLS: IDEN./SIM. BILLS: SB 1466
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fletcher Lloyd
2) Commerce Committee
SUMMARY ANALYSIS
The Residential Landlord and Tenant Act (Act), codified in part II of ch. 93, F.S., governs the rental of a
dwelling unit in Florida. The Act provides that whenever money is deposited or advanced by a tenant on a
rental agreement as security for performance of the rental agreement or as advance rent for other than the
next immediate rental period, the landlord has the option of holding such money in a separate account in a
“Florida banking institution” for the benefit of the tenant. The Act, however, does not define what constitutes a
“Florida banking institution.”
In a recent court filing alleging violations of the Act (the Palm Beach County Case), the plaintiff relied on a
repealed definition of the term “Florida banking institution.” The plaintiff was a limited liability company that had
been assigned the rights to a security deposit by the defendant landlord’s former tenants. The plaintiff cited to
the repealed statutory definition and alleged that the defendant landlord had violated the Act by depositing the
tenants’ security deposit with JPMorgan Chase Bank, which is not a Florida chartered bank nor headquartered
in Florida.
Although the definition of “Florida banking institution” relied upon by the plaintiff in the Palm Beach County
Case has been repealed, a similar definition still exists in chapter 658, F.S. This fact, combined with the fact
that the Act does not define “Florida banking institution,” suggests that similar lawsuits may be filed again in the
future.
The bill amends the Act to define “Florida banking institution” as any bank, industrial savings bank, savings and
loan association, or trust company organized under the laws of this state, another state, or the United States
and doing business in this state. The effect of this change is to expressly permit landlords to comply with the
Act by depositing their tenants’ security deposits in any bank doing business in Florida, regardless of where the
bank is chartered or headquartered.
The bill has an indeterminate positive impact on state and local government expenses but no impact on state
and local government revenues. It has indeterminate positive impact on the private sector.
The bill provides an effective date of July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h1305.IBS
DATE: 1/30/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Florida Residential Landlord and Tenant Act
The Residential Landlord and Tenant Act (Act), codified in part II of ch. 83, F.S., governs the rental of a
dwelling unit in Florida. A “dwelling unit” is defined as:
A structure or part of a structure that is rented for use as a home, residence, or sleeping place
by one person or by two or more persons who maintain a common household;
A mobile home rented by a tenant; or
A structure or part of a structure that is furnished, with or without rent, as an incident of
employment for use as a home, residence, or sleeping place by one or more persons.
The Act provides that whenever money is deposited or advanced by a tenant on a rental agreement as
security for performance of the rental agreement or as advance rent for other than the next immediate
rental period, the landlord has the option of holding such money in a separate account in a “Florida
banking institution” for the benefit of the tenant.1 The Act, however, does not define what constitutes a
“Florida banking institution.”
Litigation Over Violations of the Act
In a recent court filing in Palm Beach County alleging violations of the Act (the Palm Beach County
Case), the plaintiff relied on a statutory definition of the term “Florida banking institution” that existed in
ch. 658, F.S., relating to the regulation of banks and trust companies in Florida. 2 The statute relied
upon, however, was repealed over a decade ago.3
The repealed statute defined “Florida banking institution” as “a bank whose home is this state,” 4 and
defined “home state” as:
With respect to a state bank, the state by which the bank is chartered;
With respect to a national bank, the state in which the main office of the bank is located; and
With respect to a foreign bank, the state determined to be the home state of such foreign bank
under 12 U.S.C. s. 3103(c).5
The plaintiff in the Palm Beach case was a limited liability company that had been assigned the rights to
a $500 deposit by the defendant landlord’s former tenants.6 The plaintiff cited to the repealed statutory
definition of “Florida banking institution” and alleged that the defendant landlord had violated the Act by
depositing the tenants’ security deposit with JPMorgan Chase Bank, which is not a Florida chartered
bank nor headquartered in Florida.7 JPMorgan Chase, however, is the largest financial institution in the
United States and has numerous branches in Florida.8 Based upon the alleged violation, the plaintiff
1 Ss. 83.49(1)(a)-(b), F.S.
2 KAC 2021-1 LLC, as Assignee to Erole Emmanuel and Marie Joseph, v. Eatmira II LLC d/b/a Catalina at Miramar,
Uniform Case No. 50-2023-SC-005770-XXXX-WB (Small Claims Court for the Fifteenth Judicial Circuit, Palm Beach
County, Apr. 13, 2023) (hereinafter referred to as the Palm Beach County Case).
3 See ch. 2011-194, s. 24, Laws of Fla. (repealing s. 658.295, F.S. (2010)).
4 S. 658.295(2)(m), F.S. (2010).
5 S. 658.295(2)(o), F.S. (2010).
6 Palm Beach County Case, supra note 2, Count II.
7 Id.
8 As of September 30, 2023, JPMorgan Chase had $3.38 trillion in assets, 80 million customer accounts, and 4,700
branches. See Christopher Murray, The Biggest Bank s in 2024, Market Watch Guides (updated Jan. 16, 2024),
https://www.marketwatch.com/guides/banking/largest-banks-in-the-us/ (last visited Jan. 27, 2024).
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DATE: 1/30/2024
sought to recover its attorney fees and court costs from the defendant landlord as permitted under the
Act.9 As of January 29, 2024, the case is still pending resolution.10
Although the definition of “Florida banking institution” relied upon by the plaintiff in the Palm Beach
County Case has been repealed, a similar definition still exists in chapter 658, F.S. 11 This fact,
combined with the fact that the Act does not define “Florida banking institution,” suggests that similar
lawsuits may be filed again in the future.
Effect of the Bill
The bill amends the “Definitions” section of the Act to create a definition for “Florida banking institution.”
Under the bill, “Florida banking institution” is defined as a bank, industrial savings bank, savings and
loan association, or trust company organized under the laws of this state, another state, or the United
States and doing business in this state.12
The effect of this change is to expressly permit landlords to comply with the Act by depositing their
tenants’ security deposits in any bank doing business in Florida, regardless of where the bank is
chartered or headquartered.
The bill provides an effective date of July 1, 2024.
B. SECTION DIRECTORY:
Section 1. Amends s. 84.43, F.S., relating to definitions.
Section 2. Amends s. 83.491, F.S., relating to fee in lieu of security deposit.
Section 3. Amends s. 553.895, F.S., relating to firesafety.
Section 4. Provides an effective date of July 1, 2024.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
The bill has an indeterminate positive impact on state courts’ expenses to the extent the proposed
definition of “Florida banking institution” decreases the amount of litigation over the rights to security
deposits in Florida. As a result, the bill is likely to reduce the caseload burden on circuit courts.13
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
9 Palm Beach County Case, supra note 2, Count II. See also s. 83.48, F.S., which entitles prevailing parties to recover
attorney fees and court costs in civil actions to enforce the provisions of the Ac t.
10 See Clerk of the Circuit Court & Comptroller for Palm Beach County, Case Info: Uniform Case No. 50-2023-SC-005770-
XXXX-WB, https://appsgp.mypalmbeachclerk.com/eCaseView/search. aspx (last visited Jan. 29, 2024).
11 S. 658.2953(3)(c), F.S., defines “Florida bank” as “a bank whose home state in this state.”
12 The addition of the proposed definition changes the numbering of other defined terms. As such, the bill updates certain
cross-references to conform with such changes.
13 Under Florida law, circuit courts have concurrent jurisdiction with county courts to consider cases involving landlord-
tenant disputes. S. 34.011(1), F.S.
STORAGE NAME: h1305.IBS PAGE: 3
DATE: 1/30/2024
None.
2. Expenditures:
The bill has an indeterminate positive impact on local courts’ expenses to the extent the proposed
definition of “Florida banking institution” decreases the amount of litigation over the rights to security
deposits in Florida. As a result, the bill is likely to reduce the caseload burden on small claims and
county courts.14
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill has an indeterminate positive impact on the private sector to the extent the proposed definition
of “Florida banking institution” decreases the amount of litigation over the rights to security deposits in
Florida. The decrease in litigation will reduce costs to both plaintiffs and defendants in landlord-tenant
disputes. Further, banking institutions that are not chartered or headquartered in Florida may benefit
from receiving additional security deposits.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
Not applicable. The bill does not amend or create rule-making authority.
C. DRAFTING ISSUES OR OTHER COMMENTS:
Lines 17-20: The bill defines “Florida banking institution” as any bank, industrial savings bank, savings
and loan association, or trust company organized under the laws of this state, another state, or the
United States and doing business in this state. The bill does not specify that the accounts or deposits of
these entities must be insured by the Federal Deposit Insurance Corporation 15 or the National Credit
Union Share Insurance Fund.16 Additionally, the proposed definition does not include credit unions,
14 Under Florida law, county courts have concurrent jurisdiction with circuit courts to consider cases involving landlord -
tenant disputes. County courts have exclusive jurisdiction of proceedings relating to the right of possession of real
property and to the forcible or unlawful detention of lands and tenements, except that the circuit court also has jurisdictio n
if the amount in controversy exceeds the jurisdictional limits of the county court or the circuit court otherwise has
jurisdiction. S. 34.011(1), F.S.
15 The Federal Deposit Insurance Corporation (FDIC) protects the money that depositors place in banks insured by the
FDIC, in the unlikely event of an insured-bank failure. See Federal Deposit Insurance Corporation, Deposit Insurance,
https://www.fdic.gov/resources/deposit-ins urance/ (last visited Jan. 27, 2024).
16 The National Credit Union Share Insurance Fund (Fund) insures deposits of up to at $250,000 per individual depositor.
The National Credit Union Administration is a federal agency that regulates and supervises credit unions and administers
the Fund. See National Credit Union Administration, Share Insurance Fund Overview, https://ncua.gov/support-
services/share-insurance-fund (last visited Jan. 27, 2024).
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savings associations or thrift associations, each of which are included in the current definition of the
term “financial institution” in Florida’s financial institutions codes. 17
Line 56: Given the potential for additional litigation over the lack of a definition of “Florida banking
institution” and the apparent use of national banks for required deposits, it is recommended that the bill
become effective upon becoming law, rather than waiting until July 1, 2024.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
17 See s. 655.005(i), F.S. Florida’s financial institutions codes are codified in chs. 655, 657, 658, 660, 662, 663, 665, and
667, F.S.
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DATE: 1/30/2024
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 1305 2024
1 A bill to be entitled
2 An act relating to Florida banking institutions;
3 amending s. 83.43, F.S.; defining the term "Florida
4 banking institution"; amending ss. 83.491 and 553.895,
5 F.S.; conforming cross-references; providing an
6 effective date.
7
8 Be It Enacted by the Legislature of the State of Florida:
9
10 Section 1. Subsections (7) through (17) of section 83.43,
11 Florida Statutes, are renumbered as subsections (8) through
12 (18), respectively, and a new subsection (7) is added to that
13 section to read:
14 83.43 Definitions.—As used in this part, the following
15 words and terms shall have the following meanings unless some
16 other meaning is plainly indicated:
17 (7) "Florida banking institution" means a bank, industrial
18 savings bank, savings and loan association, or trust company
19 organized under the laws of this state, another state, or the
20 United States and doing business in this state.
21 Section 2. Subsection (6) of section 83.491, Florida
22 Statutes, is amended to read:
23 83.491 Fee in lieu of security deposit.—
24 (6) A fee collected under this section, or an insurance
25 product or a surety bond accepted, by a landlord in lieu of a
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hb1305-00
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 1305 2024
26 security deposit is not a security deposit as defined in s.
27 83.43(13) s. 83.43(12).
28 Section 3. Subsection (1) of section 553.895, Florida
29 Statutes, is amended to read:
30 553.895 Firesafety.—
31 (1) Any transient public lodging establishment, as defined
32 in chapter 509 and used primarily for transient occupancy as
33 defined in s. 83.43(18) s. 83.43(17), or any timeshare unit of a
34 timeshare plan as defined in chapters 718 and 721, which is of
35 three stories or more and for which the construction contract
36 has been let after September 30, 1983, with interior corridors
37 which do not have direct access from the guest area to exterior
38 means of egress and on buildings over 75 feet in height that
39 have direct access from the guest area to exterior means of
40 egress and for which the construction contract has been let
41 after September 30, 1983, shall be equipped with an automatic
42 sprinkler system installed in compliance with the provisions
43 prescribed in the National Fire Protection Association
44 publication NFPA No. 13 (1985), "Standards for the Installation
45 of Sprinkler Systems." Each guest room and each timeshare unit
46 shall be equipped with an approved listed single-station smoke
47 detector meeting the minimum requirements of NFPA 74 (1984)
48 "Standards for the Installation, Maintenance and Use of
49 Household Fire Warning Equipment," powered from the building
50 electrical service, notwithstanding the number of stories in the
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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 1305 2024
51 structure, if the contract for construction is let after
52 September 30, 1983. Single-station smoke detectors shall not be
53 required when guest rooms or timeshare units contain smoke
54 detectors connected to a central alarm system which also alarms
55 locally.
56 Section 4. This act shall take effect July 1, 2024.
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CODING: Words stricken are deletions; words underlined are additions.
hb1305-00
HB 1465
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1465 Pet Insurance and Wellness Programs
SPONSOR(S): Tuck
TIED BILLS: IDEN./SIM. BILLS: SB 1338
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Herrera Lloyd
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
Pet insurance offers coverage for accidents and illnesses primarily for household pets, notably dogs and cats .
While classified and regulated as Property and Casualty (P/C) insurance, it parallels human health insurance in
providing annual coverage subject to predetermined rates and conditions.
In response to the growing significance of pet insurance and the need for standardized regulations, the
National Association of Insurance Commissioners (NAIC) introduced the Pet Insurance Model Act during its
Summer 2022 National Meeting. This model act addresses key aspects of the rapidly expanding pet insurance
industry, which, as of 2017, saw only approximately 1.5 million dogs and 300,000 cats insured in the U.S.,
representing less than 2% of dogs and less than 0.5% of cats owned nationwide. Despite these relatively low
rates of coverage, the total premium volume for pet insurance policies in the U.S. reached approximately $3.2
billion by the end of 2022. The model act encompasses provisions related to pet wellness programs,
preexisting conditions, consumer protections, and training requirements for insurance producers.
Pet insurance policies typically cover various veterinary expenses, including:
Accidents: coverage for injuries resulting from accidents, such as broken bones or ingesting foreign
objects.
Illnesses: coverage for treatments related to illnesses such as cancer, diabetes, or infections.
Routine Care: some policies offer optional coverage for routine care, including vaccinations,
wellness exams, and dental cleanings.
Hereditary and Congenital Conditions: certain policies may cover hereditary and congenital
conditions, although these often have specific limitations and waiting periods.
Currently, several companies offer pet insurance in Florida; however, Florida law does not separately regulate
pet insurance.
The bill creates necessary regulatory statutes to facilitate the production of pet insurance policies for sale
within the state. The bill defines pet insurance and provides specific disclosure requirements for policy terms
and conditions, including coverage exclusions, waiting periods, and renewal provisions. Additionally, it
regulates the marketing and sales of wellness programs, ensuring they are distinct from pet insurance and
transparently disclosed to consumers. The bill also imposes training requirements for agents and brokers
selling pet insurance policies. Enforcement measures include penalties for violations, as provides for in the
Florida Insurance Code, and the bill provides for applicability and regulatory authority.
The bill provides an effective date of January 1, 2025.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h1465.IBS
DATE: 1/30/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
National Association of Insurance Commissioners
The National Association of Insurance Commissioners (NAIC) serves as the insurance standard-setting
and regulatory support body in the United States.1 Comprised of insurance regulators from all 50
states, the District of Columbia, and five U.S. territories, the NAIC aids state regulators in fulfilling their
public service mandate.2 It achieves this by setting standards and regulatory best practices, facilitating
the exchange of information, offering regulatory support services, and educating consumers, industry
professionals, and government stakeholders on the state-based insurance regulatory framework of the
United States.3
Office of Insurance Regulation
The Office of Insurance Regulation (OIR) regulates specified insurance products, insurers, and other
risk bearing entities in Florida.4 The Financial Services Commission (FSC), composed of the
Governor, the Attorney General, the Chief Financial Officer, and the Commissioner of Agriculture,
serves as agency head of the OIR for purposes of rulemaking. Further, the FSC appoints the OIR
commissioner.
As part of their regulatory oversight, the OIR may suspend or revoke an insurer’s certificate of authority
under certain conditions.5 The OIR is responsible for examining the affairs, transactions, accounts,
records, and assets of each insurer that holds a certificate of authority to transact insurance business in
Florida.6 As part of the examination process, all persons being examined must make available to the
OIR the accounts, records, documents, files, information, assets, and matters in their possession or
control that relate to the subject of the examination.7 The OIR is also authorized to conduct market
conduct examinations to determine compliance with applicable provisions of the Insurance Code. 8
Current Situation - Pet Insurance
Pet insurance offers coverage for accidents and illnesses primarily for household pets, notably dogs
and cats.9 While classified and regulated as Property and Casualty (P/C) insurance 10, it parallels
human health insurance in providing annual coverage subject to predetermined rates and conditions. 11
Originating in the U.S. in 1980, pet insurance has experienced significant expansion since its
inception.12
1 NAIC, Our Story, https://content.naic.org/about (last visited Jan. 27, 2024).
2 Id.
3 Id.
4
S. 20.121(3)(a), F.S.
5 S. 624.418, F.S
6 S. 624, 316(1)(a), F.S.
7 S. 624.318(2), F.S.
8 The Code is comprised of chs. 624-632, 634-636, 641, 642, 648, and 651, F.S. See S. 624.3161, F.S.
9 National Association of Insurance Commissioners, A Regulator’s Guide to Pet Insurance, p. 1
https://content.naic.org/sites/default/files/publication-pin-op-pet-insurance.pdf (last visited Jan. 27, 2024).
10 Casualty insurance is a broad category of insurance coverage for individuals, employers, and businesses against loss of prope rty,
damage, or other liabilities. Casualty insurance includes vehicle insurance, liability insurance, and theft insurance. Liability losses are
losses that occur as a result of the insured’s interactions with others or their property. See Investopedia, Casualty Insurance: Definition,
Types, and Examples, https://www.investopedia.com/terms/c/casualtyinsurance.asp (last visited Jan. 27, 2024).
11 Id.
12 Id.
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The North American Pet Health Insurance Association (NAPHIA) serves as the leading advocacy
group, representing over 99 percent of the U.S. and Canada pet health insurance industry. 13 Notably, in
2017, NAPHIA members witnessed growth, with total premium volume reaching approximately $1.03
billion in the U.S., marking a substantial 23.2 percent increase from the previous year.14 In the U.S. and
its territories, direct written premiums amounted to roughly $640 billion. 15 Despite the rapid growth, pet
insurance still represents a small percentage of the total P/C market. 16
Pet insurance policies typically cover various veterinary expenses, including 17:
Accidents: coverage for injuries resulting from accidents, such as broken bones or ingesting foreign
objects.
Illnesses: coverage for treatments related to illnesses such as cancer, diabetes, or infections.
Routine Care: some policies offer optional coverage for routine care, including vaccinations,
wellness exams, and dental cleanings.
Hereditary and Congenital Conditions: certain policies may cover hereditary and congenital
conditions, although these often have specific limitations and waiting periods.
In 2017, a survey by the American Pet Products Association revealed that approximately 68 percent of
U.S. households, totaling around 84.65 million families, had at least one pet, including dogs, cats, or
other animals.18 Of these households, about 60 million owned at least one dog, and 47 million had at
least one cat.19 Despite this large number of pet owners, there's considerable room for growth in the
pet insurance sector.20 However, only about 1.5 million dogs and 300,000 cats were insured in 2017,
representing less than 2 percent of dogs and less than 0.5 percent of cats owned in the country.21 In
the U.S., there are roughly 90 million household dogs and 95 million household cats, indicating a
substantial potential market for pet insurance coverage.22
Pet insurance coverage in the U.S. has seen consistent annual growth rates of 15 percent to 20
percent over the past five years.23 The distribution of pet insurance is notably concentrated in larger
urban areas, with California and New York emerging as the primary markets. 24 For a visual
representation of the distribution of pets and Gross Written Premiums (GWP) by state, please refer to
the chart below.25 According to data from NAPHIA members, the total premium volume in the U.S.
reached approximately $3.2 billion by the end of 2022, with a slight slowdown in growth observed in
2022, marking the lowest growth rate in recent periods. 26
13 Id.
14 Id.
15 Id.
16 Id.
17
Forbes, What Does Pet Insurance Cover?, https://www.forbes.com/advisor/pet-insurance/what-does-pet-insurance-cover/ (last visited
Jan. 27, 2024).
18 National Association of Insurance Commissioners, A Regulator’s Guide to Pet Insurance, p. 2
https://content.naic.org/sites/default/files/publication-pin-op-pet-insurance.pdf (last visited Jan. 27, 2024).
19 Id.
20 Id.
21 Id.
22 Id.
23 Id. at 5.
24 Id.
25 NAPHIA, State of the Industry Report 2023 Highlights, p. 24, https://naphia.org/wp-content/uploads/2023/05/NAPHIA-SOI2023-
Report-Highlights_Public-May9.pdf (last visited Jan. 27, 2024).
26 Id. at 10.
STORAGE NAME: h1465.IBS PAGE: 3
DATE: 1/30/2024
U.S. Market (Full) Pets and GWP Distribution by State (2022)
STATE
California
New York
Florida
Texas
PETS
18.6%
7.0%
6.2%
5.7%
GWP
21.0%
8.4%
6.3%
4.9%
STATE
Arizona
Indiana
Minnesota
Nevada
NdfiMI
1.6%
1.3%
1.2%
1.2%
1.6%
1.0%
1.0%
1.2%
STATE
Rhode Island
Alabama
Kentucky
Arkansas
PETS
0.6%
0.5%
0.5%
0.5%
-
0.5%
0.4%
0.4%
0.4%
New Jersey 4.6% 4.9% South Carolina 1.1% 0.9% West Virginia 0.4% 0.3%
Pennsylvania 4.5% 4.3% North Dakota 1.1% 1.0% District of Columbia 0.4% 0.4%
Massachusetts 4.1% 4.5% Tennessee 1.1% 0.9% Kansas 0.4% 0.3%
Washington 4.0% 4.1% Maine 1.1% 1.0% Oklahoma 0.4% 0.3%
Colorado 3.0% 3.0% New Mexico 1.0% 0.9% Idaho 0.4% 0.3%
Illinois 2.9% 3.1% Wisconsin 0.9% 0.8% Delaware 0.4% 0.3%
Virginia 2.7% 2.9% Missouri 0.8% 0.6% Alaska 0.3% 0.3%
North Carolina 2.4% 2.1% New Hampshire 0.8% 0.8% Mississippi 0.3% 0.2%
Maryland 2.2% 2.3% Utah 0.7% 0.5% Montana 0.2% 0.2%
Ohio 2.1% 1.9% Nebraska 0.6% 0.5% Wyoming 0.1 % 0.1%
Georgia 2.1% 1.7% Vermont 0.6% 0.6% Other. Puerto Rico 0.1% 0.1%
Connecticut 2.0% 2.2% Louisiana 0.6% 0.5% South Dakota 0.1% 0.1%
Michigan 1.8% 1.5% Hawaii 0.6% 0.6%
Oregon 1.7% 1.6% Iowa 0.6% 0.4%
As the lifespans of companion animals increase, veterinary care costs are expected to rise for
consumers, leading them to seek out pet insurance to help manage the expenses associated with
preventive care, acute and chronic illnesses, and emergency medical treatments for their pets. 27 Data
from NAPHIA indicates that consumers generally prefer "comprehensive" insurance plans for their
pets.28 In the U.S., the majority (92.8 percent) of pets are covered by Accident & Illness plans or
Embedded Wellness plans, while 7 percent have Endorsements (riders such as wellness or cancer
treatments), and the remaining 0.2 percent have Accident Only plans.29
Development of Regulatory Standards for the Pet Insurance Industry
In April 2019, the Pet Insurance Working Group was tasked with reviewing NAIC’s "A Regulator's
Guide to Pet Insurance" to determine if a model law or guideline was necessary to establish
appropriate regulatory standards for the pet insurance industry.30 Subsequently, a request for Model
Law development related to pet insurance was adopted during the NAIC 2019 Spring National Meeting,
addressing various aspects such as definitions, disclosures, violations, producer licensing, preexisting
conditions, reimbursement benefits, and regulations.31 During the NAIC's Summer 2022 National
Meeting in members voted to adopt the Pet Insurance Model Act, which includes key provisions
concerning pet wellness programs, preexisting conditions, consumer protections, and training for
insurance producers.32 Currently, only Maine has adopted a substantially similar version of the NAIC
model.33
Current Situation – Florida
27 NAIC, Pet Insurance, https://content.naic.org/cipr-topics/pet-insurance (last visited Jan. 27, 2024).
28 Id.
29 Id.
30 Id.
31 Id.
32 Id.
33 NAIC, Pet Insurance Model Act, https://content.naic.org/sites/default/files/model-law-state-page-633.pdf (last visited Jan. 27, 2024).
STORAGE NAME: h1465.IBS PAGE: 4
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Currently, several companies offer pet insurance in Florida; however, Florida law does not separately
regulate pet insurance. Below are companies that provide pet insurance:34
Average Monthly Maximum Annual
Companies Waiting Periods
Cost Coverage
14 days for illnesses,
$30 for dogs two days for injuries,
$5,000 - $100,000
Pets Best $20 for cats six months for
orthopedic conditions
Spot Pet $78 for dogs 14 days for illnesses,
$2,500 - Unlimited
Insurance $34 for cats two days for injuries
48 hours for accidents,
$63 for dogs 14 days for illnesses,
Embrace $5,000 - $100,000
$37 for cats six months for
orthopedic conditions
ASPCA Pet $47 for dogs
14 days for illnesses $3,000 - $10,000
Health Insurance $19 for cats
Effect of the bill
The bill creates necessary regulatory statutes to facilitate the production of pet insurance policies for
sale within the state. The bill applies to policies issued to residents of the state, those sold or offered
within the state's boundaries, as well as policies delivered or issued for delivery in the state.
Pet Insurance Definitions and Usage
The bill defines pet insurance as coverage designed for accidents and illnesses or diseases of pets,
facilitating reimbursement for expenses linked to veterinary medical advice, diagnosis, care, or
treatment, encompassing prescribed medications. Additionally, it introduces definitions for various
terms, including chronic condition, congenital anomaly or disorder, hereditary disorder, orthopedic
condition, pet insurance policy, preexisting condition, renewal, veterinarian, waiting period, and
wellness program.
The bill mandates that if pet insurers incorporate the defined terms within a pet insurance policy, they
must adhere to the provided definition verbatim. Additionally, the pet insurer is required to ensure
accessibility of these definitions to policyholders.
Disclosure Requirements for Pet Insurance Policies
The bill requires pet insurers to disclose coverage exclusions for chronic conditions, congenital
anomalies, hereditary disorders, and preexisting conditions, along with any other applicable exclusions.
Additionally, they must disclose policy provisions limiting coverage, changes in coverage or premiums,
and differentiate between the underwriting company and the marketed brand.
Pet insurers must allow a 30-day review period for policyholders to return policies for a refund if
unsatisfied, provided no claims have been filed. They must also disclose the basis for determining
34 Market Watch, The Best Pet Insurance Companies in Florida (2024), https://www.marketwatch.com/guides/pet-insurance/pet-
insurance-florida/ (last visited Jan. 27, 2024).
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claim payments, including benefit schedules and fee limitations, and any required medical
examinations before policy purchase.
Further, the bill requires pet insurers to clearly disclose waiting periods and their requirements to
applicants. Pet insurers must provide a summary of policy provisions and written disclosures including
contact details for regulatory offices and the insurer or agent. These disclosures are in addition to any
other disclosures required by law or regulation.
Preexisting Conditions, Waiting Periods, and Policy Renewals
The bill allows pet insurers to issue policies excluding coverage for preexisting conditions, provided that
appropriate disclosure is made to the applicant or policyholder, with the burden of proving the
applicability of the exclusion resting on the insurer. Additionally, pet insurers are permitted to impose
waiting periods before the effective date of a new policy, not exceeding 30 days for certain conditions,35
with provisions for waiving the waiting period upon completion of a medical examination, the costs of
which are typically paid by the policyholder. These waiting periods and their requirements must be
clearly disclosed to applicants before policy purchase.
The bill prohibits pet insurers from requiring medical examinations for policy renewals and mandates
compliance with the Florida Insurance Code for additional benefits included in policies. Furthermore, it
ensures that an applicant's eligibility for pet insurance is not tied to participation in a wellness program.
Marketing and Sales of Wellness Programs
The bill prohibits pet insurers and their agents from misrepresenting wellness programs as pet
insurance. It mandates that if wellness programs are offered alongside pet insurance, they must be
separate and not required for pet insurance purchase. Additionally, the costs, terms, and products of
wellness programs must be distinct from pet insurance. Clear disclosures must be provided to
applicants and policyholders regarding the nature of wellness programs, and wellness benefits within
pet insurance policies are recognized as insurance.
Agent and Broker Training Requirements
The bill requires specific training for agents and brokers involved in selling pet insurance policies.
Agents and brokers must obtain appropriate licensing and complete specified training before engaging
in the sale, solicitation, or negotiation of pet insurance policies. Pet insurers are responsible for
ensuring that their agents and brokers receive training on preexisting conditions, waiting periods, and
the distinctions between pet insurance and wellness programs. Additionally, training must cover chronic
conditions, congenital anomalies, hereditary disorders, and administrative aspects of pet insurance
policies. Satisfaction of training requirements from other states with substantially similar provisions is
recognized as meeting the training standards in the state.
Enforcement, Applicability, and Rulemaking Authority
A violation of the bill’s requirements will be a violation of the Florida Insurance Code. Additionally, it
clarifies that while all other relevant insurance laws apply to pet insurance, the specific regulations
outlined in this bill take precedence over any conflicting general provisions. The bill does not restrict the
types of exclusions pet insurers can employ in their policies nor does it mandate the inclusion of any
specific limitations or exclusions. Furthermore, the bill grants the commission the authority to adopt
rules and regulations essential for the effective administration of this section.
The bill provides an effective date of January 1, 2025.
B. SECTION DIRECTORY:
35 "Certain conditions" referenced in this sentence include illnesses, diseases, or orthopedic conditions not resulting from an accident,
as specified within the context of the bill
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DATE: 1/30/2024
Section 1: Amends s. 627.4435, F.S., relating pet insurance; noninsurance wellness programs.
Section 2: Providing an effective date of January 1, 2025.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
The bill necessitates the incorporation of pet insurance into the information technology systems of
OIR, resulting in a one-time impact. However, OIR existing resources have the capacity to absorb
this impact.36
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may positively impact the private sector if the regulatory efficiency it establishes results in lower
production costs for pet insurance providers.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
Sufficient rulemaking authority for the FSC and OIR to administer the bill’s provisions is provided.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
36 Email from Kevin James, Deputy Legislative Affairs Director, Department of Management Services, HB 1465 Bill Analysis (Jan. 2 5,
2024).
STORAGE NAME: h1465.IBS PAGE: 7
DATE: 1/30/2024
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 1465 2024
1 A bill to be entitled
2 An act relating to pet insurance and wellness
3 programs; creating s. 627.4435, F.S.; providing a
4 short title; providing purpose and applicability;
5 providing definitions; requiring pet insurers to use
6 the definitions of the terms and include the
7 definitions in insurance policies under certain
8 circumstances; requiring pet insurers to make certain
9 disclosures to pet insurance applicants and
10 policyholders; authorizing pet insurance applicants
11 and policyholders to return insurance policies and
12 riders under certain circumstances; authorizing
13 premiums to be refunded under certain circumstances;
14 requiring pet insurance policies and riders to have a
15 notice on return policies; requiring pet insurers to
16 post a summary of certain provisions on a website and
17 to provide new policyholders with a copy of the
18 summary; providing that certain required disclosures
19 are in addition to disclosures required by law or
20 regulation; authorizing exclusions, waiting periods,
21 and medical examinations provisions in pet insurance
22 policies; providing requirements for such provisions;
23 requiring that certain benefits comply with certain
24 provisions of the Florida Insurance Code; prohibiting
25 insurance applicants' eligibility from being based on
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26 participation or lack of participation in wellness
27 programs; providing sales practices for wellness
28 programs; providing that coverages in pet insurance
29 policies described as wellness benefits are insurance;
30 prohibiting insurance agents and brokers from
31 transacting in pet insurance without license and
32 specified training; providing requirements for pet
33 insurance training for insurance agents and brokers;
34 providing that similar pet insurance training in other
35 states satisfy the training requirements in this
36 state; providing penalties; providing that certain
37 insurance laws apply to pet insurance; providing that
38 specific provisions of law supersede general
39 applicable provisions of law; providing construction;
40 providing rulemaking authority; providing an effective
41 date.
42
43 Be It Enacted by the Legislature of the State of Florida:
44
45 Section 1. Section 627.4435, Florida Statutes, is created
46 to read:
47 627.4435 Pet insurance; noninsurance wellness programs. —
48 (1) SHORT TITLE.—This section may be cited as the "Pet
49 Insurance Act."
50 (2) PURPOSE AND SCOPE.—
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51 (a) The purpose of this section is to promote the public
52 welfare by creating a comprehensive legal framework within which
53 pet insurance may be sold in the state.
54 (b) This section applies to pet insurance policies that
55 are:
56 1. Issued to a resident of the state;
57 2. Sold, solicited, negotiated, or offered in the state;
58 or
59 3. Delivered or issued for delivery in the state.
60 (3) DEFINITIONS.—
61 (a) As used in this section, the term:
62 1. "Chronic condition" means a condition that can be
63 treated or managed, but not cured.
64 2. "Congenital anomaly or disorder" means a condition that
65 is present from birth, whether inherited or caused by the
66 environment, and that may cause or contribute to illness or
67 disease.
68 3. "Hereditary disorder" means an abnormality that is
69 genetically transmitted from parent to offspring and may cause
70 illness or disease.
71 4. "Orthopedic" refers to a condition that affects the
72 bones, skeletal muscle, cartilage, tendons, ligaments, or
73 joints. The condition includes, but is not limited to, elb ow
74 dysplasia, hip dysplasia, intervertebral disc degeneration,
75 patellar luxation, and cranial cruciate ligament rupture. The
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76 condition does not include any cancer or metabolic,
77 hematopoietic, or autoimmune disease.
78 5. "Pet insurance" means an insurance that provides
79 coverage for accidents and for illnesses or diseases of pets.
80 Such insurance reimburses a policyholder for expenses associated
81 with medical advice, diagnosis, care, or treatment provided by a
82 veterinarian, including, but not limited to, the co st of drugs
83 prescribed by the veterinarian.
84 6. "Pet insurance policy" or "policy" includes pet
85 insurance certificate.
86 7. "Preexisting condition" means a condition for which any
87 of the following are true before the effective date or during a
88 waiting period of a pet insurance policy:
89 a. A veterinarian provided medical advice.
90 b. The pet received previous treatment.
91 c. Based on information from verifiable sources, the pet
92 had signs or symptoms directly related to the condition for
93 which a claim is being made.
94
95 A condition for which coverage is afforded on a policy is not
96 deemed to be a preexisting condition on any renewal of the
97 policy.
98 8. "Renewal" means the issuance and delivery at the end of
99 an insurance policy period a policy that supersedes the policy
100 previously issued and delivered by the same pet insurer or
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101 affiliated pet insurer and that provides types and limits of
102 coverage substantially similar to those contained in the policy
103 being superseded.
104 9. "Veterinarian" means an individual who holds a valid
105 license to practice veterinary medicine from the appropriate
106 licensing entity in the jurisdiction in which he or she
107 practices.
108 10. "Waiting period" means the period specified in a pet
109 insurance policy which is required to transpire before s ome or
110 all of the coverage in the policy may begin. This period may not
111 be applied to renewals of existing coverage.
112 11. "Wellness program" means a subscription or
113 reimbursement-based program that is separate from an insurance
114 policy and that provides goods and services to promote the
115 general health, safety, or well-being of the pet. If the
116 subscription or program includes language such as "undertakes to
117 indemnify another," "pays a specified amount upon determinable
118 contingencies," or "provides coverage for a fortuitous event,"
119 the subscription or program is transacting in the business of
120 insurance and is subject to the Florida Insurance Code. This
121 definition is not intended to classify a contract directly
122 between a service provider and a pet owner which involves only
123 the two parties as being the business of insurance, unless other
124 indications of insurance also exist.
125 (b) If a pet insurer uses any of the terms defined in
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126 paragraph (a) in a pet insurance policy, the pet insurer must
127 use the definition of each term as provided in paragraph (a) and
128 include the definition of each term in the policy. The pet
129 insurer must also make the definition available through a clear
130 and conspicuous link on the main page of the website of the pet
131 insurer or the pet insurer's program administrator.
132 (4) DISCLOSURES.—
133 (a) A pet insurer transacting pet insurance shall disclose
134 the following to pet insurance applicants and policyholders:
135 1. A coverage exclusion due to any of the following:
136 a. A chronic condition;
137 b. A congenital anomaly or disorder;
138 c. A hereditary disorder; or
139 d. A preexisting condition.
140 2. Any other exclusions in the following statement: "Other
141 exclusions may apply. Please refer to the exclusions section of
142 the policy for more information."
143 3. A policy provision that limits coverage through a
144 waiting period, a deductible, a coinsurance, or an annual or
145 lifetime policy limit.
146 4. A reduction of coverage or an increase in premium based
147 on the policyholder's claim history, the age of the covered p et,
148 or a change in the geographic location of the policyholder.
149 5. Any difference between the underwriting company and the
150 brand name used to market and sell the pet insurance.
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151 (b)1. Unless the policyholder has filed a claim under the
152 pet insurance policy, a pet insurance applicant or policyholder
153 may examine and return the policy or rider to the pet insurer or
154 pet insurance agent or broker within 30 days after the applicant
155 or policyholder obtains the receipt and have the premium
156 refunded if, after examining the policy or rider, the applicant
157 or policyholder is not satisfied for any reason.
158 2. A pet insurance policy and rider must have a notice
159 prominently printed on or attached to the first page which
160 includes specific instructions to accomplish a return, in type
161 at least as large as any type appearing on the policy or rider
162 contract, in substantially the following language:
163
164 You have 30 days from the day you receive this policy,
165 certificate, or rider to review it and return it to
166 the company if you decide not to keep it. You do not
167 have to tell the company why you are returning it. If
168 you decide not to keep it, simply return it to the
169 company at its administrative office or you may return
170 it to the insurance agent or broker that you bought it
171 from as long as you have not filed a claim. You must
172 return it within 30 days after the day you first
173 received it. The company will refund the full amount
174 of any premium paid within 30 days after it receives
175 the returned policy, certificate, or rider. The
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176 premium refund will be sent directly to the person who
177 paid it. The policy, certificate, or rider will be
178 void as if it had never been issued.
179
180 (c) A pet insurer shall clearly disclose in a summary
181 description in the pet insurance policy the basis or formula on
182 which the pet insurer determines claim payments. This disclosure
183 must be provided before the policy issuance and through a clear
184 and conspicuous link on the main page of the website of the pet
185 insurer or the pet insurer's program administrator.
186 (d) A pet insurer that uses a benefit schedule to
187 determine claim payment under a pet insurance policy shall:
188 1. Clearly disclose the applicable benefit schedule in the
189 policy; and
190 2. Disclose all benefit schedules used by the pet insurer
191 under its pet insurance policies through a clear and conspicuous
192 link on the main page of the website of the pet insurer or the
193 pet insurer's program administrator.
194 (e) A pet insurer that determines claim payments under a
195 pet insurance policy based on usual and customary fees, or any
196 other reimbursement limitation based on prevailing veterinary
197 service provider charges, shall do the following:
198 1. Include a usual and customary fee limitation provision
199 in the policy which clearly describes the pet insurer's basis
200 for determining usual and customary fees and how that basis is
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201 applied in calculating claim payments; and
202 2. Disclose the pet insurer's basis for determining usual
203 and customary fees through a clear and conspicuous link on the
204 main page of the website of the pet insurer or the pet insurer's
205 program administrator.
206 (f) If any medical examination by a licensed veterinarian
207 is required to bring about coverage, the pet insurer shall
208 clearly and conspicuously disclose the required aspects of the
209 examination before a policy purchase and disclose that
210 examination documentation may result in a preexisting condition
211 exclusion.
212 (g) Waiting periods and the requirements applicable to
213 waiting periods must be clearly and prominently disclosed to
214 applicants before a policy purchase.
215 (h) The pet insurer shall make a summary of all policy
216 provisions required in paragraphs (a) through (g) in a separate
217 document titled "Insurer Disclosure of Important Policy
218 Provisions" and shall post on the main page of the website of
219 the pet insurer or the pet insurer's program administrator a
220 clear and conspicuous link to the document.
221 (i) At the time a new pet insurance policy is issued, the
222 pet insurer shall provide to the policyholder a copy of the
223 "Insurer Disclosure of Important Policy Provisions" document
224 required under paragraph (h). The document must be printed in at
225 least 12-point type.
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226 (j) At the time a pet insurance policy is issued or
227 delivered, the pet insurer shall include a written disclosure
228 with the following information, printed in 12-point boldface
229 type:
230 1. The mailing address, toll-free telephone number, and
231 website address of the Office of Insurance Regulation.
232 2. The address and customer service telephone number of
233 the pet insurer or the agent or broker of record.
234 3. If the policy is issued or delivered by an agent or
235 broker, a statement advising the policyholder to contact the
236 agent or broker for assistance.
237 (k) The disclosures required in this subsection must be in
238 addition to any other disclosure required by law or regulation.
239 (5) POLICY CONDITIONS.—
240 (a) A pet insurer may issue a policy that excludes
241 coverage on the basis of one or more preexisting conditions with
242 appropriate disclosure to the applicant or policyholder. The pet
243 insurer has the burden of proving that the preexisting condition
244 exclusion applies to the condition for which a claim is being
245 made.
246 (b) A pet insurer may issue a policy imposing a waiting
247 period before the effective date of a new policy which does not
248 exceed 30 days for illnesses or diseases or for orthopedic
249 conditions not resulting from an accident. A waiting period for
250 accidents is prohibited.
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251 1. A pet insurer issuing a policy that imposes a waiting
252 period shall include a provision in its contract which allows
253 the waiting period to be waived upon completion of a medical
254 examination. The pet insurer may require the examination to be
255 conducted by a licensed veterinarian after the purchase of the
256 policy.
257 a. A medical examination under this subparagraph shall be
258 paid for by the policyholder, unless the policy specifies that
259 the pet insurer will pay for the examination.
260 b. A pet insurer may specify elements to be included as
261 part of the examination and require documentation thereof,
262 provided that the specifications do not unreasonably restrict
263 the ability of the applicant or policyholder to waive the
264 waiting period.
265 2. A waiting period, and the requirements applicable to a
266 waiting period, must be clearly and prominently disclosed to an
267 applicant before the policy purchase.
268 (c) A pet insurer may not require a medical examination of
269 the covered pet for the policyholder to renew a policy.
270 (d) If a pet insurer includes any prescriptive, wellness,
271 or noninsurance benefit in the policy form, the benefit is made
272 part of the policy contract and must comply with all of the
273 applicable provisions of the Florida Insurance Code.
274 (e) An applicant's eligibility to purchase a pet insurance
275 policy must not be based on participation, or lack of
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276 participation, in a separate wellness program.
277 (6) SALES PRACTICES FOR WELLNESS PROGRAMS.—
278 (a) A pet insurer or a pet insurance agent or broker may
279 not market a wellness program as pet insurance.
280 (b) If a wellness program is sold by a pet insurer or a
281 pet insurance agent or broker:
282 1. The purchase of the wellness program must not be a
283 requirement to the purchase of pet insurance;
284 2. The costs of the wellness program must be separate and
285 identifiable from any pet insurance policy sold by a pet insurer
286 or a pet insurance agent or broker;
287 3. The terms and conditions for the wellness program must
288 be separate from any pet insurance policy sold by a pet insurer
289 or an agent or broker;
290 4. The products or coverages available through the
291 wellness program may not duplicate the products or coverages
292 available through the pet insurance policy;
293 5. The advertising of the wellness program must not be
294 misleading and must be in accordance with this paragraph; and
295 6. A pet insurer or a pet insurance agent or broker shall
296 clearly disclose the following information to applicants and
297 policyholders, printed in 12-point boldface type:
298 a. That wellness programs are not insurance;
299 b. The address and customer service telephone number of
300 the pet insurer or the pet insurance agent or broker of record;
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301 and
302 c. The mailing address, toll-free telephone number, and
303 website address of the Office of Insurance Regulation.
304 (c) Coverages included in the pet insurance policy
305 contract described as wellness benefits are insurance.
306 (7) AGENT AND BROKER TRAINING.—
307 (a) An agent or broker may not sell, solicit, or negotiate
308 a pet insurance policy until after the agent or broker is
309 appropriately licensed and has completed the required training
310 specified in paragraph (c).
311 (b) Pet insurers shall ensure that its agents and brokers
312 are trained on the topics specified in paragraph (c) and that
313 its agents and brokers have been appropriately trained on th e
314 coverages and conditions of its pet insurance products.
315 (c) The training required under this subsection must
316 include information on all of the following topics:
317 1. Preexisting conditions and waiting periods.
318 2. The differences between pet insurance and noninsurance
319 wellness programs.
320 3. Chronic conditions, congenital anomalies or disorders,
321 and hereditary disorders and the way pet insurance policies
322 interact with those conditions or disorders.
323 4. Rating, underwriting, renewal, and other related
324 administrative topics.
325 (d) The satisfaction of the training requirements of
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326 another state which are substantially similar to the provisions
327 of paragraph (c) are deemed to satisfy the training requirements
328 in this state.
329 (8) VIOLATIONS.—A violation of this section may subject
330 the party committing the violation to penalties under the
331 Florida Insurance Code.
332 (9) SUPERSEDED PROVISIONS; CONSTRUCTION.—
333 (a) All other applicable provisions of the insurance laws
334 apply to pet insurance, except that the specific provisions of
335 this section supersede any general provisions of law which would
336 otherwise apply to pet insurance.
337 (b) This section does not in any way:
338 1. Prohibit or limit the types of exclusions that pet
339 insurers may use in their policies; or
340 2. Require pet insurers to have any of the limitations or
341 exclusions described in this section.
342 (10) RULES AND REGULATIONS.—The commission may adopt rules
343 and regulations necessary to administer this section.
344 Section 2. This act shall take effect January 1, 2025.
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INSURANCE & BANKING SUBCOMMITTEE
HB 1465 by Rep. Tuck
Pet Insurance and Wellness Programs
AMENDMENT SUMMARY
February 1, 2024
Amendment 1 by Rep. Tuck (strike-all): The amendment revises the bill to better integrate its
provisions within the framework of the Florida Insurance Code.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1465 (2024)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Tuck offered the following:
4
5 Amendment (with title amendment)
6 Remove everything after the enacting clause and insert:
7 Section 1. Section 624.604, Florida Statutes, is amended to
8 read:
9 624.604 “Property insurance” defined.—“Property insurance”
10 is insurance on real or personal property of every kind and of
11 every interest therein, whether on land, water, or in the air,
12 against loss or damage from any and all hazard or cause, and
13 against loss consequential upon such loss or damage, other than
14 noncontractual legal liability for any such loss or damage.
15 Property insurance includes pet insurance that provides coverage
16 for accidents and for illnesses or diseases of pets. Property
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Bill No. HB 1465 (2024)
Amendment No. 1
17 insurance may contain a provision for accidental death or injury
18 as part of a multiple peril homeowner’s policy. Such insurance,
19 which is incidental to the property insurance, is not subject to
20 the provisions of this code applicable to life or health
21 insurance. Property insurance does not include title insurance,
22 as defined in s. 624.608.
23 Section 2. Paragraph (hh) is added to subsection (1) of
24 section 626.9541, Florida Statutes, to read:
25 626.9541 Unfair methods of competition and unfair or
26 deceptive acts or practices defined.—
27 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
28 ACTS.—The following are defined as unfair methods of competition
29 and unfair or deceptive acts or practices:
30 (hh) Sales practices for pet wellness programs.—
31 1. A pet insurance agent may not market a wellness program
32 as pet insurance.
33 2. If a wellness program is sold by a pet insurance agent:
34 a. The purchase of the wellness program may not be a
35 prerequiste to the purchase of pet insurance;
36 b. The costs of the wellness program must be separate and
37 identifiable from any pet insurance policy sold by the pet
38 insurance agent;
39 c. The terms and conditions of the wellness program must be
40 separate from any pet insurance policy sold by the agent;
41 d. The products or coverages available through the wellness
42 program may not duplicate the products or coverages available
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Amendment No. 1
43 through the pet insurance policy; and
44 e. The advertising of the wellness program must not be
45 misleading.
46 Section 3. Section 627.71545, Florida Statutes, is created
47 to read:
48 627.71545 Pet insurance; noninsurance wellness programs.—
49 (1) This section may be cited as the “Pet Insurance Act.”
50 (2) The purpose of this section is to promote the public
51 welfare by creating a comprehensive regulatory framework within
52 which pet insurance may be sold in this state.
53 (3) This section applies to all of the following:
54 (a) Pet insurance policies that are issued to any resident
55 of this state or that are sold, solicited, negotiated, or
56 offered in this state.
57 (b) Pet insurance policies or certificates that are
58 delivered or issued for delivery in the state.
59 (4)(a) This section may not be construed to prohibit or
60 limit the types of exclusions pet insurers may use in their
61 policies or to require pet insurers to include in such policies
62 any of the limitations or exclusions specified in subsection
63 (9).
64 (b) All other applicable provisions of the Florida
65 Insurance Code apply to pet insurance, except that this section
66 supersedes any general provisions of the Florida Insurance Code
67 which otherwise apply to pet insurance.
68 (5)(a) As used in this section, the term:
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Amendment No. 1
69 1. “Chronic condition” means a condition that can be
70 treated or managed, but not cured.
71 2. “Congenital anomaly or disorder” means a condition that
72 is present from birth, whether inherited or caused by the
73 environment, and that may cause or contribute to illness or
74 disease.
75 3. “Hereditary disorder” means an abnormality that is
76 genetically transmitted from parent to offspring and may cause
77 illness or disease.
78 4. “Orthopedic” refers to a condition that affects the
79 bones, skeletal muscle, cartilage, tendons, ligaments, or
80 joints. Orthopedic conditions include, but are not limited to,
81 elbow dysplasia, hip dysplasia, intervertebral disc
82 degeneration, patellar luxation, and cranial cruciate ligament
83 rupture but do not include any cancer or any metabolic,
84 hematopoietic, or autoimmune disease.
85 5. “Pet insurance” means an insurance policy that provides
86 coverage for accidents and for illnesses and diseases of pets.
87 Such insurance reimburses a policyholder for expenses associated
88 with medical advice, diagnosis, care, or treatment provided by a
89 veterinarian, including, but not limited to, the cost of drugs
90 prescribed by the veterinarian.
91 6. “Pet insurance policy” or “policy” includes pet
92 insurance certificates.
93 7. “Preexisting condition” means a condition for which any
94 of the following is true before the effective date or during a
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Amendment No. 1
95 waiting period applicable to a pet insurance policy:
96 a. A veterinarian provided medical advice.
97 b. The pet received previous treatment.
98 c. Based on information from verifiable sources, the pet
99 had signs or symptoms directly related to the condition for
100 which a claim is being made.
101
102 A condition for which coverage is afforded on a policy is not
103 deemed to be a preexisting condition on any renewal of the
104 policy.
105 8. “Renewal” means the issuance and delivery at the end of
106 an insurance policy period of a policy that supersedes the
107 policy previously issued and delivered by the same pet insurer
108 or affiliated pet insurer and that provides types and limits of
109 coverage substantially similar to those contained in the policy
110 being superseded.
111 9. “Veterinarian” means a health care practitioner who is
112 licensed to engage in the practice of veterinary medicine in
113 Florida under chapter 474.
114 10. “Waiting period” means the period of time specified in
115 a pet insurance policy which is required to run before some or
116 all of the coverage in the policy may begin. This period may not
117 be applied to renewals of existing coverage.
118 11. “Wellness program” means a subscription or
119 reimbursement-based program that is separate from an insurance
120 policy and that provides goods and services to promote the
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Amendment No. 1
121 general health, safety, or well-being of the covered pet. If the
122 subscription or program includes language such as “undertakes to
123 indemnify another,” “pays a specified amount upon determinable
124 contingencies,” or “provides coverage for a fortuitous event,”
125 the subscription or program is transacting in the business of
126 insurance and is subject to the Florida Insurance Code. This
127 definition is not intended to classify a contract directly
128 between a service provider and a pet owner which involves only
129 the two parties as being the business of insurance, unless other
130 indications of insurance also exist.
131 (b) If a pet insurer uses any of the terms defined in
132 paragraph (a) in a pet insurance policy, the pet insurer must
133 use the definition of each term as provided in paragraph (a) and
134 must include each such definition in the policy. The pet insurer
135 must also make such definitions available through a clear and
136 conspicuous link on the main page of the website of the pet
137 insurer or the pet insurer’s program administrator.
138 (6)(a) A pet insurer transacting pet insurance must
139 disclose the following to pet insurance applicants and
140 policyholders:
141 1. Whether the policy excludes coverage due to any of the
142 following:
143 a. A chronic condition;
144 b. A congenital anomaly or disorder;
145 c. A hereditary disorder; or
146 d. A preexisting condition.
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Amendment No. 1
147 2. If the policy includes any other exclusions not listed
148 in subparagraph 1., the pet insurer must state the following in
149 the disclosure: “Other exclusions may apply. Please refer to the
150 exclusions section of the policy for more information.”
151 3. Any policy provision that limits coverage through a
152 waiting period, a deductible, a coinsurance payment, or an
153 annual or lifetime policy limit. Waiting periods and applicable
154 requirements must be clearly and prominently disclosed to
155 applicants before the policy purchase.
156 4. Whether the pet insurer reduces coverage or increases
157 premium based on the policyholder’s claim history, the age of
158 the covered pet, or a change in the geographic location of the
159 policyholder.
160 5. Whether the underwriting company differs from the brand
161 name used to market and sell the pet insurance.
162 (b) Before issuing a pet insurance policy, a pet insurer
163 shall, through a clear and conspicuous link on the main page of
164 the pet insurer’s or the pet insurer’s program administrator’s
165 website, provide a summary description of the basis or formula
166 for the pet insurer’s determination of claim payments under the
167 policy.
168 1. A pet insurer that uses a benefit schedule to determine
169 claim payments under a pet insurance policy must clearly
170 disclose both of the following:
171 a. The applicable benefit schedule in the policy.
172 b. All benefit schedules used by the pet insurer under its
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Amendment No. 1
173 pet insurance policies through a clear and conspicuous link on
174 the main page of the pet insurer’s or pet insurer’s program
175 administrator’s website.
176 2. A pet insurer that determines claim payments under a pet
177 insurance policy based on usual and customary fees, or any other
178 reimbursement limitation based on prevailing veterinary service
179 provider charges, shall do both of the following:
180 a. Include a usual and customary fee limitation provision
181 in the policy which clearly describes the pet insurer’s basis or
182 formula for determining usual and customary fees and the manner
183 in which that basis or formula is applied in calculating claim
184 payments.
185 b. Disclose the pet insurer’s basis for determining usual
186 and customary fees through a clear and conspicuous link on the
187 main page of the pet insurer’s or pet insurer’s program
188 administrator’s website.
189 (c) If any medical examination of the pet by a veterinarian
190 is required to effectuate coverage, the pet insurer must clearly
191 and conspicuously disclose any requirement for the examination
192 before the policy is purchased and must disclose that
193 examination documentation may result in a preexisting condition
194 exclusion.
195 (d) A pet insurer shall create a summary of all policy
196 disclosures required in paragraphs (a), (b), and (c) in a
197 separate document titled “Insurer Disclosure of Important Policy
198 Provisions.” The pet insurer shall post the document through a
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Amendment No. 1
199 clear and conspicuous link on the main page of the pet insurer’s
200 or pet insurer’s program administrator’s website.
201 (e) At the time a pet insurance policy is issued or
202 delivered to a policyholder, the pet insurer shall provide the
203 policyholder with a copy of the Insurer Disclosure of Important
204 Policy Provisions document required under paragraph (d), in at
205 least 12-point type. At such time, the pet insurer shall also
206 include a written disclosure with all of the following:
207 1. Contact information for the Division of Consumer
208 Services of the department, including a link and toll -free
209 telephone number, for consumers to submit inquiries and
210 complaints relating to pet insurance products regulated by the
211 department or office.
212 2. The address and customer service telephone number of the
213 pet insurance agent.
214 (f) The disclosures required in this subsection are in
215 addition to any other disclosures required by the insurance code
216 or rules prescribed by the commission.
217 (7) Unless the policyholder has filed a claim under the pet
218 insurance policy, a pet insurance applicant or policyholder may
219 examine and return the policy or rider to the pet insurer or pet
220 insurance agent or broker within 30 days after the applicant or
221 policyholder obtains the receipt and is entitled to the premium
222 refunded if, after examining the policy or rider, he or she is
223 not satisfied for any reason.
224 (8) A pet insurance policy and rider must have a notice
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Bill No. HB 1465 (2024)
Amendment No. 1
225 prominently printed on or attached to the first page which
226 includes specific instructions to accomplish a return, in type
227 at least as large as any type appearing on the policy or rider
228 contract and in substantially the following language:
229
230 You have 30 days from the day you receive this policy,
231 certificate, or rider to review it and return it to
232 the company if you decide not to keep it. You do not
233 have to tell the company why you are returning it. If
234 you decide not to keep policy, certificate, or rider,
235 simply return it to the company at its administrative
236 office or return it to the insurance agent or broker
237 who you bought it from as long as you have not filed a
238 claim. You must return policy, certificate, or rider
239 within 30 days after the day you first received it in
240 order to receive a refund. The company must refund the
241 full amount of any premium paid within 30 days after
242 it receives the returned policy, certificate, or
243 rider. The premium refund will be sent directly to the
244 person who paid it. The policy, certificate, or rider
245 will be void as if it had never been issued.
246
247 (9)(a) A pet insurer may issue a policy that excludes
248 coverage on the basis of one or more preexisting conditions with
249 appropriate written disclosure to the applicant or policyholder.
250 The pet insurer has the burden of proving that the preexisting
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Amendment No. 1
251 condition exclusion applies to the condition for which a claim
252 is being made.
253 (b)1. A pet insurer may issue a policy imposing a waiting
254 period before the effective date of a new policy which does not
255 exceed 30 days for illnesses or diseases or for orthopedic
256 conditions not resulting from an accident. A pet insurer may not
257 issue a policy imposing a waiting period for accidents.
258 2. A pet insurer issuing a policy that imposes a waiting
259 period must include a provision in its contract which allows the
260 waiting period to be waived upon completion of a medical
261 examination of the pet by a veterinarian. The pet insurer may
262 require the examination to be conducted by a veterinarian after
263 the purchase of the policy.
264 a. A medical examination required under this subparagraph
265 must be paid for by the policyholder, unless the policy
266 specifies that the pet insurer will pay for the examination.
267 b. A pet insurer may specify requirements for the
268 examination and require documentation that the requirements have
269 been satisfied, provided that the specifications do not
270 unreasonably restrict the ability of the applicant or
271 policyholder to waive the waiting period.
272 (c) A pet insurer may not require a medical examination of
273 the covered pet for the policyholder to renew a policy.
274 (d) If a pet insurer includes any prescriptive, wellness,
275 or noninsurance benefit in the policy form, the benefit is made
276 part of the policy contract and must comply with all of the
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Amendment No. 1
277 applicable provisions of the Florida Insurance Code.
278 (e) An applicant’s eligibility to purchase a pet insurance
279 policy may not be based on his or her participation, or lack of
280 participation, in a separate wellness program.
281 (10)(a) Pet insurers must ensure that its agents are
282 trained on the topics specified in paragraph (b) and that its
283 agents have been appropriately trained on the coverages and
284 conditions of its pet insurance products.
285 (b) The training required under this subsection must
286 include information on all of the following topics:
287 1. Preexisting conditions and waiting periods.
288 2. The differences between pet insurance and noninsurance
289 wellness programs.
290 3. Chronic conditions, congenital anomalies or disorders,
291 and hereditary disorders and the way pet insurance policies
292 address those conditions or disorders.
293 4. Rating, underwriting, renewal, and other related
294 administrative topics.
295 (11) The commission may adopt rules necessary to administer
296 this section.
297 Section 4. This act shall take effect January 1, 2025.
298
299 -----------------------------------------------------
300 T I T L E A M E N D M E N T
301 Remove lines 3-41 and insert:
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Amendment No. 1
302 programs; amending s. 624.604, F.S.; revising the definition of
303 the term “property insurance”; amending s. 626.9541, F.S.;
304 providing that certain practices related to pet wellness
305 programs are unfair methods of competition and unfair or
306 deceptive acts or practices; creating s. 627.71545, F.S.;
307 providing a short title; providing the purpose of the act;
308 providing applicability; providing construction; defining terms;
309 requiring pet insurers that use such defined terms in their pet
310 insurance policies to use the statutory definition in their
311 policies; requiring pet insurers to also make such definitions
312 available on their website or their program administrator’s
313 website; requiring pet insurers to make certain disclosures to
314 pet insurance applicants and policyholders; requiring pet
315 insurers to provide a summary of their bases or formulas for
316 determination of claim payments under a pet insurance policy on
317 their website or their program administrator’s website;
318 requiring pet insurers to disclose certain requirements for
319 required medical examinations of a pet by a veterinarian;
320 requiring pet insurers to create a document with a summary of
321 certain disclosures, to post such document on their website or
322 their program administrator’s website, and, upon issuance or
323 delivery of a policy to a policyholder, to provide the
324 disclosure document to the policyholder; requiring additional
325 written disclosures; providing that certain required disclosures
326 are in addition to disclosures required by the insurance code or
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Bill No. HB 1465 (2024)
Amendment No. 1
327 Financial Services Commission rule; authorizing pet insurance
328 applicants and policyholders to examine and return insurance
329 policies and riders under certain circumstances; requiring that
330 premiums be refunded under certain circumstances; requiring that
331 pet insurance policies and riders have a specified notice
332 printed on or attached to the first page; authorizing pet
333 insurers to issue policies that exclude coverage on the basis of
334 preexisting conditions with appropriate written disclosure to
335 the applicant or policyholder; providing that the pet insurer
336 has a specified burden of proof with regard to such exclusions;
337 authorizing pet insurers to issue policies that impose a waiting
338 period of up to a specified period of time for specified
339 illnesses, diseases, or conditions; prohibiting pet insurers
340 from issuing policies imposing a waiting period for accidents;
341 requiring pet insurers who issue a policy that imposes a waiting
342 period to include a provision allowing for waiver of the waiting
343 period upon completion of a medical examination of the covered
344 pet by a veterinarian; authorizing pet insurers to require an
345 examination to be conducted by a veterinarian after the purchase
346 of the policy; imposing a requirement and making an
347 authorization related to such examination; prohibiting a pet
348 insurer from requiring a medical examination of the covered pet
349 to renew a policy; requiring that certain benefits comply with
350 certain provisions of the Florida Insurance Code; prohibiting
351 insurance applicants’ eligibility from being based on
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Amendment No. 1
352 participation or lack of participation in wellness programs;
353 requiring pet insurers to ensure that its agents are trained on
354 specified topics; providing rulemaking authority; providing an
355 effective date.
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HB 1611
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1611 Insurance
SPONSOR(S): Stevenson and others
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee Fortenberry Lloyd
2) State Administration & Technology
Appropriations Subcommittee
3) Commerce Committee
SUMMARY ANALYSIS
Among the variety of changes regarding insurance, the bill:
Data reporting: requires that the information that property insurers were reporting to the Office of Insurance
Regulation (OIR) on a quarterly basis be reported on a monthly basis; and, that the data must be reported
based on zip code rather than county.
Property insurance policy nonrenewals: provides the Financial Services Commission with express
rulemaking authority to adopt rules and forms to regulate how, and in what format, insurers will provide notice
to OIR of nonrenewal of more than 10,000 residential property insurance policies within a 12-month period.
Public housing authority (PHA) self-insurance trust funds: revises the maximum per-loss occurrence
amount that a PHA self-insurance fund may retain from $350,000 to an amount that the fund can withstand,
as long as it maintains a continuing program of excess insurance coverage and reinsurance to protect the
stability of the fund, and meets certain additional criteria.
Prohibition on cancellation of surplus lines property insurance policies: restricts the ability for surplus
lines insurers to cancel or nonrenew personal and commercial lines residential insurance policies due to
unrepaired damage after a hurricane.
Hurricane modeling: specifies that if an insurer uses the average of two or more models in its rate filing, the
same average model must be used throughout the state. However, if the insurer uses a weighted average, it
must provide OIR with a justification for using the weighted average, which shows that it results in a rate that
is reasonable, adequate, and fair.
Citizens Property Insurance Corporation: eliminates the statutory provision that allows Citizens to charge
up to 50 percent above the established Citizens rate for policyholders whose coverage was last provided by
an insurer determined to be unsound or place into receivership.
Reciprocal Insurers: updates the statutory chapter regarding reciprocal insurers to align it with OIR’s
existing authority to license and regulate other types of insurers, including significant changes to the
application and acquisition processes.
The bill has no impact on local or state government revenues. It may have positive impact on local government
expenditures, a negative impact on state government expenditures, and an indeterminate negative direct
economic impact on the private sector.
The bill is effective on July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h1611.IBS
DATE: 1/31/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
DATA REPORTING
Background
Each insurer doing business in Florida must file a report containing certain information with the Office of
Insurance Regulation (OIR) on a quarterly basis. 1 The report must contain premium information for
each of the property lines of business.2 It must also contain the following information for each county on
a monthly basis:
Total number of policies in force at the end of each month.
Total number of policies canceled.
Number of policies canceled due to hurricane risk.
Number of policies nonrenewed due to hurricane risk.
Number of new policies written.
Total dollar value of structure exposure under policies that include wind coverage.
Number of policies that exclude wind coverage.
Number of claims open each month.
Number of claims closed each month.
Number of claims pending each month.
Number of claims in which either the insurer or insured invoked any form of alternative dispute
resolution (ADR), and specifying which form of ADR was invoked. 3
OIR is required to aggregate this data on a statewide basis and make it available to the public on its
website.4 OIR uses this data to track market trends and shares it with the Florida Division of
Emergency Management after natural disasters to help determine where emergency response is most
necessary.5
While the data is reported on a county-by-county basis, insurers already collect data that would allow
them to report on a zip-code basis instead.6
Effect of the Bill
Pursuant to the bill, the information that property insurers were reporting to OIR on a quarterly basis
must be reported on a monthly basis instead. Additionally, the bill requires that the data is reported
based on zip code rather than county. These changes will allow OIR to receive more accurate data on
an expedited basis.7
1 S. 624.424(10)(a), F.S. For the purpose of these reports, the property insurance lines include personal and commercial
residential property insurance.
2 Id.
3 Id.
4 S. 624.424(10)(b), F.S.
5 Office of Insurance Regulation (OIR), Agency Analysis of 2024 House Bill 1611, p. 2 (Jan. 21, 2024).
6 Id.
7 OIR has indicated that the data is constantly changing and that it is outdated by the time they receive it on a quarterly
basis.
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PROPERTY INSURANCE POLICY NONRENEWALS
Background
Any property insurer planning to nonrenew more than 10,000 residential property insurance policies in
Florida within a 12-month period must give written notice to OIR 90 days before the issuance of any
notices of nonrenewal.8 While the notice is for informational purposes only, it must include:
the insurer’s reasons for the action;
the effective dates of nonrenewal; and
any arrangements the insurer has made for other insurers to offer coverage to the affected
policyholders.9
The law regarding this notice does not contain a grant of rulemaking authority to allow the Financial
Services Commission (FSC)10 to adopt rules and forms to administer it.
Effect of the Bill
The bill provides the FSC with express rulemaking authority to adopt rules and forms to regulate how,
and in what format, insurers will provide notice to OIR of nonrenewal of more than 10,000 residential
property insurance policies within a 12-month period.
PUBLIC HOUSING SELF-INSURANCE T RUST FUND
Background
Florida law provides for a public housing authority (PHA) in each city and county in the state where the
local governing body has declared the need for such an authority based upon the lack of safe or
sanitary dwellings within the city or county.11 Two or more PHAs in Florida may form a self-insurance
fund to pool and spread their members’ casualty and real or personal property risks, as long as the self-
insurance fund:12
has annual premiums that exceed $5 million;
uses a qualified actuary:
o to determine rates and submits an annual certification to OIR that the rates are
actuarially sound and not inadequate;
o to establish loss and loss adjustment expense reserves and submits an annual
certification to OIR that such reserves are adequate; and
o maintains a continuing program of excess insurance coverage and reserve evaluation to
protect the self-insurance fund’s financial stability, as determined by the actuary.
At a minimum, the PHA self-insurance program must purchase excess insurance from authorized
insurance carriers or eligible surplus lines carriers, but cannot retain liability of more $350,000, per
occurrence. However, if the excess insurance is not available at such terms or is especially costly, a
PHA self-insurance fund has limited ability to comply with the statute.
Effect of the Bill
The bill revises the maximum per-loss occurrence amount that a PHA self-insurance fund may retain
from $350,000 to an amount that the fund can withstand, as long as it maintains a continuing program
of excess insurance coverage and reinsurance to protect the stability of the fund, and, at a minimum:
8 S. 624.4305, F.S.
9 Id.
10 The Financial ServicesCommission, composed of the Governor, the Attorney General, the Chief Financial Officer, and
the Commissioner of Agriculture, serves as agency head of OIR for the purposes of rulemaking.
11 Ss. 421.04 and 421.27, F.S.
12 S. 624.46226, F.S.
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includes a net retention selected by the fund administrator, ratified by the fund’s governing
body, and certified by a qualified actuary;
includes reinsurance or excess insurance from authorized insurance carriers or eligible surplus
lines insurers; and
is certified by a qualified, independent actuary as to the program’s adequacy.
PROHIBITION ON CANCELLATION OF SURPLUS LINES PROPERTY INSURANCE POLICIES
Background
An authorized insurer may not cancel or nonrenew any personal residential or commercial residential
property insurance policy covering a dwelling or residential property in Florida, including but not limited
to, any homeowner, mobile home owner, farmowner, condominium association, condominium unit
owner, apartment building, or other policy covering a residential structure or its contents:
For 90 days after the dwelling or residential property has been repaired, if the property has been
damaged as a result of a hurricane or wind loss that is the subject of a declaration of emergency
and the filing of an order by the Insurance Commissioner. 13
Until the earlier of when the dwelling or residential property has been repaired or one year after
the insurer issues the final claim payment, if the property was damaged by a covered peril, but
not a hurricane or wind loss.14
However, an authorized insurer or agent may cancel or nonrenew a policy before the dwelling or
residential property has been repaired:
Upon 10 days’ notice for nonpayment of premium; or
Upon 45 days’ notice for:
o A material misstatement or fraud related to the claim;
o If the insurer determines that the insured has unreasonably caused a delay in the repair;
or
o If the insurer has paid policy limits.15
If an insurer elects to nonrenew a policy covering a property that has been damaged, the insurer must
provide at least 90 days’ notice that the insurer intends to nonrenew the policy 90 days after the
property has been repaired.16 A structure is considered repaired when substantially completed and
restored to the extent that it is insurable by another authorized insurer writing policies in Florida. 17
Section 626.9201, F.S., governs the cancellation or nonrenewal of personal and commercial residential
property insurance policies issued by surplus lines insurers, but it does not include specific language
regarding cancellation following a declared state of emergency.
Effect of the Bill
The bill amends s. 626.9201, F.S., to better align the cancellation and nonrenewal requirements with
those currently in law for admitted insurers. Upon a declaration of emergency and the issuance of an
order by the Insurance Commissioner, a surplus lines insurer may not cancel or nonrenew a personal
residential or commercial residential property insurance policy covering a dwelling or residential
property in Florida that has been damaged as a result of a hurricane that is the subject of the
declaration of emergency for 90 days after the dwelling or residential property has been repaired.
The bill establishes that a dwelling or residential property is deemed repaired when it is substantially
completed and restored such that it is insurable by another insurer writing policies in Florida.
13 S. 627.4133(2)(e)1.a., F.S.
14 S. 627.4133(2)(e)1.b., F.S.
15 S. 627.4133(2)(e)2., F.S.
16 S. 627.4133(2)(e)3., F.S.
17 S. 627.4133(2)(e)5., F.S.
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Additionally, a surplus lines insurer or agent may cancel or nonrenew a policy before the dwelling or
residential property has been repaired:
with 10 days’ notice for nonpayment of premium; or
with 45 days’ notice:
o for a material misstatement or fraud related to the claim;
o if the insurer determines that the insured has unreasonably cause a delay in the repair of
the dwelling or residential property; or
o if the insurer has paid policy limits.
Pursuant to the bill, if the surplus lines insurer elects to nonrenew a policy covering a dwelling or
residential property that has been damaged, the insurer must provide at least 90 days’ notice to the
insurer that it intends to nonrenew the policy 90 days after the dwelling or residential property has been
repaired.
HURRICANE M ODEL AVERAGES
Background
The law regarding OIR’s review and approval of residential property insurance rate filings requires that
a rate filing consider mitigation measures that policyholders undertake to reduce hurricane losses.18 It
sets forth the criteria under which OIR may disprove rate filings, including disproval of rates that it
determines to be excessive, inadequate, or unfairly discriminatory. 19 The law also establishes criteria
for the Commission’s consideration, and approval, of hurricane loss models and prescribes how those
models affect OIR’s approval of property insurance rate filings. 20 With respect to residential property
insurance rate filings, the rate filing may use a modeling indication that is the weighted or straight
average of two or more hurricane loss models found to be accurate or reliable by the Commission.21
The law does not require consistency in the model used, which potentially allows insurers to use
different models to produce rates in various parts of the state.22
Effect of the Bill
The bill specifies that if an insurer uses the average of two or more models in its rate filing, the same
average model must be used throughout the state. However, if the insurer uses a weighted average, it
must provide OIR with a justification for using the weighted average, which shows that it results in a
rate that is reasonable, adequate, and fair.
CITIZENS PROPERTY INSURANCE CORPORATION
Background
From 2007 until 2010, Citizens’ rates were frozen by statute at the level that had been established in
2006. In 2010, the Legislature established a “glidepath” to impose annual rate increases up to a level
that is actuarially sound. Under this glidepath, Citizens had to implement an annual rate increase which,
except for sinkhole coverage, does not exceed 10 percent above the previous year for any individual
policyholder, adjusted for coverage changes and surcharges. In 2021, the Legislature revised this
glidepath to increase it one percent per year to 15 percent, as follows: 23
11 percent for 2022.
12 percent for 2023.
13 percent for 2024.
14 percent for 2025.
18 S. 627.062(2)(j), F.S.
19 S. 627.062(2)(b), F.S.
20 Ss. 627.0628-627.06281, F.S.
21 S. 627.062(2)(j), F.S.
22 OIR, supra note 5, at 3.
23 S. 627.351(6)(n)5., F.S.
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15 percent for 2026 and all subsequent years.
The “glidepath,” which functions as a rate cap, is not closing the gap between Citizens rates and private
market rates. Instead, because of the rate cap and the increasing rates of private property insurance,
the gap is growing and making Citizens more like a competitor to private insurers than an insurer of last
resort. Because Citizens’ rates are often well below those of private carriers, Citizens may be more
competitive than otherwise intended. Due to Citizens’ structure, its rates do not contain certain
elements that the rates of private insurers contain. Citizens does not pay taxes like private insurers and
does not need to purchase as much reinsurance as private insurers because of Citizens’ higher levels
of capital and surplus.24
Until December 2022, Citizens’ rates did not differ based upon whether the property is a policyholder’s
primary residence, a policyholder’s second home (e.g., a vacation home), or occupied by a long-term
tenant.25 During Special Session 2022A, the Legislature removed the glidepath rate limitations for any
new or renewal personal lines policy for non-primary residences written on or after November 1, 2023.
The rate for these residences must be no more than 50 percent above, but not less than, the
established rate for Citizens which was in effect one year before the date of the application for
coverage.26
In addition to non-primary residences, the “glidepath” normally imposed on Citizens year-to-year rate
growth does not apply to policies where coverage for the risk insured by Citizens was last provided by
an insurer determined by OIR to be unsound or placed into receivership due to impairment or
insolvency.27 Instead, these risks must be no more than 50 percent above, but not less than, the
established rate for Citizens which was in effect one year before the date of the application for
coverage.28 The limitation on Citizens rate increases for non-primary residences and policies assumed
from unsound insurers applies on a year-over-year basis, rather than being attached to a fixed date
(i.e., the rate in effect the year before the date of application for coverage).
Effect of the Bill
The bill eliminates the statutory provision that allows Citizens to charge up to 50 percent above the
established Citizens rate for policyholders whose coverage was last provided by an insurer determined
to be unsound or place into receivership.29 The applicable rate would thus be subject to the glidepath
limitation on rates.
RECIPROCAL INSURERS
Reciprocal insurance exchanges are a form of insurance organization in which businesses and
individuals exchange insurance contracts and spread the risks associated with such contracts among
themselves.30 Policyholders of a reciprocal insurance exchange are known as “subscribers.” 31
Chapter 629, F.S., governs the regulation of reciprocal insurers in Florida. A reciprocal insurer may
transact any kind of insurance other than title insurance in Florida.32
24 S. 627.351(6)(t), F.S. See also s. 627.351(6)(c)9. for information regarding Citizens purchase of reinsurance.
25 Citizens would not issue a personal lines policy to someone using a home as a short -term vacation rental as that is
considered a business use of the home.
26 S. 627.351(n)8., F.S.
27 Id. In practical effect, this means that such policyholders might continue to pay the premium amount that they paid their
prior insurer, not a lower premium that they might otherwise be charged by Citizens if subject to the rate increase
limitations.
28 Id.
29 OIR maintains that treating these policyholders differently because they were previously insured by an unsound,
impaired, or insolvent insurer is unfairly discriminatory and, therefore, does not meet the rating standards in s. 627.062,
F.S.
30 Julia Kagan and Eric Estevez, Reciprocal Insurance Exchange: Definition, How It Work s, Example (last updated Sep.
28, 2023), Investopedia, https://www.investopedia.com/terms/r/reciprocal-insurance-exchange.asp (last visited Jan. 29,
2024).
31 Id.
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Typically, an advisory board manages a reciprocal insurance company. 33 The board is responsible for
choosing and monitoring the attorney-in-fact, approving rates, and providing oversight of the operations
of the reciprocal.34 Surpluses from premiums are held in separate surplus accounts devoted to a
specific purpose, though the accounts can be commingled and used to pay claims against the
policies.35
Florida law provides that the advisory committee of a domestic reciprocal insurer exercising the
subscribers’ rights must be selected under such rules as the subscribers adopt. 36 Not less than two-
thirds of such committee may be subscribers other than the attorney, or any person employed by,
representing, or having a financial interest in the attorney.37
The committee must:
Supervise the finances of the insurer;
Supervise the insurer’s operations to such extent as to assure conformity with the subscribers’
agreement and power of attorney;
Procure the audit of the accounts and records of the insurer and of the attorney at the expense
of the insurer; and
Have such additional powers and functions as may be conferred by the subscribers’
agreement.38
Definitions
Background
The term “reciprocal insurance” is currently defined under ch. 629, F.S., as insurance resulting from an
interexchange among subscribers of reciprocal agreements of indemnity, with the interexchange being
effectuated through an “attorney in fact” common to all such parties. 39
Additionally, the term “reciprocal insurer” is currently defined under ch. 629, F.S., as an unincorporated
aggregation of subscribers operating individually and collectively through an attorney in fact to provide
reciprocal insurance among themselves.40
Effect of the Bill
The bill creates definitions for the following terms in ch. 629, F.S.:
“Affiliated person” of another person means any of the following:
o The spouse of the other person.
o The parents of the other person and their lineal descendants, or the parents of the other
person’s spouse and their lineal descendants.
o A person who directly or indirectly owns or controls, or holds with the power to vote, 10
percent or more of the outstanding voting securities of the other person.
o A person who directly or indirectly owns 10 percent or more of the outstanding voting
securities that are directly or indirectly owned or controlled, or held with the power to
vote, by the other person.
o A person or group of persons who directly or indirectly control, are controlled by, or are
under common control with the other person.
32 S. 629.041(1), F.S. Such an insurer may purchase reinsurance and may grant reinsurance as to any kind of insurance it
is authorized to transact directly. See s. 629.041(2), F.S.
33 Id.
34 Id.
35 Id.
36 S. 629.201(1), F.S.
37 S. 629.201(2), F.S.
38 S. 629.201(3), F.S.
39 S. 629.011, F.S.
40 S. 629.021, F.S.
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o A person who is a director, officer, trustee, partner, owner, manager, joint venturer, or
an employee, or another person who is performing duties similar to those of a person in
one of the aforementioned positions.
o If the other person is an investment company, any investment adviser of such company
or any member of an advisory board of such company.
o If the other person is an unincorporated investment company not having a board of
directors, the depositor of such company.
o A person who has entered into an agreement, written or unwritten, to act in concert with
the other person in acquiring or limiting the disposition of:
Securities of an attorney in fact or controlling company that is a stock
corporation; or
An ownership interest of an attorney in fact of a reciprocal insurer. The attorney
in fact may be an individual, a corporation, or another person.
“Controlling company” means any person, corporation, trust, limited liability company,
association, or other entity owning, directly or indirectly, 10 percent or more of the voting
securities of one or more attorneys in fact that are stock corporations, or 10 percent or more of
the ownership interest of one or more attorneys in fact that are not stock corporations.
The bill amends the current definition of “reciprocal insurer” to mean an insurer that is an incorporated
aggregation of subscribers domiciled in this state operating individually and collectively through an
attorney in fact to provide reciprocal insurance to such subscribers. A domestic reciprocal insurer must
be licensed as an assessable or a nonassessable reciprocal insurer. The bill also provides that:
An assessable reciprocal insurer may require that its subscribers make up any shortfall in
capital and surplus to cover claims and expenses, either jointly or severally.
A nonassessable reciprocal insurer has no recourse against subscribers for any shortfall in
capital and surplus to cover claims and expenses.
The bill retains the current definition of “reciprocal insurance.”
Name of Reciprocal Insurer
Background
Under Florida law, a reciprocal insurer must have and use a business name. 41 The name must include
the word “reciprocal,” “interinsurer,” “interinsurance,” “exchange,” “underwriters,” or “underwriting,” but
the requirement currently does not apply to any insurer holding a certificate of authority to transact
business in Florida immediately prior to the effective date of the Florida Insurance Code. 42 Currently, a
reciprocal insurer must sue and be sued in its own name. 43
Effect of the Bill
The bill requires insurers holding a certificate of authority to transact business in Florida to have and
use a business name, and requires such an insurer to have the word “reciprocal,” “interinsurer,”
“interinsurance,” “exchange,” “underwriters,” or “underwriting” in its name.
Additionally, the provides that a foreign or alien reciprocal insurer transacting business in Florida,
whose name does not include the word “reciprocal,” “interinsurer,” “interinsurance,” “exchange,”
“underwriters,” or “underwriting,” must use a fictitious name, registered in accordance with applicable
law, which includes one of those words when transacting business in Florida.
The bill also provides that a reciprocal may sue and be sued in its own name, rather than “must.”
Premium Reserves
41 S. 629.051(1), F.S.
42 Chs. 624-632, 634, 635, 636, 641, 642, 648, and 651 constitute the “Florida Insurance Code.” See s. 624.01, F.S.
43 S. 629.051(2), F.S.
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Background
Florida law does not currently require reciprocal insurers to maintain unearned premium reserves.
Effect of the Bill
The bill requires reciprocal insurers to maintain at all times unearned premium reserves equal to 50
percent of the net written premiums of the subscribers on policies having 1 year or less to run, and pro
rata on policies running for longer periods, except that all premiums on any marine or transportation
insurance trip risk are deemed unearned until the trip is terminated.
For purposes of this new requirement, the term “net written premiums” means the premium payments
made by subscribers plus the premiums due from subscribers, after deducting the amounts specifically
provided in the subscribers’ agreements for expenses, including reinsurance costs and fees paid to the
attorney in fact, provided that the power of attorney agreement contains an explicit provision requiring
the attorney in fact to refund any unearned subscriber fees on a pro rata basis for cancelled policies.
In the absence of such a provision, the bill requires that the unearned premium reserves be calculated
without any adjustment for fees paid to the attorney in fact. If the unearned premium reserves at any
time are less than $300,000, the bill requires that additional funds in cash or eligible securities be
maintained on deposit at the exchange at all times which, together with the unearned premium
reserves, equal $300,000.
In calculating the reserves, the amount of the attorney in fact’s bond filed with OIR must be included in
such reserves. If at any time the unearned premium reserves are less than those required, the
subscribers, or the attorney in fact, must advance funds to cover the deficiency. Such advances may
only be repaid out of the surplus of the exchange and only after receiving written approval from OIR.
Surplus Funds Required
Background
Under current law, a domestic reciprocal insurer formed under ch. 629, F.S. (if it has otherwise
complied with the applicable provisions of the Florida Insurance Code) may be authorized to transact
insurance if it has and thereafter maintains surplus funds of not less than $250,000.44 In addition to the
required $200,000 in surplus funds, the insurer currently must have, when first so authorized, an
expendable surplus of not less than $750,000.45
Effect of the Bill
The bill provides that the surplus required of a reciprocal insurer is as required in s. 624.407, F.S., as to
the kind of insurance proposed to be transacted. The referenced s. 624.407, F.S., relates to minimum
surplus required of new insurers based on the type of insurance proposed to be transacted.
Organization of Reciprocal Insurer
Background
Twenty-five or more persons domiciled in Florida may organize a domestic reciprocal insurer and apply
to OIR for a certificate of authority to transact insurance. 46 The proposed attorney must fulfill the
requirements of, and must execute and file with OIR when applying for a certificate of authority, a
declaration that sets forth:
44 S. 629.071(1),F.S.
45 S. 629.071(2),F.S.
46 S. 629.081, F.S.
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The name of the insurer;
The location of the insurer’s principal office, which must be the same as that of the attorney and
must be maintained within Florida;
The kinds of insurance proposed to be transacted;
The names and addresses of the original subscribers;
The designation and appointment of the proposed attorney and a copy of the power of attorney;
The names and addresses of the officers and directors of the attorney, if a corporation, or of its
members, if other than a corporation;
The powers of the subscribers’ advisory committee, and the names and terms of office of the
members thereof;
That all moneys paid to the reciprocal must, after deducting any sum payable to the attorney, be
held in the name of the insurer and for the purposes specified in the subscribers’ agreement;
A copy of the subscribers’ agreement;
A statement that each of the original subscribers has in good faith applied for insurance of a
kind proposed to be transacted, and that the insurer has received from each such subscriber the
full premium or premium deposit required for the policy applied for, for a term of not less than 6
months at an adequate rate that has been filed with and approved by OIR;
A statement of the financial condition of the insurer, a schedule of its assets, and a statement
that the surplus as described above is on hand; and
A copy of each policy, endorsement, and application form it then proposes to issue or use.47
Effect of the Bill
The bill clarifies that twenty-five or more persons domiciled in Florida who wish to organize as a
domestic reciprocal insurer may make an application to OIR for a permit to do so. The bill provides that
a domestic reciprocal insurer may not be formed unless the persons so proposing have received a
permit from OIR. Additionally, the permit application must be in writing and made in accordance with
forms prescribed by the Commission.
The bill provides that the following information must be included in an application for a permit in addition
to the current required information (which is in also in addition to any applicable requirements of s.
628.051, F.S.,48 or other relevant statutes):
The background information as specified in the proposed s. 629.227, F.S., for all officers ,
directors, managers, and those in equivalent positions of the proposed attorney in fact as well
as for any person with an ownership interest of 10 percent or more in the proposed attorney in
fact.
The articles of incorporation and bylaws, or equivalent documents, of the proposed attorney in
fact, dated within the last year and appropriately certified.
The proposed charter of the subscribers’ advisory committee, and the names and terms of office
of the members thereof, as well as the background information for each proposed member.
A copy of the required bond.
The bill removes certain other information currently required to be included in permit application and
relocates such information to the provision of Florida law relating to certificates of authority for
reciprocal insurers.
The bill requires that a filed application must be accompanied by the application fee 49 and such other
pertinent information and documents as reasonably requested by OIR. The bill provides that OIR must
evaluate and grant or deny permit applications in accordance with ss. 628.061, 50 628.071,51 F.S., and
other relevant provisions of the Florida Insurance Code.
47 S. 629.081(2), F.S.
48 S. 628.051, F.S., codifies Florida’s laws governing domestic stock insurers, mutual insurers, and captive insurers. See
s. 628.011, F.S.
49 The application fee is $1,500. See s. 624.501(1)(a), F.S.
50 S. 628.061, F.S., relates to the investigation of proposed domestic stock insurers, mutual insurers, and captive insurers.
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Certificate of, and Continued Eligibility for, Certificate of Authority
Background
Current law provides that the certificate of authority of a reciprocal insurer must be issued to its attorney
in the name of the insurer.52
Effect of the Bill
The bill provides that, in applying for a certificate of authority as a domestic reciprocal insurer, the
attorney in fact of an applicant who has previously received a permit from OIR may file an application in
accordance with forms prescribed by the Commission which, in addition to applicable requirements of
other relevant statutes, consists of all of the following:
Executed copies of any proposed documents required as part of the permit application.
A statement affirming that all moneys paid to the reciprocal shall, after deducting therefrom any
sum payable to the attorney in fact, be held in the name of the insurer and for the purposes
specified in the subscribers' agreement.
A statement that each of the original subscribers has in good faith applied for insurance of a
kind proposed to be transacted, and that the insurer has received from each such subscriber the
full premium or premium deposit required for the policy applied for, for a term of not less than 6
months at the rate that was filed with and approved by OIR.
A copy of the required bond.
A statement of the financial condition of the insurer, a schedule of its assets, and a statement
that the required surplus is on hand.
Such other pertinent information or documents as reasonably requested by OIR.
The bill clarifies that the reciprocal certificate of authority must be issued in the name of the reciprocal
insurer to its attorney in fact.
To maintain its eligibility for a certificate authority, the bill requires that a domestic reciprocal insurer
continue to meet all conditions required to be met under the Florida Insurance Code and the rules
adopted thereunder for the initial applications for a permit and certificate of authority.
Power of Attorney
Background
Under Florida law, the rights and powers of the attorney of a reciprocal insurer are as provided in the
power of attorney given to it by the subscribers.53 The power of attorney must set forth:
The powers of the attorney;
That the attorney is empowered to accept service of process on behalf of the insurer in actions
against the insurer upon contracts exchanged;
The general services to be performed by the attorney;
The maximum amount to be deducted from advance premiums or deposits to be paid to the
attorney and the general items of expense in addition to losses, to be paid by the insurer; and
Except as to nonassessable policies, a provision for a contingent several liability of each
subscriber in a specified amount, which amount shall be not less than 5 times nor more than 10
times the premium or premium deposit stated in the policy. 54
Currently, the power of attorney may:
51 S. 628.061, F.S., relates to the granting and denial of permits for proposed domestic stock insurers, mutual insurers,
and captive insurers.
52 S. 629.091, F.S.
53 S. 629.101(1), F.S.
54 S. 629.101(2), F.S.
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Provide for the right of substitution of the attorney and revocation of the power of attorney and
rights thereunder;
Impose such restrictions upon the exercise of the power as are agreed upon by the
subscribers;
Provide for the exercise of any right reserved to the subscribers directly or through their
advisory committee; and
Contain other lawful provisions deemed advisable. 55
The terms of any power of attorney or agreement collateral must be reasonable and equitable, and no
such power or agreement may be used or be effective in Florida unless filed with OIR.56
Effect of the Bill
The bill moves the provisions of law relating to what a power of attorney may set forth and adds them to
the provisions of law relating to what a power of attorney must set forth. In addition to those changes,
the bill requires that a power of attorney must also set forth the place where the office of the attorney in
fact is maintained.
Modifications to Organizing Documents or Power of Attorney
Background
Current law provides that modifications to the terms of a subscribers’ agreement or to the power of
attorney of a domestic reciprocal insurer must be made jointly by the attorney and the subscribers’
advisory committee.57 Further, no such modification can be made effective retroactively, nor as to any
insurance contract issued prior thereto.58
Effect of the Bill
The bill provides that, in addition to modifications to the terms of a subscriber’s agreement or the power
of attorney, modifications to the terms of the subscribers’ advisory committee must be made jointly by
the attorney and the subscribers’ advisory committee. The bill also provides that no modification can
take effect until filed with, and approved in writing by, OIR.
Attorney in Fact’s Bond
Background
Concurrently with the filing of a permit application, an attorney in fact is currently required to file with
OIR a $100,000 bond in favor of the state of Florida for the benefit of all persons damaged as a result
of breach by the attorney of the conditions of such bond.59 Specifically, the bond must be conditioned
on the fact that the attorney will faithfully account for all moneys and other property of the insurer
coming into its hands, and that it will not withdraw or appropriate to its own use from the funds of the
insurer any moneys or property to which it is not entitled under the power of attorney. 60
The bond must provide that it is not subject to cancellation unless 30 days’ advance written notice is
given to both the attorney and OIR.61
Effect of the Bill
55 S. 629.101(3), F.S.
56 S. 629.101(4), F.S.
57 S. 629.111, F.S.
58 Id.
59 Ss. 629.121(1)-(2), F.S.
60 S. 629.121(2), F.S.
61 S. 629.121(3), F.S.
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The bill increases the amount of the bond to be filed with a permit application from $100,000 to
$300,000. The bill otherwise retains current law relating to an attorney in fact’s bond.
Contributions to Insurer
Background
Current law provides that the attorney in fact or other parties may advance to a domestic reciprocal
insurer upon reasonable terms such funds as it may require from time to time in its operations. 62 Sums
so advanced may not be treated as a liability of the insurer and, except upon liquidation of the insurer,
may not be withdrawn or repaid except out of the insurer’s realized earned surplus in excess of its
minimum required surplus.63
Additionally, no such withdrawal or repayment may be made without the advance approval of OIR. 64
This provision does not apply as to bank loans or to loans made upon security. 65
Effect of the Bill
The bill provides parameters for reciprocal insurers to obtain loans that are not obtained in the ordinary
course of business from banks or other financial institutions, or to loans secured by a mortgage or
assets. The bill establishes that a reciprocal insurer may obtain loans, other than those described
above, to do any of the following:
Defray expenses of creating the insurer:
Providing itself with surplus funds; or
For any business purpose.
However, the insurer must agree that any money borrowed will be repaid only out of the surplus in
excess of that stipulated in a written agreement to borrow the money. Any money borrowed, plus any
interest on that money, may not be considered part of the insurer’s legal liabilities.
OIR must approve the issuance of, and rate of interest on, any loans taken out by a reciprocal insurer.
OIR will disapprove such loans if it finds that:
The loan is unnecessary or excessive for the purpose intended;
The terms of the loan agreement are not fair and equitable to the parties and other similar
lenders; or
The information the reciprocal insurer provides regarding the loan is inadequate.
The reciprocal insurer must repay a substantial portion of the loan, if not the entire loan, when the loan
is no longer reasonably necessary for the purpose for which it was originally intended. However, before
paying back the loan or any interest on the loan, the insurer must receive approval from OIR.
62 S. 629.161, F.S.
63 Id.
64 Id.
65 Id.
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Annual Statement
Background
Under current law, the annual statement of a reciprocal insurer must be made and filed by its attorney
in fact.66
Effect of the Bill
The bill clarifies that the requirement that the annual statement of a reciprocal insurer must be made by
its attorney in fact in the same manner as domestic stock insurers under s. 624.424, F.S., which relates
to annual statements and other information filed in accordance with Florida’s Insurance Code.
Acquisitions
Background
Florida law does not currently provide specific statutory authority for the acquisition of a reciprocal
insurer.
Effect of the Bill
The bill creates a new statutory section providing details regarding the acquisition of a reciprocal
insurer. No one may, individually or in conjunction with an affiliated person, directly or indirectly acquire
10 percent or more of the ownership interest in a reciprocal insurer unless all of the following conditions
are met:
The person or affiliated person must file with OIR and send to the reciprocal insurer and its
attorney in fact a letter notifying them of the transaction no later than five days after the offer is
proposed or no later than five days after the acquisition of securities or ownership interest if no
offer is involved.
The person or affiliated person must file an application with OIR within 30 days after the offer is
proposed or the acquisition occurs.
OIR has approved the offer or acquisition.
If there is no change in the ultimate controlling shareholders, no change in the ownership percentages
of the ultimate controlling shareholders, and no acquisition of direct or indirect interest in the attorney in
fact, OIR may waive the filing of the letter of notification and the application upon request.
The application, if required, must contain all of the following information and any other information that
OIR deems necessary to determine the character, experience, ability, and other qualifications of the
applicant:
identity and background information of each person by whom, or on whose behalf the
acquisition is being made, and any other persons who control these individuals;
the source and amount of funds or other consideration used in making the acquisition;
plans or proposals that applicants may have to liquidate the attorney in fact or controlling
company, to sell any of their assets or merge or consolidate them with any person, or to make
other major changes in the business, business structure, or management;
the nature and extent of the controlling interest which the person, or affiliated person, proposes
to acquire;
the number of shared or other security that the person, or affiliated person, proposed to acquire;
and
information as to any contract, arrangement, or understanding with any party relating to the
transfer of any of the securities, option arrangements, puts or calls, or giving or withholding of
proxies.
66 S. 629.171, F.S.
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The bill requires that an application be accompanied by an application fee. 67 If any material change
occurs in the facts provided in the application or the background information, an amendment must be
filed with OIR immediately and sent to the principal offices of the reciprocal and its attorney in fact.
OIR must review the application in accordance with the Administrative Procedures Act. 68 Pursuant to
the bill, while OIR is reviewing the acquisition, the acquiring person may not make any material change
to the operation of the attorney in fact or controlling company unless OIR specifically approves the
change. Additionally, the acquiring person may not make any change in the management of the
attorney in fact unless advance notice is provided to OIR. The bill provides relevant definitions of
material change in the operation and the management of the attorney in fact.
The bill permits OIR to disapprove any acquisition of the interest in a reciprocal by any person, or
affiliated person, who:
willfully violates the law regarding acquisition of interest in a reciprocal; or
fails to divest himself or herself of interest in a reciprocal acquired in violation of the law, when
ordered to do so by OIR.
The bill places the burden of proof regarding an acquisition application on the applicant. However, the
bill provides criteria, which, if met, require OIR to approve the application as long as no administrative
proceeding has been requested under ch. 120, F.S.
The bill establishes that any vote by a stockholder that acquired stock in a reciprocal in violation of the
acquisition statute created by the bill is not valid. Additionally, any acquisition contrary to the same
statute is void. The circuit court for the county in which the principal office of the attorney in fact for the
reciprocal insurer may order an injunction or issue another order to enforce the statute. The bill also
creates a private right of action for the attorney in fact and the controlling company to enforce the
acquisition statute.
The bill provides that approval of an acquisition application by OIR does not constitute a
recommendation of an acquisition or an offer for an acquisition. It is third-degree felony for anyone to
represent that OIR has made such a recommendation.
According to the bill, any person may rebut the presumption of having control of a reciprocal insurer by
filing a disclaimer of control with OIR on a form prescribed by the FSC or by filing a copy of a Schedule
13G filed with the Securities and Exchange Commission.
The bill gives OIR the authority to suspend or revoke a reciprocal insurer’s certificate of authority if
necessary to protect the public interest when the interest was acquired in violation of the acquisition
statute. If a reciprocal insurer is subject to suspension or revocation on this basis, the attorney in fact is
deemed to be in such a condition, or to be using or have been subject to methods or practices as to
render its further transaction or insurance hazardous. OIR may offer the reciprocal insurer the ability to
cure any suspension or revocation by procuring another attorney in fact acceptable to OIR.
Filing of Background Information
Background
Florida law does not currently provide for filing of background information on reciprocal insurers, their
attorneys in fact, nor their subscribers.
Effect of the Bill
67 The current fee for acquisition is $1,500. S. 624.501(1)(a), F.S.
68 Chapter 120, F.S., codifies Florida’s Administrative Procedure Act, which provides uniform procedures for the exercise
of specified authority.
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The bill creates statutory criteria for background information that must be submitted to OIR regarding
certain individuals involved in the creation or acquisition of reciprocal insurers. The information must
include, but is not limited to:
A sworn biographical statement with information for the past ten years regarding:
o occupations, positions of employment, and offices held;
o convictions of crimes other than traffic violations;
o license revocation proceedings;
o bankruptcy proceedings, either personal or of a business where the individual held a
significant position; and
o injunction proceedings involving federal or state law regulating insurance, securities, or
banking.
Each individual’s fingerprints;
Authorizations allowing background investigations regarding each individual; and
Any other information that OIR deems necessary to determine the character, experience,
ability, and other qualifications of the individual.
Assessments
Background
Currently, assessments may from time to time be levied upon subscribers of a domestic reciprocal
insurer liable therefor under the terms of their policies by the attorney upon approval in advance by the
subscribers’ advisory committee and OIR, or by DFS as receiver of the insurer. 69
Each subscriber’s share of a deficiency for which an assessment is made, but not exceeding in any
event his or her aggregate contingent liability as computed in accordance with s. 629.251, F.S., must
be computed by applying, to the premium earned on the subscriber’s policy or policies during the period
to be covered by the assessment, the ratio of the total deficiency to the total premiums earned during
such period upon all policies subject to the assessment. 70
In computing the earned premiums for the purposes of these provisions, the gross premium received by
the insurer for the policy must be used as a base, deducting therefrom solely charges not recurring
upon the renewal or extension of the policy.71 No subscriber may have an offset against any
assessment for which he or she is liable, on account of any claim for unearned premium or losses
payable.72
Effect of the Bill
The bill clarifies that assessments may from time to time be levied upon subscribers of an assessable
domestic reciprocal insurer who are liable for such assessments therefor under the terms of their
policies by the attorney in fact. Any such assessment must be approved upon approval in advance by
the subscribers' advisory committee and OIR, or by DFS as receiver of the insurer.
The bill also provides that upon impairment of surplus of a nonassessable reciprocal insurer, OIR must
revoke the authorization under s. 629.291(5), F.S., to convert to a nonassessable reciprocal insurer.
After such revocation, any policy in force at the time the revocation occurs remains in force for the
remainder of the period for which the premium has been paid, but the reciprocal insurer may not issue
new policies without requiring contingent assessment liability from the new subscriber.
Merger or Conversion
Background
69 S. 629.231(1), F.S.
70 S. 629.231(2), F.S.
71 S. 629.231(3), F.S.
72 S. 629.231(4), F.S.
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Current law provides that a domestic reciprocal insurer, upon affirmative vote of not less than two-thirds
of its subscribers who vote on such merger pursuant to due notice and the approval of OIR of the terms
therefor, may merge with another reciprocal insurer or be converted to a stock or mutual insurer. 73 Such
a stock or mutual insurer is subject to the same capital or surplus requirements and have the same
rights as a like domestic insurer transacting like kinds of insurance. 74
OIR may not approve any plan for such merger or conversion which is inequitable to subscribers or
which, if for conversion to a stock insurer, does not give each subscriber preferential right to acquire
stock of the proposed insurer proportionate to his or her interest in the reciprocal insurer, as determined
in accordance with applicable law, and a reasonable length of time within which to exercise such right. 75
Reinsurance of all or substantially all of the insurance in force of a domestic reciprocal insurer in
another insurer is considered to be a merger for the purposes of these provisions. 76
Effect of the Bill
The bill requires that all plans to merge a reciprocal insurer with another reciprocal insurer or to convert
a reciprocal insurer to a stock or mutual insurer must be filed with OIR on forms adopted by the FSC
and must contain all information that OIR reasonably requires to evaluate the merger or conversion.
The bill provides that an assessable reciprocal insurer may be converted to a nonassessable reciproc al
insurer if all of the following conditions are met:
the subscriber’s advisory committee approves the conversion application;
the attorney in fact submits the application on the required form; and
OIR finds that the application meets the minimum statutory requirements.
If OIR approves the application, the assessable reciprocal insurer may be converted to a
nonassessable reciprocal insurer by:
extinguishing the contingent liability of subscribers under all policies in force in Florida at the
time of the conversion;
omitting contingent liability provisions in all policies delivery or issued in Florida after the
conversion; and
otherwise extinguishing the contingent liability of all subscribers.
However, if the reciprocal insurer is transacting insurance in another state that requires the issuance of
policies with contingent liability provisions, the insurer may continue to issue policies with those
provisions in the other state.
Additionally, if a reciprocal insurer’s surplus becomes impaired, the insurer may no longer issue
nonassessable policies or convert assessable policies to nonassessable policies.
The bill also prohibits a domestic stock insurer from being converted into a reciprocal insurer.
Rule-Making Authority
Background
Currently, the FSC does not have rule-making authority to administer ch. 629, F.S.
Effect of the Bill
73 S. 629.291(1), F.S.
74 S. 629.291(2), F.S.
75 S. 629.201(3), F.S.
76 S. 629.201(4), F.S.
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The bill grants rule-making authority to the FSC to adopt, amend, and repeal rules pursuant to ch. 120,
F.S., which are necessary to implement ch. 629, F.S.
Participation of Financial Institutions in Reinsurance and Insurance Exchanges
Background
Currently, subject to applicable laws relating to financial institutions and to any other applicable
provision of the Florida Insurance Code, any financial institution or aggregation of such institutions may
own or control, directly or indirectly, any insurer which is authorized or approved by OIR, which insurer
transacts only reinsurance in this state and which actively engages in reinsuring risks located in this
state.77
Additionally, subject to the same provisions described above, any financial institution or aggregation of
such institutions may participate, directly or indirectly, as an underwriting member or as an investor in
an underwriting member of any insurance exchange authorized in accordance with s. 629.401, F.S.,
which underwriting member transacts only aggregate or specific excess insurance over underlying self-
insurance coverage for self-insurance organizations authorized under the Florida Insurance Code, for
multiple-employer welfare arrangements, or for workers’ compensation self-insurance trusts, in addition
to any reinsurance the underwriting member may transact. 78
Effect of the Bill
The bill eliminates a financial institution’s, or aggregation of such institutions’ participation as an
underwriting member or an investor in an underwriting member of the insurance exchange authorized
under 629.401, F.S., and described above, because the existence of that type of exchange is being
eliminated by the bill.
Miscellaneous
Pursuant to the changes made by the bill, the bill relocates the following sections of ch. 629, F.S., and,
where applicable, relocates the provisions elsewhere:
S. 629.021, F.S., relating to “reciprocal insurer” defined;
S. 629.031, F.S., relating to scope of chapter;
S. 629.061, F.S., relating to attorney;
S. 629.261, F.S., relating to nonassessable policies;
S. 629.401, F.S., relating to insurance exchange; and
S. 629.520, F.S., relating to authority of a limited reciprocal insurer.
The bill provides an effective date of July 1, 2025. However, the bill requires reciprocal insurers
licensed before July 1, 2025, to increase their surplus as required by the bill by January 1, 2026.
Additionally, the attorney in fact of a reciprocal insurer licensed before July 1, 2025, must increase its
bond as required by the bill by January 1, 2026.
B. SECTION DIRECTORY:
Section 1. Amends s. 624.3161, F.S., relating to market conduct examinations.
Section 2. Amends s. 624.424, F.S., relating to annual statement and other information.
Section 3. Amends s. 624.4305, F.S., relating to nonrenewal of residential property insurance policies.
Section 4. Amends s. 624.46226, F.S., relating to public housing authority self-insurance funds;
exemption for taxation and assessments.
Section 5. Amends s. 626.9201, F.S., relating to notice of cancellation and nonrenewal.
Section 6. Amends 627.062, F.S., relating to rate standards.
Section 7. Amends s. 627.351, F.S., relating to insurance risk apportionment plans.
77 S. 624.45(1), F.S.
78 S. 624.45(2), F.S.
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Section 8. Amends s. 628.011, F.S., relating to scope of part.
Section 9. Amends s. 628.061, F.S., relating to investigation of proposed organization.
Section 10. Amends s. 628.801, F.S., relating to insurance holding companies; registration; regulation.
Section 11. Amends s. 629.011, F.S., relating to “reciprocal insurance” defined.
Section 12. Repeals s. 629.021, F.S., relating to “reciprocal insurer” defined.
Section 13. Repeals s. 629.031, F.S., relating to scope of chapter.
Section 14. Amends s. 629.051, F.S., relating to name; suits.
Section 15. Creates s. 629.056, F.S., relating to premium reserves.
Section 16. Repeals s. 629.061, F.S., relating to attorney.
Section 17. Amends s. 627.071, F.S., relating to surplus funds required.
Section 18. Amends s. 629.081, F.S., relating to organization of reciprocal insurer.
Section 19. Amends s. 629.091, F.S., relating to certificate of authority.
Section 20. Creates s. 629.094, F.S., relating to continued eligibility for certificate of authority.
Section 21. Amends s. 629.101, F.S., relating to power of attorney.
Section 22. Amends s. 629.111, F.S., relating to modifications.
Section 23. Amends s. 629.121, F.S., relating to attorney’s bond.
Section 24. Amends s. 629.131, F.S., relating to deposit in lieu of bond.
Section 25. Amends s. 629.141, F.S., relating to action on bond.
Section 26. Amends s. 629.161, F.S., relating to contributions to insurer.
Section 27. Amends s. 629.171, F.S., relating to annual statement.
Section 28. Amends s. 629.191, F.S., relating to who may be subscribers.
Section 29. Amends s. 629.201, F.S., relating to subscribers’ advisory committee.
Section 30. Creates s. 629.225, F.S., relating to acquisitions.
Section 31. Creates s. 629.227, F.S., relating to background information.
Section 32. Amends s. 629.231, F.S., relating to assessments.
Section 33. Amends s. 629.241, F.S., relating to time limit for assessments.
Section 34. Amends s. 629.251, F.S., relating to aggregate liability.
Section 35. Repeals s. 629.261, F.S., relating to nonassessable policies.
Section 36. Amends s. 629.271, F.S., relating to distribution of assets.
Section 37. Amends s. 629.281, F.S., relating to subscribers’ share in assets.
Section 38. Amends s. 629.291, F.S., relating to merger or conversion.
Section 39. Amends s. 629.301, F.S., relating to impaired reciprocal insurers.
Section 40. Repeals s. 629.401, F.S., relating to insurance exchange.
Section 41. Repeals s. 629.520, F.S., relating to authority of a limited reciprocal insurer.
Section 42. Creates s. 629.525, F.S., relating to rulemaking authority.
Section 43. Amends s. 163.01, F.S., relating to Florida Interlocal Cooperation Act of 1969.
Section. 44. Amends s. 624.413, F.S., relating to application for certificate of authority.
Section 45. Amends s. 624.45, F.S., relating to participation of financial institutions in reinsurance and
in insurance exchanges.
Section 46. Amends s. 626.9531, F.S., relating to identification of insurers, agents, and insurance
contractors.
Section 47. Provides undirected language regarding reciprocal insurers’ surplus requirements.
Section 48. Provides an effective date of July 1, 2024.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
The bill may have an indeterminate negative impact on state expenditures to the extent that OIR
incurs additional costs related to licensing and regulating reciprocal insurers.
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B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
The changes to the law regarding PHA self-insurance funds may have a positive impact on local
government expenditures if the funds no longer have to purchase the same amount of excess
insurance or reinsurance.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may have an indeterminate negative impact on property insurers that incur additional
administrative costs due to increasing reporting requirements from quarterly to monthly.
The bill may have a negative fiscal impact on reciprocal insurers licensed before July 1, 2025, as they
must increase their surplus as required by the bill by January 1, 2026. This fiscal impact may also affect
the attorney in fact of a reciprocal insurer licensed before July 1, 2025, as they must increase its bond
as required by the bill by January 1, 2026.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill provides authority for the FSC to adopt rules:
to administer the statutory section regarding residential property insurers that are planning to
nonrenew more than 10,000 residential property insurance policies within a 12-month period.
for filing the annual enterprise risk report in accordance with the IHCS Regulation and Model
Act as adopted by the NAIC in December 2020.
to implement the statutory restrictions on the cancellation and nonrenewal of property
insurance policies by surplus lines insurers following a hurricane.
to adopt, amend, or repeal rules necessary to implement ch. 629, F.S., regarding reciprocal
insurers.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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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 1611 2024
1 A bill to be entitled
2 An act relating to insurance; amending s. 624.3161,
3 F.S.; revising the entities for which the Office of
4 Insurance Regulation is required to conduct market
5 conduct examinations; revising the purpose of the
6 examination; amending s. 624.424, F.S.; requiring
7 insurers and insurer groups to file a specified
8 supplemental report on a monthly basis; requiring that
9 such report include certain information for each zip
10 code for which policies are written; amending s.
11 624.4305, F.S.; authorizing the Financial Services
12 Commission to adopt rules related to notice of
13 nonrenewal of residential property insurance policies;
14 amending s. 624.46226, F.S.; revising the requirements
15 for public housing authority self-insurance funds;
16 amending s. 626.9201, F.S.; prohibiting insurers from
17 canceling or nonrenewing certain insurance policies
18 under certain circumstances; providing exceptions;
19 providing construction; authorizing the commission to
20 adopt rules and the Commissioner of Insurance
21 Regulation to issue orders; amending s. 627.062, F.S.;
22 specifying requirements for rate filings if certain
23 models are used; amending s. 627.351, F.S.; revising
24 requirements for certain policies that are not subject
25 to certain rate increase limitations; amending ss.
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26 628.011 and 628.061, F.S.; conforming provisions to
27 changes made by the act; amending s. 628.801, F.S.;
28 revising requirements for rules adopted for insurers
29 that are members of an insurance holding company;
30 deleting an obsolete date; authorizing the commission
31 to adopt rules; amending s. 629.011, F.S.; defining
32 terms; revising the definition of the term "reciprocal
33 insurance"; repealing s. 629.021, F.S., relating to
34 the definition of the term "reciprocal insurer";
35 repealing s. 629.031, F.S., relating to the scope of
36 ch. 629, F.S.; amending s. 629.051, F.S.; requiring a
37 domestic reciprocal insurer to have and use certain
38 names; requiring certain foreign or alien reciprocal
39 insurers to use a fictitious name; creating s.
40 629.056, F.S.; requiring a reciprocal insurer to
41 maintain a certain unearned premium reserves; defining
42 the term "net written premiums"; requiring certain
43 actions if the unearned premium reserves are less than
44 a certain amount; repealing s. 629.061, F.S., relating
45 to the term "attorney"; amending s. 629.071, F.S.;
46 revising the surplus funds required of a reciprocal
47 insurer; amending s. 629.081, F.S.; revising the
48 procedure for persons to organize as a domestic
49 reciprocal insurer; specifying requirements for the
50 permit application; requiring that the application be
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51 accompanied by a specified fee; requiring the office
52 to evaluate and grant or deny the permit application
53 in accordance with specified provisions; amending s.
54 629.091, F.S.; providing requirements for the
55 application for a certificate of authority to operate
56 as a domestic reciprocal insurer; requiring that such
57 certificate of authority be issued in the name of the
58 reciprocal insurer to its attorney in fact; creating
59 s. 629.094, F.S.; requiring a domestic reciprocal
60 insurer to meet certain requirements to maintain its
61 eligibility for a certificate of authority; amending
62 s. 629.101, F.S.; revising requirements for the power
63 of attorney given by subscribers of a domestic
64 reciprocal insurer to the attorney in fact; conforming
65 provisions to changes made by the act; amending s.
66 629.111, F.S.; requiring that modifications of the
67 terms of certain agreements, charters, and powers of
68 attorney be made jointly by the attorney in fact and
69 the subscribers' advisory committee; prohibiting such
70 modifications from taking effect until approval in
71 writing by the office; amending s. 629.121, F.S.;
72 conforming provisions to changes made by the act;
73 revising the amount of the bond the attorney in fact
74 of a reciprocal insurer must file with the office;
75 amending ss. 629.131 and 629.141, F.S.; conforming
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76 provisions to changes made by the act; amending s.
77 629.161, F.S.; revising the requirements for a
78 reciprocal insurer that borrows money; providing
79 applicability; amending s. 629.171, F.S.; revising the
80 manner of making and filing the annual statement of a
81 reciprocal insurer; amending s. 629.191, F.S.;
82 conforming provisions to changes made by the act;
83 amending s. 629.201, F.S.; conforming provisions to
84 changes made by the act; creating s. 629.225, F.S.;
85 prohibiting persons from acquiring certain securities
86 or ownership interests of certain attorneys in fact
87 and controlling companies of certain attorneys in
88 fact; providing an exception; authorizing certain
89 persons to request that the office waive certain
90 requirements; providing that the office may waive
91 certain requirements if specified determinations are
92 made; specifying the requirements of an application to
93 the office relating to certain acquisitions; requiring
94 that such application be accompanied by a specified
95 fee; requiring that amendments be filed with the
96 office under certain circumstances; specifying the
97 manner in which the acquisition application must be
98 reviewed; authorizing the office, and requiring the
99 office if a request for a proceeding is filed, to
100 conduct a proceeding within a specified timeframe to
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101 consider the appropriateness of such application;
102 requiring that certain time periods be tolled;
103 requiring that written requests for a proceeding be
104 filed within a certain timeframe; authorizing certain
105 persons to take all steps to conclude the acquisition
106 during the pendency of the proceeding or review
107 period; requiring the office to order a proposed
108 acquisition disapproved and that actions to conclude
109 the acquisition be ceased under certain circumstances;
110 prohibiting certain persons from making certain
111 changes during the pendency of the office's review of
112 an acquisition; providing an exception; defining the
113 terms "material change in the operation of the
114 attorney in fact" and "material change in the
115 management of the attorney in fact"; requiring the
116 office to approve or disapprove certain changes upon
117 making certain findings; requiring that a proceeding
118 be conducted within a certain timeframe; requiring
119 that recommended orders and final orders be issued
120 within a certain timeframe; specifying the
121 circumstances under which the office may disapprove an
122 acquisition; specifying that certain persons have the
123 burden of proof; requiring the office to approve an
124 acquisition upon certain findings; specifying that
125 certain votes are not valid and that certain
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126 acquisitions are void; specifying that certain
127 provisions may be enforced by an injunction; creating
128 a private right of action in favor of the attorney in
129 fact or the controlling company to enforce certain
130 provisions; providing that a certain demand upon the
131 office is not required before certain legal actions;
132 providing that the office is not a necessary party to
133 certain actions; specifying the persons who are deemed
134 designated for service of process and who have
135 submitted to the administrative jurisdiction of th e
136 office; providing that approval by the office does not
137 constitute a certain recommendation; providing that
138 certain actions are unlawful; providing criminal
139 penalties; providing a statute of limitations;
140 authorizing a person to rebut a presumption of cont rol
141 by filing certain disclaimers; specifying the contents
142 of such disclaimer; specifying that, after a
143 disclaimer is filed, the attorney in fact is relieved
144 of a certain duty; authorizing the office to order
145 certain persons to cease acquisition of the attorney
146 in fact or controlling company and divest themselves
147 of any stock or ownership interest under certain
148 circumstances; requiring the office to suspend or
149 revoke the reciprocal certificate of authority under
150 certain circumstances; specifying that the attorney in
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151 fact is deemed to be hazardous to its policyholders if
152 the reciprocal insurer is subject to suspension or
153 revocation; authorizing the office to offer the
154 reciprocal insurer the ability to cure any suspension
155 or revocation under certain circumstances; providing
156 applicability; creating s. 629.227, F.S.; specifying
157 the information as to the background and identity of
158 certain persons which must be furnished by such
159 persons; amending s. 629.231, F.S.; authorizing the
160 levy of assessments upon subscribers of certain
161 assessable reciprocal insurers; requiring that
162 assessments be approved in advance by certain
163 entities; requiring the office to revoke the
164 authorization to convert upon impairment of a surplus
165 of a nonassessable reciprocal insurer; providing fo r
166 policies that remain in force after such revocation
167 and prohibiting reciprocal insurers from issuing new
168 policies that do not require contingent assessment
169 liability from new subscribers; amending ss. 629.241
170 and 629.251, F.S.; conforming provisions to changes
171 made by the act; repealing s. 629.261, F.S., relating
172 to nonassessable policies; amending ss. 629.271 and
173 629.281, F.S.; conforming provisions to changes made
174 by the act; amending s. 629.291, F.S.; providing that
175 certain insurers that merge are governed by the
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176 insurance code; prohibiting domestic stock insurers
177 from being converted to reciprocal insurers; requiring
178 that specified plans be filed with the office and that
179 such plans contain certain information; authorizing
180 the conversion of assessable reciprocal insurers to
181 nonassessable reciprocal insurers under certain
182 circumstances; providing certain procedures when
183 certain reciprocal insurers convert; prohibiting a
184 reciprocal insurer that becomes impaired from issuing
185 or converting certain policies; providing
186 applicability; amending s. 629.301, F.S.; conforming
187 provisions to changes made by the act; revising the
188 procedures that apply when an insurer becomes
189 insolvent; repealing s. 629.401, F.S., relating to
190 insurance exchanges; repealing s. 629.520, F.S.,
191 relating to the authority of limited reciprocal
192 insurers; creating s. 629.525, F.S.; requiring the
193 commission to adopt, amend, or repeal certain rules;
194 amending ss. 163.01, 624.413, 624.45, and 626.9531,
195 F.S.; conforming provisions to changes made by the
196 act; requiring compliance by reciprocal insurers and
197 attorneys in fact with increased surplus requirements
198 and bond requirements, respectively, imposed by the
199 act by a specified date; providing an effective date.
200
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201 Be It Enacted by the Legislature of the State of Florida:
202
203 Section 1. Subsection (1) of section 624.3161, Florida
204 Statutes, is amended to read:
205 624.3161 Market conduct examinations.—
206 (1) As often as it deems necessary, The office shall, as
207 often as it deems necessary, examine each licensed rating
208 organization, each advisory organization, each group,
209 association, carrier, as defined in s. 440.02, or other
210 organization of insurers which engages in joint underwriting or
211 joint reinsurance, the attorney in fact of each reciprocal
212 insurer, and each authorized insurer transacting in this state
213 any class of insurance to which the provisions of chapter 627 is
214 are applicable. The examination must shall be for the purpose of
215 ascertaining compliance by the person examined with the
216 applicable provisions of chapters 440, 624, 626, 627, 629, and
217 635.
218 Section 2. Paragraph (a) of subsection (10) of section
219 624.424, Florida Statutes, is amended to read:
220 624.424 Annual statement and other information.—
221 (10)(a) Each insurer or insurer group doing business in
222 this state shall file, on a monthly quarterly basis in
223 conjunction with financial reports required by paragraph (1)(a) ,
224 a supplemental report on an individual and group basis on a form
225 prescribed by the commission with information on persona l lines
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226 and commercial lines residential property insurance policies in
227 this state. The supplemental report must shall include separate
228 information for personal lines property policies and for
229 commercial lines property policies and totals for each item
230 specified, including premiums written for each of the property
231 lines of business as described in ss. 215.555(2)(c) and
232 627.351(6)(a). The report must shall include the following
233 information for each zip code for which policies are written
234 county on a monthly basis:
235 1. Total number of policies in force at the end of each
236 month.
237 2. Total number of policies canceled.
238 3. Total number of policies nonrenewed.
239 4. Number of policies canceled due to hurricane risk.
240 5. Number of policies nonrenewed due to hurricane risk.
241 6. Number of new policies written.
242 7. Total dollar value of structure exposure under policies
243 that include wind coverage.
244 8. Number of policies that exclude wind coverage.
245 9. Number of claims open each month.
246 10. Number of claims closed each month.
247 11. Number of claims pending each month.
248 12. Number of claims in which either the insurer or
249 insured invoked any form of alternative dispute resolution, and
250 specifying which form of alternative dispute resolution was
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251 used.
252 Section 3. Section 624.4305, Florida Statutes, is amended
253 to read:
254 624.4305 Nonrenewal of residential property insurance
255 policies.—Any insurer planning to nonrenew more than 10,000
256 residential property insurance policies in this state within a
257 12-month period shall give notice in writing to the Office of
258 Insurance Regulation for informational purposes 90 days before
259 the issuance of any notices of nonrenewal. The notice provided
260 to the office must set forth the insurer's reasons for such
261 action, the effective dates of nonrenewal, and any arrangements
262 made for other insurers to offer coverage to affected
263 policyholders. The commission may adopt rules to administer this
264 section.
265 Section 4. Paragraph (d) of subsection (1) of section
266 624.46226, Florida Statutes, is amended to read:
267 624.46226 Public housing authorities self-insurance funds;
268 exemption for taxation and assessments.—
269 (1) Notwithstanding any other provision of law, any two or
270 more public housing authorities in the state as defined in
271 chapter 421 may form a self-insurance fund for the purpose of
272 pooling and spreading liabilities of its members as to any one
273 or combination of casualty risk or real or personal property
274 risk of every kind and every interest in such property against
275 loss or damage from any hazard or cause and against any loss
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276 consequential to such loss or damage, provided the self -
277 insurance fund that is created:
278 (d) Maintains a continuing program of excess insurance
279 coverage and reinsurance reserve evaluation to protect the
280 financial stability of the fund in an amount and manner
281 determined by a qualified and independent actuary. The program
282 must, at a minimum, this program must:
283 1. Include a net retention in an amount and manner
284 selected by the administrator, ratified by the governing b ody,
285 and certified by a qualified actuary;
286 2. Include reinsurance or Purchase excess insurance from
287 authorized insurance carriers or eligible surplus lines
288 insurers; and.
289 3. Be certified by a qualified and independent actuary as
290 to the program's adequacy. This certification must be submitted
291 simultaneously with the certifications required under paragraphs
292 (b) and (c).
293 2. Retain a per-loss occurrence that does not exceed
294 $350,000.
295
296 A for-profit or not-for-profit corporation, limited liability
297 company, or other similar business entity in which a public
298 housing authority holds an ownership interest or participates in
299 its governance under s. 421.08(8) may join a self-insurance fund
300 formed under this section in which such public housing authority
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301 participates. Such for-profit or not-for-profit corporation,
302 limited liability company, or other similar business entity may
303 join the self-insurance fund solely to insure risks related to
304 public housing.
305 Section 5. Subsection (2) of section 626.9201, Florida
306 Statutes, is amended to read:
307 626.9201 Notice of cancellation or nonrenewal.—
308 (2) An insurer issuing a policy providing coverage for
309 property, casualty, surety, or marine insurance must give the
310 named insured written notice of cancellation or termination
311 other than nonrenewal at least 45 days before the effective date
312 of the cancellation or termination, including in the written
313 notice the reasons for the cancellation or termination, except
314 that:
315 (a) If cancellation is for nonpayment of premium, at least
316 10 days' written notice of cancellation accompanied by the
317 reason for cancellation must be given. As used in this
318 paragraph, the term "nonpayment of premium" means the failure of
319 the named insured to discharge when due any of his or her
320 obligations in connection with the payment of premiums on a
321 policy or an installment of such a premium, whether the premium
322 or installment is payable directly to the insurer or its agent
323 or indirectly under any plan for financing premiums or extension
324 of credit or the failure of the named insured to maintain
325 membership in an organization if such membership is a condition
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326 precedent to insurance coverage. The term also includes the
327 failure of a financial institution to honor the check of an
328 applicant for insurance which was delivered to a licensed agent
329 for payment of a premium, even if the agent previously delivered
330 or transferred the premium to the insurer. If a correctly
331 dishonored check represents payment of the initial premium, the
332 contract and all contractual obligations are void ab initio
333 unless the nonpayment is cured within the earlier of 5 days
334 after actual notice by certified mail is received by the
335 applicant or 15 days after notice is sent to the applicant by
336 certified mail or registered mail, and, if the contract is void,
337 any premium received by the insurer from a third party must
338 shall be refunded to that party in full; and
339 (b) If cancellation or termination occurs during the first
340 90 days during which the insurance is in force and if the
341 insurance is canceled or terminated for reasons other than
342 nonpayment, at least 20 days' written notice of cancellation or
343 termination accompanied by the reason for cancellation or
344 termination must be given, except if there has been a material
345 misstatement or misrepresentation or failure to comply with the
346 underwriting requirements established by the insurer; and.
347 (c)1. Upon a declaration of an emergency pursuant to s.
348 252.36 and the filing of an order by the Commissioner of
349 Insurance Regulation, an insurer may not cancel or nonr enew a
350 personal residential or commercial residential property
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351 insurance policy covering a dwelling or residential property
352 located in this state which has been damaged as a result of a
353 hurricane that is the subject of the declaration of emergency
354 for a period of 90 days after the dwelling or residential
355 property has been repaired. A dwelling or residential property
356 is deemed to be repaired when substantially completed and
357 restored to the extent that the dwelling or residential property
358 is insurable by another insurer that is writing policies in this
359 state.
360 2. An insurer or agent may cancel or nonrenew such a
361 policy before the repair of the dwelling or residential
362 property:
363 a. Upon 10 days' notice for nonpayment of premium; or
364 b. Upon 45 days' notice:
365 (I) For a material misstatement or fraud related to the
366 claim;
367 (II) If the insurer determines that the insured has
368 unreasonably caused a delay in the repair of the dwelling or
369 residential property; or
370 (III) If the insurer has paid policy limits.
371 3. If the insurer elects to nonrenew a policy covering a
372 dwelling or residential property that has been damaged, the
373 insurer must provide at least 90 days' notice to the insured
374 that the insurer intends to nonrenew the policy 90 days after
375 the dwelling or residential property has been repaired.
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376 4. This paragraph does not prevent the insurer from
377 canceling or nonrenewing the policy 90 days after the repairs
378 are complete for the same reasons the insurer would otherwise
379 have canceled or nonrenewed the policy but for the limitation
380 imposed in subparagraph 1.
381 5. The commission may adopt rules, and the Commissioner of
382 Insurance Regulation may issue orders, necessary to implement
383 this paragraph.
384 Section 6. Paragraph (j) of subsection (2) of section
385 627.062, Florida Statutes, is amended to read:
386 627.062 Rate standards.—
387 (2) As to all such classes of insurance:
388 (j) With respect to residential property insurance rate
389 filings, the rate filing:
390 1. Must account for mitigation measures undertaken by
391 policyholders to reduce hurricane losses and windstorm losses.
392 2. May use a modeling indication that is the weighted or
393 straight average of two or more hurricane loss projection models
394 found by the Florida Commission on Hurricane Loss Projection
395 Methodology to be accurate or reliable pursuant to s. 627.0628.
396 If an averaged model is used under this subparagraph, the same
397 averaged model must be used throughout this state. If a weighted
398 average is used, the insurer must provide the office with a
399 justification for using the weighted average which shows that it
400 results in a rate that is reasonable, adequate, and fair.
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401
402 The provisions of this subsection do not apply to workers'
403 compensation, employer's liability insurance, and motor vehicle
404 insurance.
405 Section 7. Paragraph (n) of subsection (6) of section
406 627.351, Florida Statutes, is amended to read:
407 627.351 Insurance risk apportionment plans.—
408 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
409 (n)1. Rates for coverage provided by the corporation must
410 be actuarially sound pursuant to s. 627.062 and not competitive
411 with approved rates charged in the admitted voluntary market so
412 that the corporation functions as a residual market mechanism to
413 provide insurance only when insurance cannot be procured in the
414 voluntary market, except as otherwise provided in this
415 paragraph. The office shall provide the corporation such
416 information as would be necessary to determine whether rates are
417 competitive. The corporation shall file its recommended rates
418 with the office at least annually. The corporation shall provide
419 any additional information regarding the rates which the office
420 requires. The office shall consider the recommendations of the
421 board and issue a final order establishing the rates for the
422 corporation within 45 days after the recommended rates are
423 filed. The corporation may not pursue an administrative
424 challenge or judicial review of the final order of the office.
425 2. In addition to the rates otherwise determined pursuant
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426 to this paragraph, the corporation shall impose and collect an
427 amount equal to the premium tax provided in s. 624.509 to
428 augment the financial resources of the corporation.
429 3. After the public hurricane loss-projection model under
430 s. 627.06281 has been found to be accurate and reliable by the
431 Florida Commission on Hurricane Loss Projection Methodology, the
432 model shall be considered when establishing the windstorm
433 portion of the corporation's rates. The corporation may use the
434 public model results in combination with the results of private
435 models to calculate rates for the windstorm portion of the
436 corporation's rates. This subparagraph does not require or allow
437 the corporation to adopt rates lower than the rates otherwise
438 required or allowed by this paragraph.
439 4. The corporation must make a recommended actuarially
440 sound rate filing for each personal and commercial line of
441 business it writes.
442 5. Notwithstanding the board's recommended rates and the
443 office's final order regarding the corporation's filed rates
444 under subparagraph 1., the corporation shall annually implement
445 a rate increase which, except for sinkhole coverage, does not
446 exceed the following for any single policy issued by the
447 corporation, excluding coverage changes and surcharges:
448 a. Twelve percent for 2023.
449 b. Thirteen percent for 2024.
450 c. Fourteen percent for 2025.
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451 d. Fifteen percent for 2026 and all subsequent years.
452 6. The corporation may also implement an increase to
453 reflect the effect on the corporation of the cash buildup factor
454 pursuant to s. 215.555(5)(b).
455 7. The corporation's implementation of rates as prescribed
456 in subparagraphs 5. and 8. shall cease for any line of business
457 written by the corporation upon the corporation's implementation
458 of actuarially sound rates. Thereafter, the corporation shall
459 annually make a recommended actuarially sound rate filing that
460 is not competitive with approved rates in the admitted voluntary
461 market for each commercial and personal line of business the
462 corporation writes.
463 8. The following New or renewal personal lines policies
464 that do not cover a primary residence written on or after
465 November 1, 2023, are not subject to the rate increase
466 limitations in subparagraph 5., but may not be charged more than
467 50 percent above, nor less than, the prior year's established
468 rate for the corporation:
469 a. Policies that do not cover a primary residence;
470 b. New policies under which the coverage for the insured
471 risk, before the date of application with the corporation, was
472 last provided by an insurer determined by the office to be
473 unsound or an insurer placed in receivership under chapter 631;
474 or
475 c. Subsequent renewals of those policies, including the
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476 new policies in sub-subparagraph b., under which the coverage
477 for the insured risk, before the date of application with the
478 corporation, was last provided by an insurer determined by the
479 office to be unsound or an insurer placed in receivership under
480 chapter 631.
481 9. As used in this paragraph, the term "primary residence"
482 means the dwelling that is the policyholder's primary home or is
483 a rental property that is the primary home of the tenant, and
484 which the policyholder or tenant occupies for more than 9 months
485 of each year.
486 Section 8. Section 628.011, Florida Statutes, is amended
487 to read:
488 628.011 Scope of part.—This part applies only to domestic
489 stock insurers, mutual insurers, and captive insurers, except
490 that s. 628.341(2) applies also as to foreign and alien
491 insurers.
492 Section 9. Section 628.061, Florida Statutes, is amended
493 to read:
494 628.061 Investigation of proposed organization.—In
495 connection with any proposal to organize incorporate a domestic
496 insurer, the office shall make an investigation of:
497 (1) The character, reputation, financial standing, and
498 motives of the organizers, incorporators, and subscribers
499 organizing the proposed insurer.
500 (2) The character, financial responsibility, insurance
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501 experience, and business qualifications of its proposed
502 officers.
503 (3) The character, financial responsibility, business
504 experience, and standing of the proposed stockholders and
505 directors.
506 Section 10. Subsections (1), (2), and (5) of section
507 628.801, Florida Statutes, are amended to read:
508 628.801 Insurance holding companies; registration;
509 regulation.—
510 (1) An insurer that is authorized to do business in this
511 state and that is a member of an insurance holding company
512 shall, on or before April 1 of each year, register with the
513 office and file a registration statement and be subject to
514 regulation with respect to its relationship to the holding
515 company as provided by law or rule. The commission shall a dopt
516 rules establishing the information and statement form required
517 for registration and the manner in which registered insurers and
518 their affiliates are regulated. The rules apply to domestic
519 insurers, foreign insurers, and commercially domiciled insurers ,
520 except for foreign insurers domiciled in states that are
521 currently accredited by the NAIC. Except to the extent of any
522 conflict with this code, the rules must include all requirements
523 and standards of the Insurance Holding Company System Model
524 Regulation and ss. 4 and 5 of the Insurance Holding Company
525 System Regulatory Act and the Insurance Holding Company System
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526 Model Regulation of the NAIC, as adopted in December 2020 2010.
527 The commission may adopt subsequent amendments thereto if the
528 methodology remains substantially consistent. The rules may
529 include a prohibition on oral contracts between affiliated
530 entities. Material transactions between an insurer and its
531 affiliates must shall be filed with the office as provided by
532 rule.
533 (2) Effective January 1, 2015, The ultimate controlling
534 person of every insurer subject to registration shall also file
535 an annual enterprise risk report on or before April 1. As used
536 in this subsection, the term "ultimate controlling person" means
537 a person who is not controlled by any other person. The report
538 must, to the best of the ultimate controlling person's knowledge
539 and belief, must identify the material risks within the
540 insurance holding company system that could pose enterprise risk
541 to the insurer. The report must shall be filed with the lead
542 state office of the insurance holding company system as
543 determined by the procedures within the Financial Analysis
544 Handbook adopted by the NAIC and is confidential and exempt from
545 public disclosure as provided in s. 624.4212.
546 (a) An insurer may satisfy this requirement by providing
547 the office with the most recently filed parent corporation
548 reports that have been filed with the Securities and Exchange
549 Commission which provide the appropriate enterprise risk
550 information.
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551 (b) The term "enterprise risk" means an activity, a
552 circumstance, an event, or a series of events involving one or
553 more affiliates of an insurer which, if not remedied promptly,
554 are likely to have a materially adverse effect upon the
555 financial condition or liquidity of the insurer or its insurance
556 holding company system as a whole, including anything that would
557 cause the insurer's risk-based capital to fall into company
558 action level as set forth in s. 624.4085 or would cause the
559 insurer to be in a hazardous financial condition.
560 (c) The commission may adopt rules for filing the annual
561 enterprise risk report in accordance with the Insurance Holding
562 Company System Regulatory Act and the Insurance Holding Company
563 System Model Regulation of the NAIC, as adopted in December
564 2020.
565 (5) Effective January 1, 2015, The failure to file a
566 registration statement, or a summary of the registration
567 statement, or the enterprise risk filing report required by this
568 section within the time specified for filing is a violation of
569 this section.
570 Section 11. Section 629.011, Florida Statutes, is amended
571 to read:
572 629.011 Definitions "Reciprocal insurance" defined.—As
573 used in this part, the term:
574 (1) "Affiliated person" of another person means any of the
575 following:
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576 (a) The spouse of the other person.
577 (b) The parents of the other person and their lineal
578 descendants, or the parents of the other person's spouse and
579 their lineal descendants.
580 (c) A person who directly or indirectly owns or controls,
581 or holds with the power to vote, 10 percent or more of the
582 outstanding voting securities of the other person.
583 (d) A person who directly or indirectly owns 10 percent or
584 more of the outstanding voting securities that are directly or
585 indirectly owned or controlled, or held with the power to vot e,
586 by the other person.
587 (e) A person or group of persons who directly or
588 indirectly control, are controlled by, or are under common
589 control with the other person.
590 (f) A person who is a director, an officer, a trustee, a
591 partner, an owner, a manager, a joint venturer, or an employee,
592 or another person who is performing duties similar to those of a
593 person in one of the aforementioned positions.
594 (g) If the other person is an investment company, any
595 investment adviser of such company or any member of an a dvisory
596 board of such company.
597 (h) If the other person is an unincorporated investment
598 company not having a board of directors, the depositor of such
599 company.
600 (i) A person who has entered into an agreement, written or
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601 unwritten, to act in concert with the other person in acquiring
602 or limiting the disposition of:
603 1. Securities of an attorney in fact or controlling
604 company that is a stock corporation; or
605 2. An ownership interest of an attorney in fact or
606 controlling company that is not a stock corporation.
607 (2) "Attorney in fact" means the attorney in fact of a
608 reciprocal insurer. The attorney in fact may be an individual, a
609 corporation, or another person.
610 (3) "Controlling company" means any person, corporation,
611 trust, limited liability company, association, or other entity
612 owning, directly or indirectly, 10 percent or more of the voting
613 securities of one or more attorneys in fact that are stock
614 corporations, or 10 percent or more of the ownership interest of
615 one or more attorneys in fact that are not stock corporations.
616 (4) "Reciprocal insurance" means is that resulting from an
617 interexchange among persons, known as "subscribers," of
618 reciprocal agreements of indemnity, the interexchange being
619 effectuated through an "attorney in fact" common to all such
620 persons.
621 (5) "Reciprocal insurer" means an insurer that is an
622 unincorporated aggregation of subscribers domiciled in this
623 state operating individually and collectively through an
624 attorney in fact to provide reciprocal insurance to such
625 subscribers. A domestic reciprocal insurer must be licensed as
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626 an assessable or a nonassessable reciprocal insurer.
627 (a) An assessable reciprocal insurer may require that its
628 subscribers make up any shortfall in capital and surplus to
629 cover claims and expenses, either jointly or severally.
630 (b) A nonassessable reciprocal insurer has no recourse
631 against subscribers for any shortfall in capital and surplus to
632 cover claims and expenses.
633 Section 12. Section 629.021, Florida Statutes, is
634 repealed.
635 Section 13. Section 629.031, Florida Statutes, is
636 repealed.
637 Section 14. Section 629.051, Florida Statutes, is amended
638 to read:
639 629.051 Name; suits.—A reciprocal insurer shall:
640 (1) A domestic reciprocal insurer shall have and use a
641 business name that must. The name shall include the word
642 "reciprocal," or "interinsurer," or "interinsurance," or
643 "exchange," or "underwriters," or "underwriting.," but this
644 requirement shall not apply as to any insurer holding a
645 certificate of authority to transact insurance in this state
646 immediately prior to the effective date of this code.
647 (2) A foreign or alien reciprocal insurer transacting
648 business in this state, whose name does not include the word
649 "reciprocal," "interinsurer," "interinsurance," "exchange,"
650 "underwriters," or "underwriting," shall use a fictitious name,
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651 registered in accordance with s. 865.09, which includes one of
652 those words when transacting business in this state.
653 (3) A reciprocal insurer may sue and be sued in its own
654 name.
655 Section 15. Section 629.056, Florida Statutes, is created
656 to read:
657 629.056 Premium reserves.—A reciprocal insurer shall at
658 all times maintain unearned premium reserves equal to 50 percent
659 of the net written premiums of the subscribers on policies
660 having 1 year or less to run, and pro rata on policies running
661 for longer periods, except that all premiums on any marine or
662 transportation insurance trip risk are deemed unearned until the
663 trip is terminated. For the purpose of this section, the term
664 "net written premiums" means the premium payments made by
665 subscribers plus the premiums due from subscribers, after
666 deducting the amounts specifically provided in the subscribers'
667 agreements for expenses, including reinsurance costs and fees
668 paid to the attorney in fact, provided that the power of
669 attorney agreement contains an explicit provision requiring the
670 attorney in fact to refund any unearned subscriber fees on a pro
671 rata basis for canceled policies. In the absence of such a
672 provision, the unearned premium reserves must be calcula ted
673 without any adjustment for fees paid to the attorney in fact. If
674 the unearned premium reserves at any time are less than
675 $300,000, additional funds in cash or eligible securities must
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676 be maintained on deposit at the exchange at all times which,
677 together with the unearned premium reserves, equal $300,000. In
678 calculating these reserves, the amount of the attorney in fact's
679 bond, as filed with the office and as required by s. 629.121,
680 must be included in such reserves. If at any time the unearned
681 premium reserves are less than those required, the subscribers,
682 or the attorney in fact, must advance funds to cover the
683 deficiency. Such advances may only be repaid out of the surplus
684 of the exchange and only after receiving written approval from
685 the office.
686 Section 16. Section 629.061, Florida Statutes, is
687 repealed.
688 Section 17. Section 629.071, Florida Statutes, is amended
689 to read:
690 629.071 Surplus funds required.—The surplus required of a
691 reciprocal insurer is as required in s. 624.407 as to the kind
692 of insurance proposed to be transacted.
693 (1) A domestic reciprocal insurer hereunder formed, if it
694 has otherwise complied with the applicable provisions of this
695 code, may be authorized to transact insurance if it has and
696 thereafter maintains surplus funds of not less than $250,000.
697 (2) In addition to the surplus required to be maintained
698 under subsection (1), the insurer shall have, when first so
699 authorized, an expendable surplus of not less than $750,000.
700 Section 18. Section 629.081, Florida Statutes, is amended
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701 to read:
702 629.081 Organization of reciprocal insurer.—
703 (1) Twenty-five or more persons domiciled in this state
704 who wish to organize as a domestic reciprocal insurer may make
705 application to the office for a permit to do so. A domestic
706 reciprocal insurer may not be formed unless the persons so
707 proposing have first received a permit from the office may
708 organize a domestic reciprocal insurer and make application to
709 the office for a certificate of authority to transact insurance .
710 (2) The permit application, to be filed by the organizers
711 or the proposed attorney in fact, must be in writing and made in
712 accordance with forms prescribed by the commission. In addition
713 to any applicable requirements of s. 628.051 or other relevant
714 statutes, the application must include all of the following
715 shall fulfill the requirements of and shall execute and file
716 with the office, when applying for a certificate of authority, a
717 declaration setting forth:
718 (a) The name of the proposed reciprocal insurer, which
719 must be in accordance with s. 629.051.;
720 (b) The location of the insurer's principal office, which
721 must shall be the same as that of the proposed attorney in fact
722 and must shall be maintained within this state.;
723 (c) The kinds of insurance proposed to be transac ted.;
724 (d) The names and addresses of the original 25 or more
725 subscribers.;
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726 (e) The proposed designation and appointment of the
727 proposed attorney in fact and a copy of the power of attorney.;
728 (f) The names and addresses of the officers and directors
729 of the proposed attorney in fact, if a corporation, or of its
730 members, if other than a corporation.;
731 (g) The background information as specified in s. 629.227
732 for all officers, directors, managers, and those in equivalent
733 positions of the proposed attorney in fact as well as for any
734 person with an ownership interest of 10 percent or more in the
735 proposed attorney in fact.
736 (h) The articles of incorporation and bylaws, or
737 equivalent documents, of the proposed attorney in fact, dated
738 within the last year and appropriately certified.
739 (i) The proposed charter powers of the subscribers'
740 advisory committee, and the names and terms of office of the
741 members thereof, as well as the background information as
742 specified in s. 629.227 for each proposed member.;
743 (h) That all moneys paid to the reciprocal shall, after
744 deducting therefrom any sum payable to the attorney, be held in
745 the name of the insurer and for the purposes specified in the
746 subscribers' agreement;
747 (j)(i) A copy of the proposed subscribers' agreement.;
748 (j) A statement that each of the original subscribers has
749 in good faith applied for insurance of a kind proposed to be
750 transacted, and that the insurer has received from each such
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751 subscriber the full premium or premium deposit required for the
752 policy applied for, for a term of not less than 6 months at an
753 adequate rate theretofore filed with and approved by the office;
754 (k) A statement of the financial condition of the insurer,
755 a schedule of its assets, and a statement that the surplus as
756 required by s. 629.071 is on hand; and
757 (l) A copy of each policy, endorsement, and application
758 form it then proposes to issue or use.
759 (l) A copy of the bond required under s. 629.121.
760 (3) The filing must be accompanied by the application fee
761 required by s. 624.501(1)(a) and such other pertinent
762 information and documents as reasonably requested by the office.
763 (4) The office shall evaluate and grant or deny the permit
764 application in accordance with ss. 628.061, 628.071, and other
765 relevant provisions of the code.
766
767 Such declaration shall be acknowledged by the attorney before an
768 officer authorized to take acknowledgments.
769 Section 19. Section 629.091, Florida Statutes, is amended
770 to read:
771 629.091 Reciprocal certificate of authority.—
772 (1) To apply for a certificate of authority as a domestic
773 reciprocal insurer, the attorney in fact of an applicant who has
774 previously received a permit from the office may file an
775 application in accordance with forms prescribed by the
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776 commission which, in addition to applicable requirements of ss.
777 624.404, 624.411, 624.413, and other relevant statutes, consists
778 of all of the following:
779 (a) Executed copies of any proposed or draft documents
780 required as part of the permit application.
781 (b) A statement affirming that all moneys paid to the
782 reciprocal shall, after deducting therefrom any sum payable to
783 the attorney in fact, be held in the name of the insurer and for
784 the purposes specified in the subscribers' agreement.
785 (c) A statement that each of the original subscribers has
786 in good faith applied for insurance of a kind proposed to be
787 transacted, and that the insurer has received from each such
788 subscriber the full premium or premium deposit required for the
789 policy applied for, for a term of not less than 6 months at the
790 rate that was filed with and approved by the office.
791 (d) A copy of the bond required under s. 629.121.
792 (e) A statement of the financial condition of the insurer,
793 a schedule of its assets, and a statement that the surplus as
794 required by s. 629.071 is on hand.
795 (f) Such other pertinent information or documents as
796 reasonably requested by the office.
797 (2) The reciprocal certificate of authority must of a
798 reciprocal insurer shall be issued to its attorney in the name
799 of the reciprocal insurer to its attorney in fact.
800 Section 20. Section 629.094, Florida Statutes, is created
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801 to read:
802 629.094 Continued eligibility for certificate of
803 authority.-In order to maintain its eligibility for a
804 certificate of authority, a domestic reciprocal insurer must
805 continue to meet all conditions required to be met under this
806 code and the rules adopted thereunder for the initial
807 applications for a permit and certificate of authority.
808 Section 21. Section 629.101, Florida Statutes, is amended
809 to read:
810 629.101 Power of attorney.—
811 (1) The rights and powers of the attorney in fact of a
812 domestic reciprocal insurer are shall be as provided in the
813 power of attorney given it by the subscribers.
814 (2) The power of attorney must set forth all of the
815 following:
816 (a) The powers of the attorney in fact.;
817 (b) That the attorney in fact is empowered to accept
818 service of process on behalf of the insurer in actions against
819 the insurer upon contracts exchanged.;
820 (c) The place where the office of the attorney in fact is
821 maintained.
822 (d) The general services to be performed by the attorney
823 in fact.;
824 (e)(d) The maximum amount to be deducted from advance
825 premiums or deposits to be paid to the attorney in fact and the
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826 general items of expense in addition to losses, to be paid by
827 the insurer.; and
828 (f)(e) Except as to nonassessable policies, a provision
829 for a contingent several liability of each subscriber in a
830 specified amount, which amount may shall be not be less than 5
831 times nor more than 10 times the premium or premium deposit
832 stated in the policy.
833 (3) The power of attorney may:
834 (g)(a) Provide for The right of substitution of the
835 attorney in fact and revocation of the power of attorney and
836 rights thereunder.;
837 (h)(b) Impose such Restrictions upon the exercise of the
838 power as are agreed upon by the subscribers.;
839 (i)(c) Provide for The exercise of any right reserved to
840 the subscribers directly or through their advisory committee .;
841 and
842 (3)(d) The power of attorney may contain other lawful
843 provisions deemed advisable.
844 (4) The terms of any power of attorney or agreement
845 collateral thereto must shall be reasonable and equitable, and
846 no such power or agreement may shall be used or be effective in
847 this state unless filed with the office.
848 Section 22. Section 629.111, Florida Statutes, is amended
849 to read:
850 629.111 Modifications.—Modifications of the terms of the
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851 subscribers' agreement, charter of the subscribers' advisory
852 committee, or of the power of attorney of a domestic reciprocal
853 insurer must shall be made jointly by the attorney in fact and
854 the subscribers' advisory committee. No such modification may
855 shall be effective retroactively, nor as to any insurance
856 contract issued prior thereto. A modification may not take
857 effect until filed with, and approved in writing by, the office.
858 Section 23. Section 629.121, Florida Statutes, is amended
859 to read:
860 629.121 Attorney in fact's Attorney's bond.—
861 (1) Concurrently with the filing of the permit application
862 declaration provided for in s. 629.081, the attorney in fact of
863 a domestic reciprocal insurer shall file with the office a bond
864 in favor of this state for the benefit of all persons damaged as
865 a result of breach by the attorney in fact of the conditions of
866 its his or her bond as set forth in subsection (2). The bond
867 must shall be executed by the attorney in fact and by an
868 authorized corporate surety and is shall be subject to the
869 approval of the office.
870 (2) The bond must shall be in the sum of $300,000
871 $100,000, aggregate in form, the bond conditioned that the
872 attorney in fact will faithfully account for all moneys and
873 other property of the insurer coming into its his or her hands,
874 and that it he or she will not withdraw or appropriate to its
875 his or her own use from the funds of the insurer any moneys or
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876 property to which it he or she is not entitled under the power
877 of attorney.
878 (3) The bond must shall provide that it is not subject to
879 cancellation unless 30 days' advance notice in writing of
880 cancellation is given both the attorney in fact and the office.
881 Section 24. Section 629.131, Florida Statutes, is amended
882 to read:
883 629.131 Deposit in lieu of bond.—In lieu of the bond
884 required under s. 629.121, the attorney in fact may maintain on
885 deposit with the department a like amount in value of securities
886 qualified for deposit under s. 625.52 and subject to the same
887 conditions as the bond.
888 Section 25. Section 629.141, Florida Statutes, is amended
889 to read:
890 629.141 Action on bond.—Action on the attorney in fact's
891 attorney's bond or to recover against any such deposit made in
892 lieu thereof may be brought at any time by one or more
893 subscribers suffering loss through a violation of its conditions
894 or by a receiver or liquidator of the insurer. Amounts recovered
895 on the bond shall be deposited in and become part of the
896 insurer's funds. The total aggregate liability of the surety
897 shall be limited to the amount of the penalty of such bond.
898 Section 26. Section 629.161, Florida Statutes, is amended
899 to read:
900 629.161 Contributions to insurer.—
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901 (1) A reciprocal insurer may borrow money to defray the
902 expenses of its organization, to provide itself with surplus
903 funds, or for any purpose of its business, upon a written
904 agreement that such money is required to be repaid only out of
905 the insurer's surplus in excess of that stipulated in such
906 agreement. Any interest stipulated in such agreement may not
907 constitute a liability of the insurer as to its funds other than
908 such excess of surplus. Commission or promotion expense may not
909 be paid in connection with any such loan.
910 (2) Money so borrowed, together with the interest thereon
911 if so stipulated in the agreement, may not form a part of the
912 insurer's legal liabilities, except as to its surplus in excess
913 of the amount stipulated in the agreement, or be the basis of
914 any setoff; but until repaid, financial statements filed or
915 published by the insurer must show as a footnote to such
916 statement the amount of the unpaid loan together with any
917 interest accrued but unpaid.
918 (3) Any such loan to a reciprocal insurer is subject to
919 the approval of the office for the issue and the rate of
920 interest to be paid. The reciprocal insurer shall, in advance of
921 the loan, file with the office a statement of the purpose of the
922 loan and a copy of the proposed loan agreement. The office shall
923 disapprove any proposed loan or agreement if it finds that the
924 loan is unnecessary or excessive for the purpose intended; that
925 the terms of the loan agreement are not fair and equitable to
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926 the parties and to other similar lenders, if any, to the
927 reciprocal insurer; or that the information so filed by the
928 reciprocal insurer is inadequate.
929 (4) Any such loan to a reciprocal insurer, or a
930 substantial portion of such loan, must be repaid by the
931 reciprocal insurer when no longer reasonably necessary for the
932 purpose originally intended. A reciprocal insurer may not repay
933 such loan or any interest on such loan unless repayment is
934 approved in advance by the office.
935 (5) This section does not apply to loans obtained by the
936 reciprocal insurer in the ordinary course of business from banks
937 and other financial institutions, or to loans secured by pledge
938 or mortgage of assets The attorney or other parties may advance
939 to a domestic reciprocal insurer upon reasonable terms such
940 funds as it may require from time to time in its operations.
941 Sums so advanced shall not be treated as a liability of the
942 insurer and, except upon liquidation of the insurer, shall not
943 be withdrawn or repaid except out of the insurer's realized
944 earned surplus in excess of its minimum required surplus. No
945 such withdrawal or repayment shall be made without the advance
946 approval of the office. This section does not apply as to bank
947 loans or to loans made upon security.
948 Section 27. Subsection (1) of section 629.171, Florida
949 Statutes, is amended to read:
950 629.171 Annual statement.—
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951 (1) The annual statement of a reciprocal insurer must
952 shall be made and filed by its attorney in fact in the same
953 manner as domestic stock insurers under s. 624.424.
954 Section 28. Section 629.191, Florida Statutes, is amended
955 to read:
956 629.191 Who may be subscribers.—Individuals, partnerships,
957 and corporations of this state may make applications for, enter
958 into agreements for, and hold policies or contracts in or with,
959 and be subscribers of, any domestic, foreign, or alien
960 reciprocal insurer.
961 Section 29. Section 629.201, Florida Statutes, is amended
962 to read:
963 629.201 Subscribers' advisory committee.—
964 (1) The advisory committee of a domestic reciprocal
965 insurer exercising the subscribers' rights must shall be
966 selected under such rules as the subscribers adopt.
967 (2) Not less than two-thirds of such committee may shall
968 be subscribers other than the attorney in fact, or any person
969 appointed by, employed by, representing, or having a financial
970 interest in the attorney in fact.
971 (3) The committee shall do all of the following:
972 (a) Supervise the finances of the insurer.;
973 (b) Supervise the insurer's operations to such extent as
974 to assure conformity with the subscribers' agreement and power
975 of attorney.;
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976 (c) Procure the audit of the accounts and records of the
977 insurer and of the attorney in fact at the expense of the
978 insurer.; and
979 (d) Have such additional powers and functions as may be
980 conferred by the subscribers' agreement.
981 Section 30. Section 629.225, Florida Statutes, is created
982 to read:
983 629.225 Acquisitions.—
984 (1) A person may not, individually or in conjunction with
985 an affiliated person of such person, directly or indirectly,
986 conclude a tender offer or exchange offer for, enter into any
987 agreement to exchange securities for, or otherwise finally
988 acquire 10 percent or more of the outstanding voting securities
989 of an attorney in fact that is a stock corporation or of a
990 controlling company of an attorney in fact that is a stock
991 corporation; or conclude an acquisition of, or otherwise finally
992 acquire, 10 percent or more of the ownership interest of an
993 attorney in fact that is not a stock corporation or of a
994 controlling company of an attorney in fact that is not a stock
995 corporation, unless all of the following conditions are met:
996 (a) The person or affiliated person has filed with the
997 office and sent to the principal office of the attorney in fact,
998 any controlling company of the attorney in fact, and the
999 reciprocal insurer a letter of notification regarding the
1000 transaction or proposed transaction no later than 5 days after
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1001 any form of tender offer or exchange offer is proposed, or no
1002 later than 5 days after the acquisition of the securities or
1003 ownership interest if no tender offer or exchange offer is
1004 involved. The notification must be provided on forms prescribed
1005 by the commission containing information determined necessary to
1006 understand the transaction and identify all purchasers and
1007 owners involved.
1008 (b) The person or affiliated person has filed with the
1009 office an application, signed under oath and prepared on forms
1010 prescribed by the commission, which contains the information
1011 specified in subsection (3). The application must be completed
1012 and filed within 30 days after any form of tender offer or
1013 exchange offer is proposed, or after the acquisition of the
1014 securities if no tender offer or exchange offer is involved.
1015 (c) The office has approved the tender offer or exchange
1016 offer, or acquisition if no tender offer or exchange offer is
1017 involved.
1018 (2) The person or affiliated person filing the notice
1019 required in paragraph (1)(a) may additionally request that the
1020 office waive the requirements of paragraph (1)(b), provided that
1021 there is no change in the ultimate controlling shareholders, no
1022 change in the ownership percentages of the ultimate controlling
1023 shareholders, and no unaffiliated parties acquire any direct or
1024 indirect interest in the attorney in fact. The office may waive
1025 the filing if it determines that there is no change in the
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1026 ultimate controlling shareholders, no change in the ownership
1027 percentages of the ultimate controlling shareholders, and no
1028 unaffiliated parties will acquire any direct or indirect
1029 interest in the attorney in fact.
1030 (3) The application to be filed with the office and
1031 furnished to the attorney in fact and controlling company must
1032 contain all of the following information and any additional
1033 information as the office deems necessary to determine the
1034 character, experience, ability, and other qualifications of the
1035 person, or the affiliated person of such person, for the
1036 protection of the reciprocal insurer's subscribers and of the
1037 public:
1038 (a) The identity and background information specified in
1039 s. 629.227 of:
1040 1. Each person by whom, or on whose behalf, the
1041 acquisition is to be made; and
1042 2. Any person who controls, either directly or indirectly,
1043 such other person, including each director, officer, trustee,
1044 partner, owner, manager, or joint venturer, or another person
1045 performing duties similar to those of persons in the
1046 aforementioned positions for the person.
1047 (b) The source and amount of the funds or other
1048 consideration used, or to be used, in making the acquisition.
1049 (c) Any plans or proposals that such persons may have made
1050 to liquidate the attorney in fact or controlling company, to
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1051 sell any of their assets or merge or consolidate them with any
1052 person, or to make any other major change in their business or
1053 corporate structure or management, and any plans or proposals
1054 that such persons may have made to liquidate any controlling
1055 company of the attorney in fact, to sell any of its assets or
1056 merge or consolidate it with any person, or to make any other
1057 major change in its business or corporate structure or
1058 management.
1059 (d) The nature and the extent of the controlling interest
1060 which the person, or the affiliated person of such person,
1061 proposes to acquire, the terms of the proposed acquisition, and
1062 the manner in which the controlling interest is to be acquired
1063 of an attorney in fact or controlling company which is not a
1064 stock corporation.
1065 (e) The number of shares or other securities that the
1066 person, or the affiliated person of such person, proposes to
1067 acquire, the terms of the proposed acquisition, and the manner
1068 in which the securities are to be acquired.
1069 (f) Information as to any contract, arrangement, or
1070 understanding with any party with respect to any of the
1071 securities of the attorney in fact or controlling company,
1072 including, but not limited to, information relating to the
1073 transfer of any of the securities, option arrangements, puts or
1074 calls, or the giving or withholding of proxies, which
1075 information names the party with whom the contract, arrangement,
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1076 or understanding has been entered into and gives the details
1077 thereof.
1078 (4) The acquisition application must be accompanied by the
1079 fee required under s. 624.501(1)(a).
1080 (5) If any material change occurs in the facts provided in
1081 the application filed with the office pursuant to this section,
1082 or the background information required under s. 629.227, an
1083 amendment specifying such changes must be immediately filed with
1084 the office, and a copy of the amendment must be sent to the
1085 principal office of the attorney in fact and to the principal
1086 office of the controlling company.
1087 (6)(a) The acquisition application must be reviewed in
1088 accordance with chapter 120. The office may conduct, or, if
1089 requested to do so in writing by a substantially affected
1090 person, shall conduct, a proceeding to consider the
1091 appropriateness of the proposed application. Time periods for
1092 purposes of chapter 120 are tolled during the pendency of the
1093 proceeding. Any written request for a proceeding must be filed
1094 with the office within 10 days after the date notice of the
1095 filing is given. During the pendency of the proceeding or review
1096 period by the office, any person or affiliated person complying
1097 with the filing requirements of this section may proceed and
1098 take all steps necessary to conclude the acquisition so long as
1099 finalization of the acquisition is conditioned upon obtaining
1100 office approval. However, at any time it finds an immediate
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1101 danger to the public health, safety, and welfare of the
1102 reciprocal insurer's subscribers exists, the office shall
1103 immediately order, pursuant to s. 120.569(2)(n), the proposed
1104 acquisition disapproved and any further steps to conclude the
1105 acquisition ceased.
1106 (b) During the pendency of the office's review of any
1107 acquisition subject to this section, the acquiring person may
1108 not make any material change in the operation of the attorney in
1109 fact or controlling company unless the office has specifically
1110 approved the change, and the acquiring person may not make any
1111 material change in the management of the attorney in fact unless
1112 advance written notice of the change in management is furnished
1113 to the office. The term "material change in the operation of the
1114 attorney in fact" means a transaction that disposes of or
1115 obligates 5 percent or more of the capital and surplus of the
1116 attorney in fact. The term "material change in the management of
1117 the attorney in fact" means any change in management involving
1118 officers or directors of the attorney in fact or any person of
1119 the attorney in fact or controlling company having authority to
1120 dispose of or obligate 5 percent or more of the attorney in
1121 fact's capital or surplus. The office must approve a material
1122 change in the operation of the attorney in fact if it finds the
1123 applicable provisions of subsection (7) have not been met. The
1124 office may disapprove a material change in management of the
1125 attorney in fact if it finds that the applicable provisions of
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1126 subsection (7) have been met, and in such case the attorney in
1127 fact shall promptly change management as acceptable to the
1128 office.
1129 (c) If a request for a proceeding is filed, the proceeding
1130 must be conducted within 60 days after the date the written
1131 request for a proceeding is received by the office. A
1132 recommended order must be issued within 20 days after the date
1133 of the close of the proceedings. A final order must be issued
1134 within 20 days after the date of the recommended order or, if
1135 exceptions to the recommended order are filed, within 20 days
1136 after the date the exceptions are filed.
1137 (7) The office may disapprove any acquisition subject to
1138 this section by any person, or any affiliated person of such
1139 person, who:
1140 (a) Willfully violates this section;
1141 (b) In violation of an order issued by the office pursuant
1142 to subsection (11), fails to divest himself or herself of any
1143 stock or ownership interest obtained in violation of this
1144 section or fails to divest himself or herself of any direct or
1145 indirect control of such stock or ownership interest, within 25
1146 days after such order; or
1147 (c) In violation of an order issued by the office pursuant
1148 to subsection (11), acquires an additional stock or ownership
1149 interest in an attorney in fact or controlling company or direct
1150 or indirect control of such stock or ownership interest, without
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1151 complying with this section.
1152 (8) The person filing the application required by this
1153 section has the burden of proof. The office must approve any
1154 such acquisition if it finds, on the basis of the record made
1155 during any proceeding or on the basis of the filed application
1156 if no proceeding is conducted, that:
1157 (a) The financial condition of the acquiring person will
1158 not jeopardize the financial stability of the attorney in fact
1159 or prejudice the interests of the reciprocal insurer's
1160 subscribers or the public.
1161 (b) Any plan or proposal that the acquiring person has
1162 made:
1163 1. To liquidate the attorney in fact, sell its assets, or
1164 merge or consolidate it with any person, or to make any other
1165 major change in its business or corporate structure or
1166 management, is fair and free of prejudice to the reciprocal
1167 insurer's subscribers or to the public; or
1168 2. To liquidate any controlling company, sell its assets,
1169 or merge or consolidate it with any person, or to make any major
1170 change in its business or corporate structure or management
1171 which would have an effect upon the attorney in fact, is fair
1172 and free of prejudice to the reciprocal insurer's subscribers or
1173 to the public.
1174 (c) The competence, experience, and integrity of those
1175 persons who will control directly or indirectly the operation of
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1176 the attorney in fact indicate that the acquisition is in the
1177 best interest of the reciprocal insurer's subscribers and in the
1178 public interest.
1179 (d) The natural persons for whom background information is
1180 required to be furnished pursuant to this section have such
1181 backgrounds as to indicate that it is in the best interests of
1182 the reciprocal insurer's subscribers and in the public interest
1183 to permit such persons to exercise control over the attorney in
1184 fact.
1185 (e) The directors and officers, if such attorney in fact
1186 or controlling company is a stock corporation, or the trustees,
1187 partners, owners, managers, or joint venturers, or other persons
1188 performing duties similar to those of persons in the
1189 aforementioned positions, if such attorney in fact or
1190 controlling company is not a stock corporation, to be employed
1191 after the acquisition have sufficient insurance experience and
1192 ability to ensure reasonable promise of successful operation.
1193 (f) The management of the attorney in fact after the
1194 acquisition will be competent and trustworthy and will possess
1195 sufficient managerial experience so as to make the proposed
1196 operation of the attorney in fact not hazardous to the
1197 insurance-buying public.
1198 (g) The management of the attorney in fact after the
1199 acquisition will not include any person who has directly or
1200 indirectly through ownership, control, reinsurance transactions,
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1201 or other insurance or business relations unlawfully manipulated
1202 the assets, accounts, finances, or books of any insurer or
1203 otherwise acted in bad faith with respect thereto.
1204 (h) The acquisition is not likely to be hazardous or
1205 prejudicial to the reciprocal insurer's subscribers or to the
1206 public.
1207 (i) The effect of the acquisition would not substantially
1208 lessen competition in the line of insurance for which the
1209 reciprocal insurer is licensed or certified in this state or
1210 would not tend to create a monopoly therein.
1211 (9) A vote by the stockholder of record, or by any other
1212 person, of any security acquired in contravention of this
1213 section is not valid. Any acquisition contrary to this section
1214 is void. Upon the petition of the attorney in fact, the
1215 controlling company, or the reciprocal insurer, the circuit
1216 court for the county in which the principal office of the
1217 attorney in fact is located may, without limiting the generality
1218 of its authority, order the issuance or entry of an injunction
1219 or other order to enforce this section. There is a private right
1220 of action in favor of the attorney in fact or controlling
1221 company to enforce this section. A demand upon the office that
1222 it perform its functions is not required as a prerequisite to
1223 any legal action by the attorney in fact or controlling company
1224 against another person, and the office may not be deemed a
1225 necessary party to any action by the attorney in fact or
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1226 controlling company to enforce this section. Any person who
1227 makes or proposes an acquisition requiring the filing of an
1228 application pursuant to this section, or who files such an
1229 application, is deemed to have designated the Chief Financial
1230 Officer, or his or her assistant or deputy or another person in
1231 charge of his or her office, as such person's agent for service
1232 of process under this section and is deemed to have submitted
1233 himself or herself to the administrative jurisdiction of the
1234 office and to the jurisdiction of the circuit court.
1235 (10) Any approval under this section by the office does
1236 not constitute a recommendation by the office of the tender
1237 offer or exchange offer, or the acquisition, if no tender offer
1238 or exchange offer is involved. It is unlawful for a person to
1239 represent that the office's approval constitutes a
1240 recommendation. A person who violates this subsection commits a
1241 felony of the third degree, punishable as provided in s.
1242 775.082, s. 775.083, or s. 775.084. The statute-of-limitations
1243 period for the prosecution of an offense committed under this
1244 subsection is 5 years.
1245 (11) A person may rebut a presumption of control by filing
1246 with the office a disclaimer of control with the office on a
1247 form prescribed by the commission. The disclaimer must fully
1248 disclose all material relationships and bases for affiliation
1249 between the person and the attorney in fact as well as the basis
1250 for disclaiming the affiliation. In lieu of such form, a person
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1251 or acquiring party may file with the office a copy of a Schedule
1252 13G filed with the Securities and Exchange Commission pursuant
1253 to Rule 13d-1(b) or (c), 17 C.F.R. s. 240.13d-1, under the
1254 Securities Exchange Act of 1934, as amended. After a disclaimer
1255 has been filed, the attorney in fact is relieved of any duty to
1256 register or report under this section which may arise out of the
1257 attorney in fact's relationship with the person unless the
1258 office disallows the disclaimer.
1259 (12) If the office determines that any person, or any
1260 affiliated person of such person, has acquired 10 percent or
1261 more of the outstanding voting securities of an attorney in fact
1262 or controlling company that is a stock corporation, or 10
1263 percent or more of the ownership interest of an attorney in fact
1264 or controlling company that is not a stock corporation, without
1265 complying with this section, the office may order that the
1266 person, and any affiliated person of such person, cease
1267 acquisition of the attorney in fact or controlling company and,
1268 if appropriate, divest itself of any stock or ownership interest
1269 acquired in violation of this section.
1270 (13)(a) The office shall, if necessary to protect the
1271 public interest, suspend or revoke the reciprocal certificate of
1272 authority of the reciprocal insurer whose attorney in fact or
1273 controlling company is acquired in violation of this section.
1274 (b) If a reciprocal insurer is subject to suspension or
1275 revocation pursuant to paragraph (a), the attorney in fact is
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1276 deemed to be in such condition, or to be using or to have been
1277 subject to such methods or practices in the conduct of its
1278 business, as to render its further transaction of insurance
1279 hazardous to its subscribers, creditors, or stockholders or to
1280 the public. In such case, the office may offer the reciprocal
1281 insurer, through its subscriber representatives, the ability to
1282 cure any suspension or revocation by procuring another attorney
1283 in fact acceptable to the office.
1284 (14) This section does not apply to any acquisition of
1285 voting securities or ownership interest of an attorney in fact
1286 or of a controlling company by any person who is the owner of a
1287 majority of the voting securities or ownership interest with the
1288 approval of the office under this section or s. 629.091.
1289 Section 31. Section 629.227, Florida Statutes, is created
1290 to read:
1291 629.227 Background information.—The information as to the
1292 background and identity of each person for whom information is
1293 required to be furnished pursuant to s. 629.081 or s. 629.225
1294 must include, but need not be limited to, all of the following:
1295 (1) A sworn biographical statement, on forms adopted by
1296 the commission, which must include, but need not be limited to,
1297 the following information:
1298 (a) Occupations, positions of employment, and offices held
1299 during the past 10 years, including the principal business and
1300 address of any business, corporation, or organization where each
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1301 occupation, position of employment, or office occurred.
1302 (b) Whether, during such 10-year period, the person was
1303 convicted of any crime other than a traffic violation.
1304 (c) Whether, during such 10-year period, the person has
1305 been the subject of any proceeding for the revocation of any
1306 license and, if so, the nature of the proceeding and the
1307 disposition of the proceeding.
1308 (d) Whether, during such 10-year period, the person has
1309 been the subject of any proceeding under the bankruptcy code.
1310 (e) Whether, during such 10-year period, any person or
1311 other business or organization in which the person was a
1312 director, officer, trustee, partner, owner, manager, or other
1313 official has been subject to any proceeding under the bankruptcy
1314 code, either during the time of that person's tenure with the
1315 business or organization or within 12 months thereafter.
1316 (f) Whether, during such 10-year period, the person has
1317 been enjoined, either temporarily or permanently, by a court of
1318 competent jurisdiction from violating any federal or state law
1319 regulating the business of insurance, securities, or banking, or
1320 from carrying out any particular practice or practices in the
1321 course of the business of insurance, securities, or banking,
1322 together with details as to any such event.
1323 (2) The fingerprints of each person.
1324 (3) An authorization for release of information necessary
1325 to investigate such person's background.
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1326 (4) Any additional information that the office deems
1327 necessary to determine the character, experience, ability, and
1328 other qualifications of the person, or affiliated person of such
1329 person, for the protection of the reciprocal insurer's
1330 subscribers and of the public.
1331 Section 32. Subsection (1) of section 629.231, Florida
1332 Statutes, is amended, and subsection (5) is added to that
1333 section, to read:
1334 629.231 Assessments.—
1335 (1) Assessments may from time to time be levied upon
1336 subscribers of an assessable a domestic reciprocal insurer who
1337 are liable for such assessments therefor under the terms of
1338 their policies by the attorney in fact. Any such assessment must
1339 be approved upon approval in advance by the subscribers'
1340 advisory committee and the office, or by the department as
1341 receiver of the insurer.
1342 (5) Upon impairment of surplus of a nonassessable
1343 reciprocal insurer, the office shall revoke the authorization
1344 under s. 629.291(5) to convert to a nonassessable reciprocal
1345 insurer. After such revocation, any policy in force at the time
1346 the revocation occurs remains in force for the remainder of the
1347 period for which the premium has been paid, but the reciprocal
1348 insurer may not issue new policies without requiring contingent
1349 assessment liability from the new subscriber.
1350 Section 33. Section 629.241, Florida Statutes, is amended
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1351 to read:
1352 629.241 Time limit for assessments.—Every subscriber of a
1353 domestic reciprocal insurer having contingent liability shall be
1354 liable for, and shall pay his or her share of, any assessment,
1355 as computed and limited in accordance with this chapter, if:
1356 (1) While his or her policy is in force or within 4 years
1357 after its termination, the subscriber is notified by either the
1358 attorney in fact or the office of its intentions to levy such
1359 assessment; or
1360 (2) An order to show cause why a receiver, conservator,
1361 rehabilitator, or liquidator of the insurer should not be
1362 appointed is issued while the subscriber's policy is in force or
1363 within 4 years after its termination.
1364 Section 34. Section 629.251, Florida Statutes, is amended
1365 to read:
1366 629.251 Aggregate liability.—No one policy or subscriber
1367 as to such policy shall be assessed or charged with an aggregate
1368 of contingent liability as to obligations incurred by a domestic
1369 reciprocal insurer in any one calendar year in excess of the
1370 amount provided for in the power of attorney or in the
1371 subscribers' agreement, computed solely upon premium earned on
1372 such policy during that year.
1373 Section 35. Section 629.261, Florida Statutes, is
1374 repealed.
1375 Section 36. Subsection (2) of section 629.271, Florida
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1376 Statutes, is amended to read:
1377 629.271 Distribution of savings.—
1378 (2) In addition to the option provided in subsection (1),
1379 a domestic reciprocal insurer may, upon the prior written
1380 approval of the office, pay to its subscribers a portion of
1381 unassigned funds of up to 10 percent of surplus, with
1382 distribution limited to 50 percent of net income from the
1383 previous calendar year. Such distribution may not unfairly
1384 discriminate between classes of risks or policies, or between
1385 subscribers, but may vary as to classes of subscribers based on
1386 the experience of the classes.
1387 Section 37. Section 629.281, Florida Statutes, is amended
1388 to read:
1389 629.281 Subscribers' share in assets.—Upon the liquidation
1390 of a domestic reciprocal insurer, its assets remaining after
1391 discharge of its indebtedness and policy obligations, the return
1392 of any contributions of the attorney in fact or other persons to
1393 its surplus made as provided in s. 629.161, and the return of
1394 any unused premium, savings, or credits then standing on
1395 subscribers' accounts shall be distributed to its subscribers
1396 who were such within the 12 months prior to the last termination
1397 of its reciprocal certificate of authority, according to such
1398 reasonable formula as the office approves.
1399 Section 38. Subsections (1), (2), and (4) of section
1400 629.291, Florida Statutes, are amended, and subsection (5) is
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1401 added to that section, to read:
1402 629.291 Merger or conversion.—
1403 (1) A domestic reciprocal insurer, upon affirmative vote
1404 of not less than two-thirds of its subscribers who vote on such
1405 merger pursuant to due notice, subject to and the approval by of
1406 the office of the terms therefor, may merge with another
1407 reciprocal insurer or be converted to a stock or mutual insurer ,
1408 to be thereafter governed by the applicable sections of the
1409 Florida Insurance Code. However, a domestic stock insurer may
1410 not be converted to a reciprocal insurer.
1411 (2) Any such plan to merge a reciprocal insurer with
1412 another reciprocal insurer or for conversion of the reciprocal
1413 insurer to a stock or mutual insurer must be filed with the
1414 office on forms adopted by the commission and must contain such
1415 information as the office reasonable requires to evaluate the
1416 transaction Such a stock or mutual insurer shall be subject to
1417 the same capital or surplus requirements and shall have the same
1418 rights as a like domestic insurer transacting like kinds of
1419 insurance.
1420 (4) Reinsurance of all or substantially all of the
1421 insurance in force of a domestic reciprocal insurer in another
1422 insurer is shall be deemed to be a merger for the purposes of
1423 this section.
1424 (5)(a) An assessable reciprocal insurer may be converted
1425 to a nonassessable reciprocal insurer if:
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1426 1. The subscriber's advisory committee approves the
1427 application for conversion;
1428 2. The attorney in fact submits the application on the
1429 required application form; and
1430 3. The office finds that the application meets the minimum
1431 statutory requirements.
1432 (b) If the office approves the application, the assessable
1433 reciprocal insurer may be converted to a nonassessable
1434 reciprocal insurer by:
1435 1. Extinguishing the contingent liability of subscribers
1436 under all policies then in force in this state;
1437 2. Omitting contingent liability provisions in all
1438 policies delivered or issued in this state after the conversion;
1439 and
1440 3. Otherwise extinguishing the contingent liability of all
1441 of its subscribers. However, if the reciprocal insurer is
1442 transacting insurance as an authorized insurer in another state
1443 and that state's laws require the insurer to issue policies with
1444 contingent liability provisions, the insurer may issue
1445 contingent liability policies in that other state.
1446 (c) If the surplus of the reciprocal insurer becomes
1447 impaired, the insurer may no longer issue nonassessable policies
1448 or convert assessable policies to nonassessable policies, and s.
1449 629.301 applies.
1450 Section 39. Subsections (1) and (2) of section 629.301,
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1451 Florida Statutes, are amended to read:
1452 629.301 Impaired reciprocal insurers.—
1453 (1) If the assets of a domestic reciprocal insurer are at
1454 any time insufficient to discharge its liabilities, other than
1455 any liability on account of funds contributed by the attorney in
1456 fact or others, and to maintain the required surplus, its
1457 attorney in fact shall forthwith make up the deficiency or levy
1458 an assessment upon the subscribers for the amount needed to make
1459 up the deficiency, but subject to the limitation set forth in
1460 the power of attorney or policy.
1461 (2) If the attorney in fact fails to make up such
1462 deficiency or to make the assessment within 30 days after the
1463 office orders him or her to do so, or if the deficiency is not
1464 fully made up within 60 days after the date the assessment was
1465 made, the insurer must shall be deemed insolvent and shall be
1466 proceeded against in the same manner as any other domestic
1467 insurer under chapter 631 and the insurance as authorized by
1468 this code.
1469 Section 40. Section 629.401, Florida Statutes, is
1470 repealed.
1471 Section 41. Section 629.520, Florida Statutes, is
1472 repealed.
1473 Section 42. Section 629.525, Florida Statutes, is created
1474 to read:
1475 629.525 Rulemaking authority.—The commission shall adopt,
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1476 amend, or repeal rules pursuant to chapter 120 which are
1477 necessary to implement this chapter.
1478 Section 43. Paragraph (h) of subsection (3) of section
1479 163.01, Florida Statutes, is amended to read:
1480 163.01 Florida Interlocal Cooperation Act of 1969. —
1481 (3) As used in this section:
1482 (h) "Local government liability pool" means a reciprocal
1483 insurer as defined in s. 629.011 s. 629.021 or any self-
1484 insurance program created pursuant to s. 768.28(16), formed and
1485 controlled by counties or municipalities of this state to
1486 provide liability insurance coverage for counties,
1487 municipalities, or other public agencies of this state, which
1488 pool may contract with other parties for the purpose of
1489 providing claims administration, processing, accounting, and
1490 other administrative facilities.
1491 Section 44. Paragraph (c) of subsection (1) of section
1492 624.413, Florida Statutes, is amended to read:
1493 624.413 Application for certificate of authority. —
1494 (1) To apply for a certificate of authority, an insurer
1495 shall file its application therefor with the office, upon a form
1496 adopted by the commission and furnished by the office, showing
1497 its name; location of its home office and, if an alien insurer,
1498 its principal office in the United States; kinds of insurance to
1499 be transacted; state or country of domicile; and such additional
1500 information as the commission reasonably requires, together with
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1501 the following documents:
1502 (c) If a foreign or alien reciprocal insurer, a copy of
1503 the power of attorney of its attorney in fact and of its
1504 subscribers' agreement, if any, certified by the attorney in
1505 fact; and, if a domestic reciprocal insurer, the permit
1506 application declaration provided for in s. 629.081.
1507 Section 45. Section 624.45, Florida Statutes, is amended
1508 to read:
1509 624.45 Participation of financial institutions in
1510 reinsurance and in insurance exchanges.—Subject to applicable
1511 laws relating to financial institutions and to any other
1512 applicable provision of the Florida Insurance Code, any
1513 financial institution or aggregation of such institutions may :
1514 (1) own or control, directly or indirectly, any insurer
1515 that which is authorized or approved by the office, that which
1516 insurer transacts only reinsurance in this state, and that which
1517 actively engages in reinsuring risks located in this state.
1518 (2) Participate, directly or indirectly, as an
1519 underwriting member or as an investor in an underwriting member
1520 of any insurance exchange authorized in accordance with s.
1521 629.401, which underwriting member transacts only aggregate or
1522 specific excess insurance over underlying self-insurance
1523 coverage for self-insurance organizations authorized under the
1524 Florida Insurance Code, for multiple-employer welfare
1525 arrangements, or for workers' compensation self-insurance
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1526 trusts, in addition to any reinsurance the underwriting member
1527 may transact.
1528 Nothing in However, this section may not shall be deemed to
1529 prohibit a financial institution from engaging in any presently
1530 authorized insurance activity.
1531 Section 46. Subsection (3) of section 626.9531, Florida
1532 Statutes, is amended to read:
1533 626.9531 Identification of insurers, agents, and insurance
1534 contracts.—
1535 (3) For the purposes of this section, the term "risk
1536 bearing entity" means a reciprocal insurer as defined in s.
1537 629.011 s. 629.021, a commercial self-insurance fund as defined
1538 in s. 624.462, a group self-insurance fund as defined in s.
1539 624.4621, a local government self-insurance fund as defined in
1540 s. 624.4622, a self-insured public utility as defined in s.
1541 624.46225, or an independent educational institution self-
1542 insurance fund as defined in s. 624.4623. For the purposes of
1543 this section, the term "risk bearing entity" does not include an
1544 authorized insurer as defined in s. 624.09.
1545 Section 47. Reciprocal insurers licensed before July 1,
1546 2025, shall increase their surplus as required by the amendments
1547 made by this act to s. 629.071, Florida Statutes, by January 1,
1548 2026. The attorney in fact of a reciprocal insurer licensed
1549 before July 1, 2025, shall increase its bond as required by the
1550 amendments made by this act to s. 629.121, Florida Statutes, by
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1551 January 1, 2026.
1552 Section 48. This act shall take effect July 1, 2025.
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INSURANCE & BANKING SUBCOMMITTEE
HB 1611 by Rep. Stevenson
Insurance
AMENDMENT SUMMARY
February 1, 2024
Amendment 1 by Rep. Stevenson (Stike-all): The amendment makes the following changes
to the bill as filed:
• Adds wind storm to the causes of loss for which an insurer may not cancel a policy for
90 days after repair.
• Adds an insured’s failure to respond within 30 days to a written inquiry by the insurer
regarding the status of repairs to the list of reasons why an insurer may cancel a policy
with unrepaired damage.
• Requires that the biographical statements required for certain individuals involved in the
creation or acquisition of a reciprocal insurer provide a 20-year history rather than the
10-year history required in the bill as filed.
• Eliminates some provisions proposed by the bill, preserves certain current law, and
makes other technical changes regarding reciprocal insurers to better streamline the
Office of Insurane Regulation’s authority to license and regulate these types of insurers.
• Changes the effective date of the bill from July 1, 2025, to July 1, 2024.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1611 (2024)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Stevenson offered the following:
4
5 Amendment (with title amendment)
6 Remove everything after the enacting clause and insert:
7 Section 1. Subsection (1) of section 624.3161, Florida
8 Statutes, is amended to read:
9 624.3161 Market conduct examinations.—
10 (1) As often as it deems necessary, The office shall
11 examine each licensed rating organization, each advisory
12 organization, each group, association, carrier, as defined in s.
13 440.02, or other organization of insurers which engages in joint
14 underwriting or joint reinsurance, the attorney in fact of each
15 reciprocal insurer, and each authorized insurer transacting in
16 this state any class of insurance to which the provisions of
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Amendment No. 1
17 chapter 627 is are applicable. The examination must shall be for
18 the purpose of ascertaining compliance by the person examined
19 with the applicable provisions of chapters 440, 624, 626, 627,
20 and 635.
21 Section 2. Paragraph (a) of subsection (10) of section
22 624.424, Florida Statutes, is amended to read:
23 624.424 Annual statement and other information.—
24 (10)(a) Each insurer or insurer group doing business in
25 this state shall file, on a monthly quarterly basis in
26 conjunction with financial reports required by paragraph (1)(a) ,
27 a supplemental report on an individual and group basis on a form
28 prescribed by the commission with information on personal lines
29 and commercial lines residential property insurance policies in
30 this state. The supplemental report must shall include separate
31 information for personal lines property policies and for
32 commercial lines property policies and totals for each item
33 specified, including premiums written for each of the property
34 lines of business as described in ss. 215.555(2)(c) and
35 627.351(6)(a). The report must shall include the following
36 information for each zip code county on a monthly basis:
37 1. Total number of policies in force at the end o f each
38 month.
39 2. Total number of policies canceled.
40 3. Total number of policies nonrenewed.
41 4. Number of policies canceled due to hurricane risk.
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42 5. Number of policies nonrenewed due to hurricane risk.
43 6. Number of new policies written.
44 7. Total dollar value of structure exposure under policies
45 that include wind coverage.
46 8. Number of policies that exclude wind coverage.
47 9. Number of claims open each month.
48 10. Number of claims closed each month.
49 11. Number of claims pending each month.
50 12. Number of claims in which either the insurer or
51 insured invoked any form of alternative dispute resolution, and
52 specifying which form of alternative dispute resolution was
53 used.
54 Section 3. Section 624.4305, Florida Statutes, is amended
55 to read:
56 624.4305 Nonrenewal of residential property insurance
57 policies.—Any insurer planning to nonrenew more than 10,000
58 residential property insurance policies in this state within a
59 12-month period shall give notice in writing to the Office of
60 Insurance Regulation for informational purposes 90 days before
61 the issuance of any notices of nonrenewal. The notice provided
62 to the office must set forth the insurer's reasons for such
63 action, the effective dates of nonrenewal, and any arrangements
64 made for other insurers to offer coverage to affected
65 policyholders. The commission may adopt rules to administer this
66 section.
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Amendment No. 1
67 Section 4. Paragraph (d) of subsection (1) of section
68 624.46226, Florida Statutes, is amended to read:
69 624.46226 Public housing authorities self-insurance funds;
70 exemption for taxation and assessments.—
71 (1) Notwithstanding any other provision of law, any two or
72 more public housing authorities in the state as defined in
73 chapter 421 may form a self-insurance fund for the purpose of
74 pooling and spreading liabilities of its members as to any one
75 or combination of casualty risk or real or personal property
76 risk of every kind and every interest in such property against
77 loss or damage from any hazard or cause and against any loss
78 consequential to such loss or damage, provided the self-
79 insurance fund that is created:
80 (d) Maintains a continuing program of excess insurance
81 coverage and reinsurance reserve evaluation to protect the
82 financial stability of the fund in an amount and manner
83 determined by a qualified and independent actuary. The program
84 must, at a minimum, this program must:
85 1. Include a net retention in an amount and manner
86 selected by the administrator, ratified by the governing body,
87 and certified by a qualified actuary;
88 2. Include reinsurance or Purchase excess insurance from
89 authorized insurance carriers or eligible surplus lines
90 insurers; and.
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Amendment No. 1
91 3. Be certified by a qualified and independent actuary as
92 to the program's adequacy. This certification must be submitted
93 simultaneously with the certifications required under paragraphs
94 (b) and (c).
95 2. Retain a per-loss occurrence that does not exceed
96 $350,000.
97
98 A for-profit or not-for-profit corporation, limited liability
99 company, or other similar business entity in which a public
100 housing authority holds an ownership interest or participates in
101 its governance under s. 421.08(8) may join a self-insurance fund
102 formed under this section in which such public housing authority
103 participates. Such for-profit or not-for-profit corporation,
104 limited liability company, or other similar business entity may
105 join the self-insurance fund solely to insure risks related to
106 public housing.
107 Section 5. Subsection (2) of section 626.9201, Florida
108 Statutes, is amended to read:
109 626.9201 Notice of cancellation or nonrenewal.—
110 (2) An insurer issuing a policy providing coverage for
111 property, casualty, surety, or marine insurance must give the
112 named insured written notice of cancellation or termination
113 other than nonrenewal at least 45 days before the effective d ate
114 of the cancellation or termination, including in the written
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Amendment No. 1
115 notice the reasons for the cancellation or termination, except
116 that:
117 (a) If cancellation is for nonpayment of premium, at least
118 10 days' written notice of cancellation accompanied by the
119 reason for cancellation must be given. As used in this
120 paragraph, the term "nonpayment of premium" means the failure of
121 the named insured to discharge when due any of his or her
122 obligations in connection with the payment of premiums on a
123 policy or an installment of such a premium, whether the premium
124 or installment is payable directly to the insurer or its agent
125 or indirectly under any plan for financing premiums or extension
126 of credit or the failure of the named insured to maintain
127 membership in an organization if such membership is a condition
128 precedent to insurance coverage. The term also includes the
129 failure of a financial institution to honor the check of an
130 applicant for insurance which was delivered to a licensed agent
131 for payment of a premium, even if the agent previously delivered
132 or transferred the premium to the insurer. If a correctly
133 dishonored check represents payment of the initial premium, the
134 contract and all contractual obligations are void ab initio
135 unless the nonpayment is cured within the earlier of 5 days
136 after actual notice by certified mail is received by the
137 applicant or 15 days after notice is sent to the applicant by
138 certified mail or registered mail, and, if the contract is void,
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Amendment No. 1
139 any premium received by the insurer from a third party must
140 shall be refunded to that party in full; and
141 (b) If cancellation or termination occurs during the first
142 90 days during which the insurance is in force and if the
143 insurance is canceled or terminated for reasons other than
144 nonpayment, at least 20 days' written notice of cancellation or
145 termination accompanied by the reason for cancellation or
146 termination must be given, except if there has been a material
147 misstatement or misrepresentation or failure to comply with the
148 underwriting requirements established by the insurer; and.
149 (c)1. Upon a declaration of an emergency pursuant to s.
150 252.36 and the filing of an order by the Commissioner of
151 Insurance Regulation, an insurer may not cancel or nonrenew a
152 personal residential or commercial residential property
153 insurance policy covering a dwelling or residential property
154 located in this state which has been damaged as a result of a
155 hurricane or wind loss that is the subject of the declaration of
156 emergency for 90 days after the dwelling or residential property
157 has been repaired. A dwelling or residential property is deemed
158 to be repaired when substantially completed and restored to the
159 extent that the dwelling or residential property is insurable by
160 another insurer that is writing policies in this state.
161 2. An insurer or agent may cancel or nonrenew such a
162 policy before the repair of the dwelling or residential
163 property:
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Amendment No. 1
164 a. Upon 10 days' notice for nonpayment of premium; or
165 b. Upon 45 days' notice:
166 (I) For a material misstatement or fraud related to the
167 claim;
168 (II) If the insurer determines that the insured has
169 unreasonably caused a delay in the repair of the dwelling or
170 residential property;
171 (III) If the insurer or its agent has made a reasonable
172 written inquiry to the insured as to the status of the repair
173 and the insured has failed within 30 calendar days to provide
174 information that is responsive to the inquiry to either the
175 address or e-mail account designated by the insurer or its
176 agent; or
177 (IV) If the insurer has paid policy limits.
178 3. If the insurer elects to nonrenew a policy covering a
179 dwelling or residential property that has been damaged, the
180 insurer must provide at least 90 days' notice to the insured
181 that the insurer intends to nonrenew the policy 90 days after
182 the property has been repaired.
183 4. This paragraph does not prevent the insurer from
184 canceling or nonrenewing the policy 90 days after the repair is
185 completed for the same reasons the insurer would otherwise have
186 canceled or nonrenewed the policy but for the limitations
187 imposed in subparagraph 1.
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188 5. The commission may adopt rules, and the Commissioner of
189 Insurance Regulation may issue orders, necessary to implement
190 this paragraph.
191 Section 6. Paragraph (j) of subsection (2) of section
192 627.062, Florida Statutes, is amended to read:
193 627.062 Rate standards.—
194 (2) As to all such classes of insurance:
195 (j) With respect to residential property insurance rate
196 filings, the rate filing:
197 1. Must account for mitigation measures undertaken by
198 policyholders to reduce hurricane losses and windstorm losses.
199 2. May use a modeling indication that is the weighted or
200 straight average of two or more hurricane loss projection models
201 found by the Florida Commission on Hurricane Loss Projection
202 Methodology to be accurate or reliable pursuant to s. 627.0628.
203 If an averaged model is used under this section, the same
204 averaged model must be used throughout this state. If a weighted
205 average is used, the insurer must provide the office with a
206 justification for using the weighted average which shows t hat
207 the weighted average results in a rate that is reasonable,
208 adequate, and fair.
209
210 The provisions of this subsection do not apply to workers'
211 compensation, employer's liability insurance, and motor vehicle
212 insurance.
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Amendment No. 1
213 Section 7. Paragraph (n) of subsection (6) of section
214 627.351, Florida Statutes, is amended to read:
215 627.351 Insurance risk apportionment plans.—
216 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
217 (n)1. Rates for coverage provided by the corporation must
218 be actuarially sound pursuant to s. 627.062 and not competitive
219 with approved rates charged in the admitted voluntary market so
220 that the corporation functions as a residual market mechanism to
221 provide insurance only when insurance cannot be procured in the
222 voluntary market, except as otherwise provided in this
223 paragraph. The office shall provide the corporation such
224 information as would be necessary to determine whether rates are
225 competitive. The corporation shall file its recommended rates
226 with the office at least annually. The corporation shall provide
227 any additional information regarding the rates which the office
228 requires. The office shall consider the recommendations of the
229 board and issue a final order establishing the rates for the
230 corporation within 45 days after the recommended rate s are
231 filed. The corporation may not pursue an administrative
232 challenge or judicial review of the final order of the office.
233 2. In addition to the rates otherwise determined pursuant
234 to this paragraph, the corporation shall impose and collect an
235 amount equal to the premium tax provided in s. 624.509 to
236 augment the financial resources of the corporation.
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237 3. After the public hurricane loss-projection model under
238 s. 627.06281 has been found to be accurate and reliable by the
239 Florida Commission on Hurricane Loss Projection Methodology, the
240 model shall be considered when establishing the windstorm
241 portion of the corporation's rates. The corporation may use the
242 public model results in combination with the results of private
243 models to calculate rates for the windstorm portion of the
244 corporation's rates. This subparagraph does not require or allow
245 the corporation to adopt rates lower than the rates otherwise
246 required or allowed by this paragraph.
247 4. The corporation must make a recommended actuarially
248 sound rate filing for each personal and commercial line of
249 business it writes.
250 5. Notwithstanding the board's recommended rates and the
251 office's final order regarding the corporation's filed rates
252 under subparagraph 1., the corporation shall annually implement
253 a rate increase which, except for sinkhole coverage, does not
254 exceed the following for any single policy issued by the
255 corporation, excluding coverage changes and surcharges:
256 a. Twelve percent for 2023.
257 b. Thirteen percent for 2024.
258 c. Fourteen percent for 2025.
259 d. Fifteen percent for 2026 and all subsequent years.
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260 6. The corporation may also implement an increase to
261 reflect the effect on the corporation of the cash buildup factor
262 pursuant to s. 215.555(5)(b).
263 7. The corporation's implementation of rates as prescribed
264 in subparagraphs 5. and 8. shall cease for any line of business
265 written by the corporation upon the corporation's implementation
266 of actuarially sound rates. Thereafter, the corporation shall
267 annually make a recommended actuarially sound rate filing that
268 is not competitive with approved rates in the admitted voluntary
269 market for each commercial and personal line of business the
270 corporation writes.
271 8. The following New or renewal personal lines policies
272 that do not cover a primary residence written on or after
273 November 1, 2023, are not subject to the rate increase
274 limitations in subparagraph 5., but may not be charged more than
275 50 percent above, nor less than, the prior year's established
276 rate for the corporation:
277 a. Policies that do not cover a primary residence;
278 b. New policies under which the coverage for the insured
279 risk, before the date of application with the corporation, was
280 last provided by an insurer determined by the office to be
281 unsound or an insurer placed in receivership under chapter 631;
282 or
283 c. Subsequent renewals of those policies, including the
284 new policies in sub-subparagraph b., under which the coverage
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285 for the insured risk, before the date of application with the
286 corporation, was last provided by an insurer determined by the
287 office to be unsound or an insurer placed in receivership under
288 chapter 631.
289 9. As used in this paragraph, the term "primary residence"
290 means the dwelling that is the policyholder's primary home or is
291 a rental property that is the primary home of the tenant, and
292 which the policyholder or tenant occupies for more than 9 months
293 of each year.
294 Section 8. Section 628.011, Florida Statutes, is amended
295 to read:
296 628.011 Scope of part.—This part applies only to domestic
297 stock insurers, mutual insurers, and captive insurers, except
298 that s. 628.341(2) applies also as to foreign and alien
299 insurers.
300 Section 9. Section 628.061, Florida Statutes, is amended
301 to read:
302 628.061 Investigation of proposed organization.—In
303 connection with any proposal to organize or incorporate a
304 domestic insurer, the office shall make an investigation of:
305 (1) The character, reputation, financial standing, and
306 motives of the organizers, incorporators, and subscribers
307 organizing the proposed insurer or any attorney in fact.
308 (2) The character, financial responsibility, insurance
309 experience, and business qualifications of its proposed
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310 officers, members of its subscribers' advisory committee, or
311 officers of its attorney in fact.
312 (3) The character, financial responsibility, business
313 experience, and standing of the proposed stockholders and
314 directors, including the stockholders and directors of any
315 attorney in fact.
316 Section 10. Subsections (1), (2), and (5) of section
317 628.801, Florida Statutes, are amended to read:
318 628.801 Insurance holding companies; registration;
319 regulation.—
320 (1) An insurer that is authorized to do business in this
321 state and that is a member of an insurance holding company
322 shall, on or before April 1 of each year, register with the
323 office and file a registration statement and be subject to
324 regulation with respect to its relationship to the holding
325 company as provided by law or rule. The commission shall adopt
326 rules establishing the information and statement form required
327 for registration and the manner in which registered insurers and
328 their affiliates are regulated. The rules apply to domestic
329 insurers, foreign insurers, and commercially domiciled insurers,
330 except for foreign insurers domiciled in states that are
331 currently accredited by the NAIC. Except to the extent of any
332 conflict with this code, the rules must include all requirements
333 and standards of the Insurance Holding Company System Model
334 Regulation and ss. 4 and 5 of the Insurance Holding Company
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335 System Regulatory Act and the Insurance Holding Company System
336 Model Regulation of the NAIC, as adopted in December 2020 2010.
337 The commission may adopt subsequent amendments thereto if the
338 methodology remains substantially consistent. The rules may
339 include a prohibition on oral contracts between affiliated
340 entities. Material transactions between an insurer and its
341 affiliates must shall be filed with the office as provided by
342 rule.
343 (2) Effective January 1, 2015, The ultimate controlling
344 person of every insurer subject to registration shall also file
345 an annual enterprise risk report on or before April 1. As used
346 in this subsection, the term "ultimate controlling person" means
347 a person who is not controlled by any other person. The report
348 must, to the best of the ultimate controlling person's knowledge
349 and belief, must identify the material risks within the
350 insurance holding company system that could pose enterprise risk
351 to the insurer. The report must shall be filed with the lead
352 state office of the insurance holding company system as
353 determined by the procedures within the Financial Analysis
354 Handbook adopted by the NAIC and is confidential and exempt from
355 public disclosure as provided in s. 624.4212.
356 (a) An insurer may satisfy this requirement by providing
357 the office with the most recently filed parent corporation
358 reports that have been filed with the Securities and Exchange
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359 Commission which provide the appropriate enterprise risk
360 information.
361 (b) The term "enterprise risk" means an activity,
362 circumstance, event, or series of events involving one or more
363 affiliates of an insurer which, if not remedied promptly, are
364 likely to have a materially adverse effect upon the financial
365 condition or liquidity of the insurer or its insurance holding
366 company system as a whole, including anything that would cause
367 the insurer's risk-based capital to fall into company action
368 level as set forth in s. 624.4085 or would cause the insurer to
369 be in a hazardous financial condition.
370 (c) The office may adopt rules for filing the annual
371 enterprise risk report in accordance with the Insurance Holding
372 Company System Regulatory Act and the Insurance Holding Company
373 System Model Regulation of the NAIC, as adopted in December
374 2020.
375 (5) Effective January 1, 2015, The failure to file a
376 registration statement, or a summary of the registration
377 statement, or the enterprise risk filing report required by this
378 section within the time specified for filing is a violation of
379 this section.
380 Section 11. Section 629.011, Florida Statutes, is amended
381 to read:
382 629.011 Definitions "Reciprocal insurance" defined.—As
383 used in this part, the term:
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384 (1) "Affiliated person" of another person means any of the
385 following:
386 (a) The spouse of the other person.
387 (b)1. The parents of the other person or their lineal
388 descendants.
389 2. The parents of the other person's spouse or their
390 lineal descendants.
391 (c) A person who directly or indirectly owns or controls,
392 or holds with the power to vote, 10 percent or more o f the
393 outstanding voting securities of the other person.
394 (d) A person who directly or indirectly owns 10 percent or
395 more of the outstanding voting securities that are directly or
396 indirectly owned or controlled, or held with the power to vote,
397 by the other person.
398 (e) A person or group of persons who directly or
399 indirectly control, are controlled by, or are under common
400 control with the other person.
401 (f) A director, officer, trustee, partner, owner, manager,
402 joint venturer, or employee, or another person who is performing
403 duties similar to those of persons in such positions, of the
404 other person.
405 (g) If the other person is an investment company, any
406 investment adviser of such company or any member of an advisory
407 board of such company.
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408 (h) If the other person is an unincorporated investment
409 company not having a board of directors, the depositor of such
410 company.
411 (i) A person who has entered into an agreement, written or
412 unwritten, to act in concert with the other person in acquiring,
413 or limiting the disposition of:
414 1. Securities of an attorney in fact or controlling
415 company that is a stock corporation; or
416 2. An ownership interest of an attorney in fact or
417 controlling company that is not a stock corporation.
418 (2) "Attorney in fact" or "attorney" means the attorney in
419 fact of a reciprocal insurer. The attorney in fact may be an
420 individual, a corporation, or another person.
421 (3) "Controlling company" means a person, corporation,
422 trust, limited liability company, association, or other entity
423 owning, directly or indirectly, 10 percent or more of the voting
424 securities of one or more attorneys in fact that are stock
425 corporations, or 10 percent or more of the ownership interest of
426 one or more attorneys in fact that are not stock corporations.
427 (4) "Reciprocal insurance" means is that resulting from an
428 interexchange among persons, known as "subscribers," of
429 reciprocal agreements of indemnity, the interexchange being
430 effectuated through an "attorney in fact" common to all such
431 persons.
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432 (5) "Reciprocal insurer" means an unincorporated
433 aggregation of subscribers operating individually and
434 collectively through an attorney in fact to provide reciprocal
435 insurance among themselves.
436 Section 12. Section 629.021, Florida Statutes, is
437 repealed.
438 Section 13. Section 629.061, Florida Statutes, is
439 repealed.
440 Section 14. Section 629.081, Florida Statutes, is amended
441 to read:
442 629.081 Organization of reciprocal insurer.—
443 (1) Twenty-five or more persons domiciled in this state
444 may organize a domestic reciprocal insurer by applying and make
445 application to the office for a permit to do so. A domestic
446 reciprocal insurer may not be formed unless the persons so
447 proposing have first received a permit from the office a
448 certificate of authority to transact insurance.
449 (2) The permit application, to be filed by the organizers
450 or the proposed attorney in fact, must be in writing and made in
451 accordance with forms prescribed by the commission. In addition
452 to any applicable requirements of s. 628.051 and other relevant
453 statutes, the application must include all of the following
454 shall fulfill the requirements of and shall execute and file
455 with the office, when applying for a certificate of authority, a
456 declaration setting forth:
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457 (a) The name of the proposed reciprocal insurer, which
458 must be in accordance with s. 629.051.;
459 (b) The location of the insurer's principal office, which
460 must shall be the same as that of the proposed attorney in fact
461 and must shall be maintained within this state.;
462 (c) The kinds of insurance proposed to be transacted.;
463 (d) The names and addresses of the original 25 or more
464 subscribers.;
465 (e) The proposed designation and appointment of the
466 proposed attorney in fact and a copy of the proposed power of
467 attorney.;
468 (f) The names and addresses of the officers and directors
469 of the proposed attorney in fact, if a corporation, or of its
470 members, if other than a corporation.;
471 (g) The background information as specified in s. 629.227
472 for all officers, directors, managers, and those in equivalent
473 positions of the proposed attorney in fact as well as for any
474 person with an ownership interest of 10 percent or more in the
475 proposed attorney in fact.
476 (h) The articles of incorporation and bylaws, or
477 equivalent documents, of the proposed attorney in fac t, dated
478 within the last year and appropriately certified.
479 (i) The proposed charter powers of the subscribers'
480 advisory committee, and the names and terms of office of the
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481 members thereof, as well as the background information as
482 specified in s. 629.227 for each proposed member.;
483 (h) That all moneys paid to the reciprocal shall, after
484 deducting therefrom any sum payable to the attorney, be held in
485 the name of the insurer and for the purposes specified in the
486 subscribers' agreement;
487 (j)(i) A copy of the proposed subscribers' agreement.;
488 (j) A statement that each of the original subscribers has
489 in good faith applied for insurance of a kind proposed to be
490 transacted, and that the insurer has received from each such
491 subscriber the full premium or premium deposit required for the
492 policy applied for, for a term of not less than 6 months at an
493 adequate rate theretofore filed with and approved by the office;
494 (k) A statement of the financial condition of the insurer,
495 a schedule of its assets, and a statement that the surplus as
496 required by s. 629.071 is on hand; and
497 (l) A copy of each policy, endorsement, and application
498 form it then proposes to issue or use.
499 (l) Any other pertinent information and documents as
500 reasonably requested by the office.
501 (3) The filing must be accompanied by the application fee
502 required by s. 624.501(1)(a).
503 (4) The office shall evaluate and grant or deny the permit
504 application in accordance with ss. 628.061, 628.071, and other
505 relevant provisions of the code.
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506
507 Such declaration shall be acknowledged by the attorney before an
508 officer authorized to take acknowledgments.
509 Section 15. Section 629.091, Florida Statutes, is amended
510 to read:
511 629.091 Reciprocal certificate of authority.—
512 (1) A domestic reciprocal insurer may seek a certificate
513 of authority only after obtaining a permit.
514 (2) To apply for a certificate of authority as a domestic
515 reciprocal insurer, the attorney in fact of an applicant who has
516 previously received a permit from the office may file an
517 application for a certificate of authority in accordance with
518 forms prescribed by the commission which, in addition to
519 applicable requirements of ss. 624.404, 624.411, 624.413, and
520 other relevant statutes, consists of all of the following:
521 (a) Executed copies of any proposed or draft documents
522 required as part of the permit application.
523 (b) A statement affirming that all moneys paid to the
524 reciprocal insurer shall, after deducting therefrom any sum
525 payable to the attorney in fact, be held in the name of the
526 insurer and for the purposes specified in the subscribers'
527 agreement.
528 (c) A statement that each of the original subscribers has
529 in good faith applied for insurance of a kind proposed to be
530 transacted, and that the insurer has received from each such
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531 subscriber the full premium or premium deposit required for the
532 policy applied for, for a term of not less than 6 months at an
533 adequate rate that was filed with and approved by the office.
534 (d) A copy of the bond required under s. 629.121.
535 (e) A statement of the financial condition of the insurer,
536 a schedule of its assets, and a statement that the surplus as
537 required by s. 629.071 is on hand.
538 (f) Such other pertinent information or documents as
539 reasonably requested by the office.
540 (3) If the reciprocal insurer intends to issue
541 nonassessable policies upon receipt of a certificate of
542 authority and if the office determines that the reciprocal
543 insurer meets the legal requirements to issue nonassessable
544 policies, including the surplus requirements, the office shall
545 grant the authorization. If the surplus of the reciprocal
546 insurer becomes impaired, the insurer may no longer issue or
547 renew nonassessable policies or convert assessable policies to
548 nonassessable policies, and s. 629.301 applies.
549 (4) The certificate of authority must of a reciprocal
550 insurer shall be issued to its attorney in the name of the
551 reciprocal insurer to its attorney in fact.
552 Section 16. Section 629.094, Florida Statutes, is created
553 to read:
554 629.094 Continued eligibility for certificate of
555 authority.-In order to maintain its eligibility for a
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556 certificate of authority, a domestic reciprocal insurer must
557 continue to meet all applicable conditions required for
558 receiving the initial permit and certificate of authority under
559 the insurance code and the rules adopted thereunder.
560 Section 17. Section 629.101, Florida Statutes, is amended
561 to read:
562 629.101 Power of attorney in fact.—
563 (1) The rights and powers of the attorney of a reciprocal
564 insurer are shall be as provided in the power of attorney given
565 it by the subscribers.
566 (2) The power of attorney must set forth all of the
567 following:
568 (a) The powers of the attorney.;
569 (b) That the attorney is empowered to accept service of
570 process on behalf of the insurer in actions against the insurer
571 upon contracts exchanged.;
572 (c) The general services to be performed by the attorney.;
573 (d) That the attorney has a fiduciary duty to the
574 subscribers of the reciprocal insurer.
575 (e)(d) The maximum amount to be deducted from advance
576 premiums or deposits to be paid to the attorney and the general
577 items of expense in addition to losses, to be paid by the
578 insurer.; and
579 (f)(e) Except as to nonassessable policies, a provision
580 for a contingent several liability of each subscriber in a
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Amendment No. 1
581 specified amount, which amount may shall be not be less than 5
582 nor more than 10 times the premium or premium deposit stated in
583 the policy.
584 (3) The power of attorney may:
585 (a) Provide for the right of substitution of the attorney
586 and revocation of the power of attorney and rights thereunder.;
587 (b) Impose such restrictions upon the exercise of the
588 power as are agreed upon by the subscribers.;
589 (c) Provide for the exercise of any right reserved to the
590 subscribers directly or through their advisory committee .; and
591 (d) Contain other lawful provisions deemed advisable.
592 (4) The terms of any power of attorney or agreement
593 collateral thereto must shall be reasonable and equitable, and
594 no such power or agreement may shall be used or be effective in
595 this state unless filed with the office.
596 Section 18. Section 629.225, Florida Statutes, is created
597 to read:
598 629.225 Acquisitions.—
599 (1) A person may not, individually or in conjunction with
600 an affiliated person of such person, directly or indirectly,
601 conclude a tender offer or exchange offer for, enter into any
602 agreement to exchange securities for, or otherwise finally
603 acquire 10 percent or more of the outstanding voting securities
604 of an attorney in fact that is a stock corporation or of a
605 controlling company of an attorney in fact that is a stock
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Amendment No. 1
606 corporation; or conclude an acquisition of, or otherwise finally
607 acquire, 10 percent or more of the ownership interest of an
608 attorney in fact that is not a stock corporation or of a
609 controlling company of an attorney in fact that is not a stock
610 corporation, unless all of the following conditions are met:
611 (a)1. The person or affiliated person has filed with the
612 office and sent to the principal office of the attorney in fact,
613 any controlling company of the attorney in fact, the
614 subscribers' advisory committee, and the domestic reciprocal
615 insurer a letter of notification regarding the transaction or
616 proposed transaction no later than 5 days after any form of
617 tender offer or exchange offer is proposed, or no later than 5
618 days after the acquisition of the securities or ownership
619 interest if a tender offer or exchange offer is not involved.
620 The notification must be provided on forms prescribed by the
621 commission containing information determined necessary to
622 understand the transaction and identify all purchasers and
623 owners involved.
624 2. The subscribers' advisory committee must provide the
625 notification to the subscribers of the reciprocal insurer within
626 3 business days. Such notification must be provided on a form
627 prescribed by the commission explaining what the notification is
628 and letting the subscribers know of the filing deadlines for
629 objecting to the acquisition.
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630 (b) The person or affiliated person has filed with the
631 office an application, signed under oath and prepared on forms
632 prescribed by the commission, which contains the information
633 specified in subsection (3). The application must be completed
634 and filed within 30 days after any form of tender offer or
635 exchange offer is proposed, or after the acquisition of the
636 securities if a tender offer or exchange offer is not involved.
637 (c) The office has approved the tender offer or exchange
638 offer, or acquisition if a tender offer or exchange offer is not
639 involved.
640 (2) The person or affiliated person filing the notice
641 required in paragraph (1)(a) may additionally request the office
642 to waive the requirements of paragraph (1)(b), provided that
643 there is no change in the ultimate controlling shareholders and
644 no change in the ownership percentages of the ultimate
645 controlling shareholders, and no unaffiliated parties acquire
646 any direct or indirect interest in the attorney in fact. The
647 office may waive the filing required in paragraph (1)(b) if it
648 determines that in fact there is no change in the ultimate
649 controlling shareholders and no change in the ownership
650 percentages of the ultimate controlling shareholders, and no
651 unaffiliated parties will acquire any direct or indirect
652 interest in the attorney in fact.
653 (3) The application to be filed with the office and
654 furnished to the attorney in fact must contain all of the
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655 following information and any additional information as the
656 office deems necessary to determine the character, experience,
657 ability, and other qualifications of the person or affiliated
658 person of such person for the protection of the reciprocal
659 insurer's subscribers and of the public:
660 (a) The identity and background information specified in
661 s. 629.227 of:
662 1. Each person by whom, or on whose behalf, the
663 acquisition is to be made; and
664 2. Any person who controls, directly or indirectly, such
665 other person, including each director, officer, trustee,
666 partner, owner, manager, or joint venturer, or another person
667 performing duties similar to those of persons in such positions,
668 for the person.
669 (b) The source and amount of the funds or other
670 consideration used, or to be used, in making the acquisition.
671 (c) Any plans or proposals that such persons may have made
672 to liquidate the attorney in fact or controlling company, to
673 sell any of their assets or merge or consolidate them with any
674 person, or to make any other major change in their business or
675 corporate structure or management.
676 (d) The nature and the extent of the controlling interest
677 which the person or affiliated person of such person proposes to
678 acquire, the terms of the proposed acquisition, and the manner
679 in which the controlling interest is to be acquired of an
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680 attorney in fact or controlling company which is not a stock
681 corporation.
682 (e) The number of shares or other securities that the
683 person or affiliated person of such person proposes to acquire,
684 the terms of the proposed acquisition, and the manner in which
685 the securities are to be acquired.
686 (f) Information as to any contract, arrangement, or
687 understanding with any party with respect to any of the
688 securities of the attorney in fact or controlling company,
689 including, but not limited to, information relating to the
690 transfer of any of the securities, option arrangements, puts or
691 calls, or the giving or withholding of proxies, which
692 information names the party with whom the contract, arrang ement,
693 or understanding has been entered into and gives the details
694 thereof.
695 (4) The filing must be accompanied by the fee required
696 under s. 624.501(1)(a).
697 (5) If any material change occurs in the facts provided in
698 the application filed with the office pursuant to this section,
699 or the background information required under s. 629.227, an
700 amendment specifying such changes must be filed immediately with
701 the office, and a copy of the amendment must be sent to the
702 principal office of the attorney in fact and to the principal
703 office of the controlling company.
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704 (6)(a) The acquisition application must be reviewed in
705 accordance with chapter 120. The office may, on its own
706 initiative, or, if requested to do so in writing by a
707 substantially affected person, shall conduct a proceeding to
708 consider the appropriateness of the proposed filing. Time
709 periods for purposes of chapter 120 are tolled during the
710 pendency of the proceeding. Any written request for a proceeding
711 must be filed with the office within 10 days after the date on
712 which notice of the filing is given, or 10 days after the date
713 on which notice of the filing is sent to the subscribers by the
714 subscribers' advisory committee, whichever is later. During the
715 pendency of the proceeding or review period by the office, any
716 person or affiliated person complying with the filing
717 requirements of this section may proceed and take all steps
718 necessary to conclude the acquisition as long as the
719 acquisition's becoming final is conditioned upon obtaining
720 office approval. However, at any time that the office finds that
721 an immediate danger to the public health, safety, and welfare of
722 the reciprocal insurer's subscribers exists, the office shall
723 immediately order, pursuant to s. 120.569(2)(n), the proposed
724 acquisition disapproved and any further steps to conclude the
725 acquisition ceased.
726 (b) During the pendency of the office's review of any
727 acquisition subject to this section, the acquiring person may
728 not make any material change in the operation of the attorney in
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729 fact or controlling company unless the office has specifically
730 approved the change, and the acquiring person may not make any
731 material change in the management of the attorney in fact unless
732 advance written notice of the change in management is furnished
733 to the office. As used in this paragraph, the term "material
734 change in the operation of the attorney in fact" means a
735 transaction that disposes of or obligates 5 percent or more of
736 the capital and surplus of the attorney in fact or of any
737 domestic reciprocal insurer. The term "material change in the
738 management of the attorney in fact" means any change in
739 management involving officers or directors of the attorney in
740 fact or any person of the attorney in fact or controlling
741 company having authority to dispose of or obligate 5 percent or
742 more of the attorney in fact's capital or surplus. The office
743 must approve a material change in operations if it finds the
744 applicable provisions of subsection (7) have been met. The
745 office may disapprove a material change in management if i t
746 finds that the applicable provisions of subsection (7) have not
747 been met, and, in such case, the attorney in fact shall promptly
748 change management as acceptable to the office.
749 (c) If a request for a proceeding is filed, the proceeding
750 must be conducted within 60 days after the date the written
751 request for a proceeding is received by the office. A
752 recommended order must be issued within 20 days after the date
753 of the close of the proceedings. A final order must be issued
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754 within 20 days after the date of the recommended order or, if
755 exceptions to the recommended order are filed, within 20 days
756 after the date the exceptions are filed.
757 (7) The office may disapprove any acquisition subject to
758 this section by any person, or any affiliated person of such
759 person, who:
760 (a) Willfully violates this section;
761 (b) In violation of an order issued by the office pursuant
762 to subsection (12), fails to divest himself or herself of any
763 stock or ownership interest obtained in violation of this
764 section or fails to divest himself or herself of any direct or
765 indirect control of such stock or ownership interest, within 25
766 days after such order; or
767 (c) In violation of an order issued by the office pursuant
768 to subsection (12), acquires an additional stock or ownership
769 interest in an attorney in fact or controlling company or direct
770 or indirect control of such stock or ownership interest, without
771 complying with this section.
772 (8) The person filing the application required by this
773 section has the burden of proof. The office must approve any
774 such acquisition if it finds, on the basis of the record made
775 during any proceeding or on the basis of the filed application
776 if no proceeding is conducted, that:
777 (a) The financial condition of the acquiring person will
778 not jeopardize the financial stability of the attorney in fact
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779 or prejudice the interests of the reciprocal insurer's
780 subscribers or the public.
781 (b) Any plan or proposal that the acquiring person has
782 made:
783 1. To liquidate the attorney in fact, sell its assets, or
784 merge or consolidate it with any person, or to make any other
785 major change in its business or corporate structure or
786 management; or
787 2. To liquidate any controlling company, sell its assets,
788 or merge or consolidate it with any person, or to make any major
789 change in its business or corporate structure or management
790 which would have an effect upon the attorney in fact,
791
792 is fair and free of prejudice to the reciprocal insurer's
793 subscribers or to the public.
794 (c) The competence, experience, and integrity of those
795 persons who will control directly or indirectly the operation of
796 the attorney in fact indicate that the acquisition is in the
797 best interest of the reciprocal insurer's subscribers and in the
798 public interest.
799 (d) The natural persons for whom background inform ation is
800 required to be furnished pursuant to this section have such
801 backgrounds as to indicate that it is in the best interests of
802 the reciprocal insurer's subscribers and in the public interest
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803 to permit such persons to exercise control over the attorney in
804 fact.
805 (e) The directors and officers, if such attorney in fact
806 or controlling company is a stock corporation, or the trustees,
807 partners, owners, managers, joint venturers, or other persons
808 performing duties similar to those of persons in such positio ns,
809 if such attorney in fact or controlling company is not a stock
810 corporation, to be employed after the acquisition have
811 sufficient insurance experience and ability to ensure reasonable
812 promise of successful operation.
813 (f) The management of the attorney in fact after the
814 acquisition will be competent and trustworthy and will possess
815 sufficient managerial experience so as to make the proposed
816 operation of the attorney in fact not hazardous to the
817 insurance-buying public.
818 (g) The management of the attorney in fact after the
819 acquisition will not include any person who has directly or
820 indirectly through ownership, control, reinsurance transactions,
821 or other insurance or business relations unlawfully manipulated
822 the assets, accounts, finances, or books of any insurer or
823 otherwise acted in bad faith with respect thereto.
824 (h) The acquisition is not likely to be hazardous or
825 prejudicial to the reciprocal insurer's subscribers or to the
826 public.
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827 (i) The effect of the acquisition would not substantially
828 lessen competition in the line of insurance for which the
829 reciprocal insurer is licensed or certified in this state or
830 would not tend to create a monopoly therein.
831 (9) A vote by the stockholder of record, or by any other
832 person, of any security acquired in contravention of this
833 section is not valid. Any acquisition contrary to this section
834 is void. Upon the petition of the attorney in fact, the
835 controlling company, or the reciprocal insurer, the circuit
836 court for the county in which the principal office of the
837 attorney in fact is located may, without limiting the generality
838 of its authority, order the issuance or entry of an injunction
839 or other order to enforce this section. There is a private right
840 of action in favor of the attorney in fact or controlling
841 company to enforce this section. A demand upon the office that
842 it perform its functions is not required as a prerequisite to
843 any suit by the attorney in fact or controlling company against
844 another person, and in no case is the office deemed a necessary
845 party to any action by the attorney in fact or controlling
846 company to enforce this section. Any person who makes or
847 proposes an acquisition requiring the filing of an application
848 pursuant to this section, or who files such an application, is
849 deemed thereby to have designated the Chief Financial Officer,
850 or his or her assistant or deputy or another person in charge of
851 his or her office, as such person's agent for service of process
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852 under this section and is deemed thereby to have submitted
853 himself or herself to the administrative jurisdiction of the
854 office and to the jurisdiction of the circuit court.
855 (10) Any approval by the office under this section does
856 not constitute a recommendation by the office of the tender
857 offer or exchange offer, or the acquisition if a te nder offer or
858 exchange offer is not involved. It is unlawful for a person to
859 represent that the office's approval constitutes a
860 recommendation. A person who violates this subsection commits a
861 felony of the third degree, punishable as provided in s.
862 775.082, s. 775.083, or s. 775.084. The statute-of-limitations
863 period for the prosecution of an offense committed under this
864 subsection is 5 years.
865 (11) A person may rebut a presumption of control by filing
866 a disclaimer of control with the office on a form prescribed by
867 the commission. The disclaimer must fully disclose all material
868 relationships and bases for affiliation between the person and
869 the attorney in fact as well as the basis for disclaiming the
870 affiliation. In lieu of such form, a person or acquiring party
871 may file with the office a copy of a Schedule 13G filed with the
872 Securities and Exchange Commission pursuant to Rule 13d -1(b) or
873 (c), 17 C.F.R. s. 240.13d-1, under the Securities Exchange Act
874 of 1934, as amended. After a disclaimer has been filed, th e
875 attorney in fact is relieved of any duty to register or report
876 under this section which may arise out of the attorney in fact's
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877 relationship with the person unless the office disallows the
878 disclaimer.
879 (12) If the office determines that any person or any
880 affiliated person of such person has acquired 10 percent or more
881 of the outstanding voting securities of an attorney in fact or
882 controlling company that is a stock corporation, or 10 percent
883 or more of the ownership interest of an attorney in fact or
884 controlling company that is not a stock corporation, without
885 complying with this section, the office may order that the
886 person and any affiliated person of such person cease
887 acquisition of the attorney in fact or controlling company and,
888 if appropriate, divest itself of any stock or ownership interest
889 acquired in violation of this section.
890 (13)(a) The office shall, if necessary to protect the
891 public interest, suspend or revoke the certificate of authority
892 of the reciprocal insurer whose attorney in fact or c ontrolling
893 company is acquired in violation of this section.
894 (b) If a reciprocal insurer is subject to suspension or
895 revocation pursuant to paragraph (a), any other reciprocal
896 insurer using the same attorney in fact is also subject to
897 suspension or revocation. In such case, the office may offer any
898 affected reciprocal insurer, through its subscriber
899 representatives, the ability to cure any suspension or
900 revocation by procuring another attorney in fact acceptable to
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901 the office or by taking any other action agreed to by the
902 office.
903 (14) This section applies to domestic reciprocal insurers
904 and the attorney in fact of domestic reciprocal insurers. This
905 section does not apply to any acquisition of voting securities
906 or ownership interest of an attorney in fact or of a controlling
907 company by any person who is the owner of a majority of the
908 voting securities or ownership interest with the approval of the
909 office under this section or s. 629.091.
910 Section 19. Section 629.227, Florida Statutes, is created
911 to read:
912 629.227 Background information.—The information as to the
913 background and identity of each person about whom information is
914 required to be furnished pursuant to s. 629.081 or s. 629.225
915 must include, but need not be limited to, all of the following:
916 (1) A sworn biographical statement, on forms adopted by
917 the commission, which must include, but need not be limited to,
918 the following information:
919 (a) Occupations, positions of employment, and offices held
920 during the past 20 years, including the principal business and
921 address of any business, corporation, or organization where each
922 occupation, position of employment, or office occurred.
923 (b) Whether, at any time during such 20-year period, the
924 person was convicted of any crime other than a traffic
925 violation.
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926 (c) Whether, during such 20-year period, the person has
927 been the subject of any proceeding for the revocation of any
928 license and, if so, the nature of the proceeding and the
929 disposition of the proceeding.
930 (d) Whether, during such 20-year period, the person has
931 been the subject of any proceeding under the federal Bankruptcy
932 Act.
933 (e) Whether, during such 20-year period, any person or
934 other business or organization in which the person was a
935 director, officer, trustee, partner, owner, manager, or ot her
936 official has been the subject of any proceeding under the
937 federal Bankruptcy Act, either during the time of that person's
938 tenure with the business or organization or within 12 months
939 thereafter.
940 (f) Whether, during such 20-year period, the person has
941 been enjoined, either temporarily or permanently, by a court of
942 competent jurisdiction from violating any federal or state law
943 regulating the business of insurance, securities, or banking, or
944 from carrying out any particular practice or practices in the
945 course of the business of insurance, securities, or banking,
946 together with details as to any such event.
947 (g) Whether, during such 20-year period, the person has
948 served as the attorney in fact, a subscribers' advisory
949 committee member, or any other manager or officer of a
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950 reciprocal insurer or insurer that became insolvent or had its
951 certificate of authority suspended or revoked.
952 (2) Fingerprints of each person.
953 (3) An authorization for release of information in regard
954 to the investigation of such person's background.
955 (4) Any additional information that the office deems
956 necessary to determine the character, experience, ability, and
957 other qualifications of the person, or affiliated person of such
958 person, for the protection of the reciprocal insurer's
959 subscribers and of the public.
960 Section 20. Section 629.229, Florida Statutes, is created
961 to read:
962 629.229 Attorneys in fact, officers, and directors of
963 insolvent reciprocal insurers or other insurers.—A person who
964 served as an attorney in fact, or as an officer, director, or
965 manager of an attorney in fact, a member of a subscribers'
966 advisory committee of a reciprocal insurer doing business in
967 this state, or an officer or director of any other insurer doing
968 business in this state, and who served in that capacity within
969 the 2-year period before the date the insurer or reciprocal
970 insurer became insolvent, for an insolvency that occurs on or
971 after July 1, 2024, may not thereafter:
972 (1) Serve as an attorney in fact, or as an officer,
973 director, or manager of an attorney in fact; a member of a
974 subscribers' advisory committee of a reciprocal insurer doing
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975 business in this state; or an officer or director of any other
976 insurer doing business in this state; or
977 (2) Have direct or indirect control over the selection or
978 appointment of an attorney in fact, or of an officer, director,
979 or manager of an attorney in fact; or a member of the
980 subscribers' advisory committee of a reciprocal insurer doing
981 business in this state; or an officer or director of any insurer
982 doing business in this state, through contract or trust or by
983 operation of law,
984
985 unless the person demonstrates that his or her personal actions
986 or omissions were not a significant contributing cause to the
987 insolvency.
988 Section 21. Section 629.261, Florida Statutes, is amended
989 to read:
990 629.261 Nonassessable policies.—Upon the impairment of the
991 surplus of a nonassessable reciprocal insurer, the office shall
992 revoke the authorization issued under s. 629.091(3) or s.
993 629.291(5).
994 (1) If a reciprocal insurer has a surplus as to
995 policyholders required of a domestic stock insurer authorized to
996 transact like kinds of insurance, upon application of the
997 attorney and as approved by the subscribers' advisory committee
998 the office shall issue its certificate authorizing the insurer
999 to extinguish the contingent liability of subscribers under its
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1000 policies then in force in this state and to omit provisions
1001 imposing contingent liability in all policies delivered or
1002 issued for delivery in this state for so long as all such
1003 surplus remains unimpaired.
1004 (2) Upon impairment of such surplus, the office shall
1005 forthwith revoke the certificate. Such revocation shall not
1006 render subject to contingent liability any policy then in force
1007 and for the remainder of the period for which the premium has
1008 theretofore been paid; but, after such revocation, no policy
1009 shall be issued or renewed without providing for contingent
1010 assessment liability of the subscriber.
1011 (3) The office shall not authorize a domestic reciprocal
1012 insurer so to extinguish the contingent liability of any of its
1013 subscribers or in any of its policies to be issued, unless it
1014 qualifies to and does extinguish such liability of all its
1015 subscribers and in all such policies for all kinds of insurance
1016 transacted by it; except that, if required by the laws of
1017 another state in which the insurer is transacting insurance as
1018 an authorized insurer, the insurer may issue policies providing
1019 for the contingent liability of such of its subscribers as may
1020 acquire such policies in such state, and need not extinguish the
1021 contingent liability applicable to policies theretofore in force
1022 in such state.
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1023 Section 22. Subsections (1), (2), and (4) of section
1024 629.291, Florida Statutes, are amended, and subsection (5) is
1025 added to that section, to read:
1026 629.291 Merger or conversion.—
1027 (1) A domestic reciprocal insurer, upon affirmative vote
1028 of not less than two-thirds of its subscribers who vote on such
1029 merger pursuant to due notice, and subject to the approval by of
1030 the office of the terms therefor, may merge with another
1031 reciprocal insurer or be converted to a stock or mutual insurer ,
1032 to be thereafter governed by the applicable sections of the
1033 Florida Insurance Code. However, a domestic stock insurer may
1034 not convert to a reciprocal insurer.
1035 (2) A plan to merge a reciprocal insurer with another
1036 reciprocal insurer or for conversion of the reciprocal insurer
1037 to a stock or mutual insurer must be filed with the office on
1038 forms adopted by the office and must contain such information as
1039 the office reasonable requires to evaluate the transaction Such
1040 a stock or mutual insurer shall be subject to the same capital
1041 or surplus requirements and shall have the same rights as a like
1042 domestic insurer transacting like kinds of insurance.
1043 (4) Reinsurance of all or substantially all of the
1044 insurance in force of a domestic reciprocal insurer in another
1045 insurer is shall be deemed to be a merger for the purposes of
1046 this section.
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1047 (5)(a) An assessable reciprocal insurer may convert to a
1048 nonassessable reciprocal insurer if:
1049 1. The subscribers' advisory committee approves the
1050 conversion;
1051 2. The attorney in fact submits the application for
1052 conversion on the required application form; and
1053 3. The office finds that the application for conversion
1054 meets the minimum statutory requirements.
1055 (b) If the office approves the application for conversion,
1056 the assessable reciprocal insurer may convert to a nonassessable
1057 reciprocal insurer by:
1058 1. Extinguishing the contingent liability of subscribers
1059 under all policies then in force in this state;
1060 2. Omitting contingent liability provisions in all
1061 policies delivered or issued in this state after the conversion;
1062 and
1063 3. Otherwise extinguishing the contingent liability of all
1064 of its subscribers. However, if the reciprocal insurer is
1065 transacting insurance as an authorized insurer in another state
1066 and that state's laws require the insurer to issue policies with
1067 contingent liability provisions, the insurer may issue
1068 contingent liability policies in that other state.
1069 (c) If the surplus of the reciprocal insurer becomes
1070 impaired, the insurer may no longer issue nonassessable policies
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1071 or convert assessable policies to nonassessable policies, and s.
1072 629.301 applies.
1073 Section 23. Section 629.525, Florida Statutes, is created
1074 to read:
1075 629.525 Rulemaking authority.—The commission shall adopt,
1076 amend, or repeal rules pursuant to chapter 120 which are
1077 necessary to implement this chapter.
1078 Section 24. Paragraph (h) of subsection (3) of section
1079 163.01, Florida Statutes, is amended to read:
1080 163.01 Florida Interlocal Cooperation Act of 1969. —
1081 (3) As used in this section:
1082 (h) "Local government liability pool" means a reciprocal
1083 insurer as defined in s. 629.011 s. 629.021 or any self-
1084 insurance program created pursuant to s. 768.28(16), formed and
1085 controlled by counties or municipalities of this state to
1086 provide liability insurance coverage for counties,
1087 municipalities, or other public agencies of this state, which
1088 pool may contract with other parties for the purpose of
1089 providing claims administration, processing, accounting, and
1090 other administrative facilities.
1091 Section 25. Subsection (3) of section 626.9531, Florida
1092 Statutes, is amended to read:
1093 626.9531 Identification of insurers, agents, and insurance
1094 contracts.—
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1095 (3) For the purposes of this section, the term "risk
1096 bearing entity" means a reciprocal insurer as defined in s.
1097 629.011 s. 629.021, a commercial self-insurance fund as defined
1098 in s. 624.462, a group self-insurance fund as defined in s.
1099 624.4621, a local government self-insurance fund as defined in
1100 s. 624.4622, a self-insured public utility as defined in s.
1101 624.46225, or an independent educational institution self-
1102 insurance fund as defined in s. 624.4623. For the purposes of
1103 this section, the term "risk bearing entity" does not include an
1104 authorized insurer as defined in s. 624.09.
1105 Section 26. This act shall take effect July 1, 2024.
1106
1107 -----------------------------------------------------
1108 T I T L E A M E N D M E N T
1109 Remove everything before the enacting clause and insert:
1110 A bill to be entitled
1111 An act relating to insurance; amending s. 624.3161, F.S.;
1112 revising the entities for which the Office of Insurance
1113 Regulation is required to conduct market conduct examinations;
1114 amending s. 624.424, F.S.; requiring insurers and insurer groups
1115 to file a specified supplemental report on a monthly basis;
1116 requiring that such report include certain information for each
1117 zip code; amending s. 624.4305, F.S.; authorizing the Financial
1118 Services Commission to adopt rules related to notice of
1119 nonrenewal of residential property insurance policies; amending
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1120 s. 624.46226, F.S.; revising the requirements for public housing
1121 authority self-insurance funds; amending s. 626.9201, F.S.;
1122 prohibiting insurers from canceling or nonrenewing certain
1123 insurance policies under certain circumstances; providing
1124 exceptions; providing construction; authorizing the commission
1125 to adopt rules and the Commissioner of Insurance Regulation to
1126 issue orders; amending s. 627.062, F.S.; specifying requirements
1127 for rate filings if certain models are used; amending s.
1128 627.351, F.S.; revising requirements for certain policies that
1129 are not subject to certain rate increase limitations; amending
1130 ss. 628.011 and 628.061, F.S.; conforming provisions to ch anges
1131 made by the act; amending s. 628.801, F.S.; revising
1132 requirements for rules adopted for insurers that are members of
1133 an insurance holding company; deleting an obsolete date;
1134 authorizing the office to adopt rules; amending s. 629.011,
1135 F.S.; defining terms; repealing s. 629.021, F.S., relating to
1136 the definition of the term "reciprocal insurer"; repealing s.
1137 629.061, F.S., relating to the term "attorney"; amending s.
1138 629.081, F.S.; revising the procedure for persons to organize as
1139 a domestic reciprocal insurer; specifying requirements for the
1140 permit application; requiring that the application be
1141 accompanied by a specified fee; requiring the office to evaluate
1142 and grant or deny the permit application in accordance with
1143 specified provisions; amending s. 629.091, F.S.; providing
1144 requirements for the application for a certificate of authority
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1145 to operate as a domestic reciprocal insurer; requiring the
1146 office to grant the authorization for reciprocal insurers to
1147 issue certain policies under certain circumstances; prohibiting
1148 insurers from issuing and renewing certain policies under a
1149 specified circumstance; requiring that such certificate of
1150 authority be issued in the name of the reciprocal insurer to its
1151 attorney in fact; creating s. 629.094, F.S.; requiring a
1152 domestic reciprocal insurer to meet certain requirements to
1153 maintain its eligibility for a certificate of authority;
1154 amending s. 629.101, F.S.; revising requirements for the power
1155 of attorney given by subscribers of a domestic reciprocal
1156 insurer to the attorney in fact; conforming provisions to
1157 changes made by the act; creating s. 629.225, F.S.; prohibiting
1158 persons from acquiring certain securities or ownership interests
1159 of certain attorneys in fact and controlling companies of
1160 certain attorneys in fact; providing an exception; authorizing
1161 certain persons to request that the office waive certain
1162 requirements; providing that the office may waive certain
1163 requirements if specified determinations are made; specifying
1164 the requirements of an application to the office relating to
1165 certain acquisitions; requiring that such application be
1166 accompanied by a specified fee; requiring that amendments be
1167 filed with the office under certain circumstances; specifying
1168 the manner in which the acquisition application must be
1169 reviewed; authorizing the office, and requiring the office if a
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1170 request for a proceeding is filed, to conduct a proceeding
1171 within a specified timeframe to consider the appropriateness of
1172 such application; requiring that certain time periods be tolled;
1173 requiring that written requests for a proceeding be filed within
1174 a certain timeframe; authorizing certain persons to take all
1175 steps to conclude the acquisition during the pendency of the
1176 proceeding or review period; requiring the office to order a
1177 proposed acquisition disapproved and that actions to conclude
1178 the acquisition be ceased under certain circumstances;
1179 prohibiting certain persons from making certain changes during
1180 the pendency of the office's review of an acquisition; providing
1181 an exception; defining the terms "material change in the
1182 operation of the attorney in fact" and "material change in the
1183 management of the attorney in fact"; requiring the office to
1184 approve or disapprove certain changes upon making certain
1185 findings; requiring that a proceeding be conducted within a
1186 certain timeframe; requiring that recommended orders and final
1187 orders be issued within a certain timeframe; specifying the
1188 circumstances under which the office may disapprove an
1189 acquisition; specifying that certain persons have the burden of
1190 proof; requiring the office to approve an acquisition upon
1191 certain findings; specifying that certain votes are not valid
1192 and that certain acquisitions are void; specifying that certain
1193 provisions may be enforced by an injunction; creating a private
1194 right of action in favor of the attorney in fact or the
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Page 49 of 51
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1611 (2024)
Amendment No. 1
1195 controlling company to enforce certain provisions; providing
1196 that a certain demand upon the office is not required before
1197 certain legal actions; providing that the office is not a
1198 necessary party to certain actions; specifying the persons who
1199 are deemed designated for service of process and who have
1200 submitted to the administrative jurisdiction of the office;
1201 providing that approval by the office does not constitute a
1202 certain recommendation; providing that certain actions are
1203 unlawful; providing criminal penalties; providing a statute of
1204 limitations; authorizing a person to rebut a presumption of
1205 control by filing certain disclaimers; specifying the contents
1206 of such disclaimer; specifying that, after a disclaimer is
1207 filed, the attorney in fact is relieved of a certain duty;
1208 authorizing the office to order certain persons to cease
1209 acquisition of the attorney in fact or controlling company and
1210 divest themselves of any stock or ownership interest under
1211 certain circumstances; requiring the office to suspend or revoke
1212 the reciprocal certificate of authority under certain
1213 circumstances; specifying that the attorney in fact is deemed to
1214 be hazardous to its policyholders if the reciprocal insurer is
1215 subject to suspension or revocation; authorizing the office to
1216 offer the reciprocal insurer the ability to cure any suspension
1217 or revocation under certain circumstances; providing
1218 applicability and nonapplicability; creating s. 629.227, F.S.;
1219 specifying the information as to the background and identity of
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. HB 1611 (2024)
Amendment No. 1
1220 certain persons which must be furnished by such persons;
1221 creating s. 629.229, F.S.; prohibiting certain persons from
1222 serving in specified positions of reciprocal insurers or
1223 insurers under certain circumstances; amending s. 6 29.261, F.S.;
1224 removing provisions relating to certain authorizations for
1225 reciprocal insurers; amending s. 629.291, F.S.; providing that
1226 certain insurers that merge are governed by the insurance code;
1227 prohibiting domestic stock insurers from converting to
1228 reciprocal insurers; requiring that specified plans be filed
1229 with the office and that such plans contain certain information;
1230 authorizing the conversion of assessable reciprocal insurers to
1231 nonassessable reciprocal insurers under certain circumstances;
1232 providing certain procedures when certain reciprocal insurers
1233 convert; prohibiting a reciprocal insurer that becomes impaired
1234 from issuing or converting certain policies; providing
1235 applicability; creating s. 629.525, F.S.; requiring the
1236 commission to adopt, amend, or repeal certain rules; amending
1237 ss. 163.01 and 626.9531, F.S.; conforming provisions to changes
1238 made by the act; providing an effective date.
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CS/HB 1639
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 1639 Gender and Biological Sex
SPONSOR(S): Select Committee on Health Innovation, Bankson and others
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Select Committee on Health Innovation 10 Y, 5 N, As CS Lloyd Calamas
2) Insurance & Banking Subcommittee Fortenberry Lloyd
3) Infrastructure Strategies Committee
SUMMARY ANALYSIS
Gender dysphoria is a behavioral health disorder diagnosable by a health care practitioner in which a person
experiences incongruence between one’s experienced or expressed gender and birth sex, and meets age-
specific diagnostic sub-criteria. Treatment for gender dysphoria has evolved from a behavioral health approach
focused on helping patients become comfortable with their biological sex, to an affirmation-focused approach
potentially involving puberty blocking medication for minors and potentially cross-hormone medication and
surgical interventions. Current law prohibits these services for minors, and requires informed consent for adults.
Health insurers and health maintenance organizations (HMOs) are regulated by the Office of Insurance
Regulation and the Agency for Health Care Administration, respectively. Current law does not regulate
insurance coverage of sex-reassignment prescriptions or procedures.
CS/HB 1639 requires any health insurer or health maintenance organization coverage policy delivered in the
state after July 1, 2024, which covers sex-reassignment prescriptions or procedures, to also provide coverage
for treatment to de-transition from such prescriptions or procedures, for an appropriate additional premium. In
addition, insurers and HMOs that offer policies with coverage for sex-reassignment prescriptions or procedures
must also offer a policy that does not provide that coverage. The bill also forbids all health insurers and HMOs
from prohibiting coverage of mental health or therapeutic services to treat a person’s perception that his or her
sex is inconsistent with the person’s sex at birth by affirming the insured’s sex at birth.
Current law requires driver licenses and identification cards issued by the Department of Highway Safety and
Motor Vehicles (DHSMV) to include the licensee’s gender, among other information; however, current law does
not define “gender” or outline procedures relating to the identification of a person’s gender. CS/HB 1639
requires a driver’s license or identification card to state the applicant’s sex at birth, rather than gender.
The bill has an insignificant negative fiscal impact on the DHSMV and no fiscal impact on local government.
The bill may have an indeterminate, negative fiscal impact on health insurers and HMOs, depending on their
current coverage options and offerings.
The bill has an effective date of July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: h1639b.IBS
DATE: 1/30/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Gender Dysphoria
Transgender and gender nonconforming are general terms for individuals whose gender identity, role,
or expression differ from their biological sex at birth.1
Gender dysphoria refers to the significant discomfort or distress felt as a result of the gender
incongruency.2 Gender dysphoria is a behavioral health disorder diagnosable by a health care
practitioner. The American Psychiatric Association’s Diagnostic Statistical Manual of Mental Disorders
(DSM) classification of gender dysphoria denote a “marked incongruence between one’s
experienced/expressed gender and assigned3 gender, of at least six months’ duration” and
manifestation of sub-criteria that differs based on age.4
Treatment
Treatment of gender dysphoria has evolved. Traditionally, gender identity issues were treated as a
mental illness, with treatment primarily provided through psychotherapy to help patients become
comfortable with their sex at birth.5
In the late 1990’s, treatment began shifting to an “affirmative care model” after physicians in the
Netherlands published a report on positive psychological outcomes for a transgender adolescent
treated with hormones.6 Those physicians suppressed puberty in the early stages followed by cross-
sex hormone therapy starting at age 16. This treatment model became known as the “Dutch Protocol”.
The “Dutch Protocol”, as well as the re-categorization of gender identity issues in the DSM, created a
profound shift in the medically accepted treatment for gender issues. In 2013, the authors of the DSM
replaced the term “gender identity disorder” with “gender dysphoria in children” and “gender dysphoria
in adolescence and adults” to diagnose and treat the distress individuals felt by the incongruency
between their gender identities and their bodies.7 The medical community stopped classifying gender
identity issues as a mental illness. The “Dutch Protocol” was subsequently incorporated into the widely
adopted standards of care for the treatment of transgender patients. 8
The treatment goal now focuses on affirming the patient’s gender identity rather than affirming the
gender of the patient’s sex at birth. Treatment for gender dysphoria now primarily addresses the
1 Coleman, E., Radix, A.E., Bouman, W.P., Brown, G.R., de Vries, A.L.C., et al, (2022), Standards of Care for the Health of
Transgender and Gender Diverse People, Version 8, International Journal of Transgender Health, 23(S1), S1-S260.
2 Id.
3
The DSM uses “assigned” to refer to the delivery physician’s assessment and notation of the child’s biological sex, usually b ased on
external genitalia. See American Psychiatric Association, Gender Dysphoria, available at, https://www.ps ychiatry.org/patients -
families/gender-dysphoria (last visited Jan. 23, 2024).
4 American Psychiatric Association, (2013), Diagnostic and Statistical Manual of Mental Disorders (5 th ed.), Arlington, VA: American
Psychiatric Publishing.
5 See Diagnostic and statistical manual of mental disorders. 3 rd ed. Washington, DC: American Psychiatric Publishing; 1980; Diagnostic
and statistical manual of mental disorders. 4 th ed. Washington, DC; American Psychiatric Publishing; 1994.
6 Cohen-Kettenis P.T., van Goozen S.H., (1998), Pubertal delay as an aid in diagnosis and treatment of a transsexual adolescent, Eur
Child Adolsc. Psychiatry, 7(4):246-8.
7 The American Psychiatric Association stated that “it is important to note that gender nonconformity is not itself a m ental disorder”.
Supra note 4.
8 Supra note 2; Hembree, W., Cohen-Kettenis, P., et al, (2017), Endocrine Treatment of Gender-Dysphoric/Gender-Incongruent
Persons: An Endocrine Society Clinical Practice Guideline, Journal of Clinical Endocrinology & Metab olism, 102(11):2896-3903.
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incongruency with psychotherapy and medical interventions that align the body with the mind, rather
than the mind with the body. This treatment may include:9
Psychotherapy to address the negative impact of gender dysphoria and mental health, which
includes social transitioning to affirm an individual’s felt gender identity, role, and expression.
Puberty blockers to suppress the release of testosterone or estrogen and stop the onset of
secondary sex characteristics.
Cross-sex hormone therapy to feminize or masculinize the body.
Sex reassignment surgery to change primary and/or secondary sex characteristics (e.g.,
breasts/chest, external and/or internal genitalia, facial features, and body contouring).
Concerns with Treatment
Clinicians and academics have raised concerns with the appropriateness of medical interventions for
minors based on the lack of rigorous scientific research on the issue. Various issues bring the value of
gender treatment research into question, specifically: many lack randomized control trials, use small
sample sizes, and have a medium to high risk of bias due to recruitment design.10 From the perspective
of some clinicians, there are no studies that sufficiently evaluate the long-term impact of medical
treatments, so the long-term effects on physical developments, fertility, sexual function and brain
development is unknown.11
Limited research suggests access to puberty blockers and gender-affirming hormones may improve
mental health outcomes, including reduced anxiety, depression, self-harm, and suicidality, in the short-
term.12 On the other hand, other research found a higher rate of suicide attempts and suicide
completion in the short term, and much higher rates of suicide compared to the general population
beginning 10 years post-transition.13
Researchers are just beginning to understand the unintended physical effects of transgender treatment.
Puberty is a time of complex chemical changes that direct the development of many bodily functions.
Taking puberty blockers at that time can prevent that development, with the possibility of significant
future harms as an adult. For example, recent studies document the effect of puberty-blocking
medications on bone development, causing severe lack of density, which may be irreversible. 14 The
long-term effect of puberty blockers and cross-sex hormone treatment on sexual function in adulthood
requires further research. One literature review noted both positive and negative effects, but also noted
that there is no valid tool to accurately measure sexual health outcomes. 15 Similarly, researchers are
beginning to express concerns about the impact on the brain, including permanent alterations to
neurodevelopment. 16
9 Supra note 3.
10 See Hruz, P., (2019), Deficiencies in Scientific Evidence for Medical Management of Gender Dysphoria, The Linacre Quarterly 87:1,
34-42.; Abbruzzese, E., Levine, S., Mason, J., (2023), The Myth of “Reliable Research” in Pediatric Gender Medicine: A critical
evaluation of the Dutch Studies – and research that has followed, Journal of Sex & Martial Therapy DOI:
10.1080/0092623X.2022.2150346.
11 Supra note 9.
12 See Allen, L. R., Watson, L. B., Egan, A. M., Moser, C. N., (2019), Well-being and suicidality among transgender youth after gender-
affirming hormones, Clinical Practice in Pediatric Psychology, 7(3), 302.
13 Dhejne C., Lichtenstein, P., Boman M., Johansson A., Långström N., Landén, M., (2011), Long -term follow-up of transsexual persons
undergoing sex reassignment surgery: cohort study in Sweden, PLoS One, vol. 6, issue 2.
14 See, e.g., Joseph T, Ting J, Butler G. The effect of GnRH analogue treatment on bone mineral density in young adolescents with
gender dysphoria: Findings from a large national cohort. J Pediatr Endocrinol Metab . 2019; 10: 1077– 1081; Lee J., et al, (2020), Low
bone mineral density in early pubertal transgender/gender diverse youth: findings from the trans youth care study, J Endocr Soc. Sep 1;
4(9): bvaa065. In 2022, the Endocrine Society took the position that more research is needed in this area to properly address bone
health in young patients. Endocrine Society, “Longer treatment with puberty-delaying medication in transgender youth leads to lower
bone mineral density”, June 12, 2022, available at https://admin.endocrine.org/news-and-advocacy/news-room/2022/longer-treatment-
with-puberty-delaying-medication-leads-to-lower-bone-mineral-density (last visited Jan. 20, 2024).
15 Mattawanon N., Charoenkwan K., Tangpricha V., (2021), Sexual dysfunction in transgender people: a systematic review, Urol Clin N
Am 48 (2021) 437–460. See, Shirazi TN, Self H, Dawood K, et al., Pubertal timing predicts adult psychosexuality: Evidence from
typically developing adults and adults with isolated GnRH deficiency, Psychoneuroendocrinology. 2020; 104733:104733;
16 See, e.g.,Chen D, Strang JF, Kolbuck VD, et al. Consensus parameter: Research methodologies to evaluate neurodevelopmental
effects of pubertal suppression in transgender youth. Transgender Health. 2020; 4: 246– 257.
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Regulation of Sex-Reassignment Prescriptions and Procedures in Florida
Current law regulates sex-reassignment prescriptions and procedures as a matter of practitioner
licensure. These prescriptions and procedures include: 17
Puberty blockers prescribed to stop or delay normal puberty in order to affirm a person’s
perception of his or her sex if that perception is inconsistent with the person’s sex;18
Hormones or hormone antagonists prescribed to affirm a person’s perception of his or her sex if
that perception is inconsistent with the person’s sex; and
Medical procedures to affirm a person’s perception of his or her sex if that perception is
inconsistent the person’s sex.
Current law prohibits sex-reassignment prescriptions and procedures for patients under age 18, with
exceptions for minors actively receiving this treatment at the time the law was enacted in 2023. For
adults, physicians must obtain specified informed consent on a form adopted by the Boards of Medicine
and Osteopathic Medicine.19
Regulation of Insurers and Health Maintenance Organizations
The Office of Insurance Regulation (OIR) licenses and regulates the activities of insurers, health
maintenance organizations (HMOs), and other risk bearing entities in Florida.20 The Agency for Health
Care Administration (AHCA) regulates the quality of care by HMOs under part III of ch. 641, F.S. Before
receiving a certificate of authority from the OIR, an HMO must receive a Health Care Provider
Certificate from AHCA.21
All persons who transact insurance in this state must comply with the Florida Insurance Code (Code).22
The OIR has the authority to collect, propose, publish, and disseminate any information relating to the
subject matter of the Code,23 and may investigate any matter relating to insurance. 24
A health insurance mandate is a legal requirement that an insurance company or health plan cover
specific benefits, or services by particular health care providers, or specific patient groups. A contingent
coverage mandate requires coverage of a service, condition, or provider’s care only if coverage is
provided for a certain other service, condition, or provider’s care. In general, coverage mandates
increase the cost of health coverage in varying amounts depending on the cost of the mandated care
and the amount of patient utilization of that care.
Mandated offerings, on the other hand, do not mandate that certain benefits be provided. Rather, a
mandated offering law requires that insurers offer an option for coverage for a particular benefit or
specific patient groups, which may require an additional premium and which the consumer is free to
accept or reject.
Current Florida law requires every person or organization seeking consideration of a legislative
proposal which would mandate a health coverage or the offering of a health coverage by an insurer, to
submit to the Agency for Health Care Administration and the legislative committees having jurisdiction,
a report that assesses the social and financial impacts of the proposed coverage. 25 To the extent
information is available, the report should address:
17 S. 456.08, F.S.
18 Under current law, a person’s sex is indicated by a person’s sex chromosomes, naturally occurring sex hormones, and internal and
external genitalia present at birth. S. 456.001(8), F.S.
19 S. 456.52, F.S.
20 S. 20.121(3)(a), F.S.
21 S. 641.21(1)(1), F.S.
22 S. 624.11, F.S. The Code is comprised of chs. 624-632, 634-636, 641, 642, 648, and 651, F.S. S. 624.01, F.S.
23 S. 624.307(4), F.S.
24 S. 624.307(3), F.S.
25 S. 624.215, F.S.
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The extent to which the treatment or service is generally used by a significant portion of the
population.
The extent to which insurance coverage is generally available; or, if not generally available,
results in persons avoiding necessary health care treatment.
The extent to which lack of coverage results in unreasonable financial hardship.
The level of public demand for the treatment or service.
The level of public demand for insurance coverage of the treatment or service.
The level of interest of collective bargaining agents in negotiating for the inclusion of this
coverage in group contracts.
The extent to which coverage will increase or decrease the cost of the treatment or service.
The extent to which coverage will increase the appropriate uses of the treatment or service.
The extent to which the treatment or service will be a substitute for a more expensive treatment
or service.
The extent to which the coverage will increase or decrease the administrative expenses of
insurance companies and the premium and administrative expenses of policyholders.
The impact of this coverage on the total cost of health care.
The House Health and Human Services Committee has not received a report for CS/HB 1639.
Currently, the Code does not regulate coverage of sex-reassignment prescriptions or procedures. The
extent to which health insurers and HMOs provide coverage for sex-reassignment prescriptions or
procedures is unknown.
State Driver Licenses and Identification Cards
Under Florida law, an application for the issuance of an identification card or a driver license from the
Department of Highway Safety and Motor Vehicles (DHSMV) must include certain information,
including the applicant’s gender.26 Additionally, a printed driver license issued by DHSMV to a driver
must include, among other requirements, a licensee’s gender and a space upon which the licensee
shall affix his or her usual signature.27 Florida law does not define “gender” in the context of driver
license and identification card issuance.
Although not expressed in Florida law, the DHSMV Driver License Operations Manual governs how
gender is determined for purposes of driver licenses and identification cards. Primarily, an applicant’s
gender is taken from the primary identification document, such as a birth certificate or a valid and non-
expired United States passport. If a primary identification document does not list a gender, then the
customer would specify which gender they most closely identify with for the use of the credential.
Similarly, if the primary identification document indicates “nonbinary X” for gender, and the applicant
presents no other primary resource documentation indicating gender, then the applicant would specify
the gender they must closely identify with on the application. 28
To change a gender on a driver license or identification card,29 an applicant can present a credential
from another state with the desired gender, a certified court order, or a signed statement on offic ial
letterhead from a physician or advanced practice nurse meeting certain criteria. The statement must
include language stating that the applicant is undergoing clinical treatment for gender transition, and
language declaring under penalty of perjury that the statement is true and correct. 30 The DHSMV
follows standards established by the World Professional Association for Transgender Health. 31
Effect of the Bill
Regulation of Insurers and Health Maintenance Organizations
26 Ss. 322.051(1), F.S. and 322.08(2)(a), F.S.
27
S. 322.14(1)(a), F.S.
28 Florida Department of Highway Safety and Motor Vehicles, Driver License Operations Manual, IR08.3 - Estab lishing Gender.
29 Other than for a clerical error.
30 Florida Department of Highway Safety and Motor Vehicles, Driver License Operations Manual, IR08.4 - Gender Change.
31 Id. at p. 2
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The bill authorizes insurers and HMOs to cover sex-reassignment prescriptions and procedures, for an
additional premium, but imposes a contingent coverage mandate related to sex-reassignment
coverage: a health insurer or HMO which covers sex-reassignment prescriptions or procedures must
also cover treatment to treatments to de-transition from such prescriptions or procedures.
The impact of this provision is unclear, because the extent of sex-reassignment prescriptions or
procedures coverage, and de-transition coverage, is unknown. Health insurers and HMOs providing
both types of coverage will not be affected by the bill; similarly, those not providing covering for sex-
reassignment prescriptions or procedures will be unaffected. Insurers and HMOs providing c overage for
sex-reassignment prescriptions or procedures only, without de-transition coverage, may comply with
the conditional mandate by either providing de-transition coverage, for an additional cost, or by
eliminating coverage for sex-reassignment prescriptions or procedures (thereby eliminating the pre-
condition that triggers the contingent mandate).
The bill also imposes a mandated offering: an insurer or HMO which issues a policy that provides
coverage for sex-reassignment prescriptions and procedures must also offer a policy that does not
provide such coverage. Again, it is unknown how many health insurers and HMOs issue policies that
provide this coverage and so would be subject to the requirement to offer policies that do not cover it.
Finally, the bill forbids health insurers and HMOs from prohibiting coverage of mental health and
therapeutic services to treat a person’s perception that his or her sex is inconsistent with sex at birth by
affirming the person’s sex at birth.
State Driver Licenses and Identification Cards
The bill replaces the statutory term “gender” with the term “sex”, as it relates to driver license and
identification card issuance. Specifically, the bill provides that an application for the issuance of an
identification card or a driver license from DHSMV must include the applicant’s sex. The bill defines
“sex” as a person’s sex indicated at birth using a definition consistent with that used in health care
practitioner licensure laws.32 DHSMV will be required to amend operational policies to reflect these
changes..
The bill provides an effective date of July 1, 2024.
B. SECTION DIRECTORY:
Section 1: Amends s. 322.01, F.S., relating to definitions.
Section 2: Amends 322.051, F.S., relating to identification cards.
Section 3: Amends 322.08, F.S., relating to application for licenses and identification cards.
Section 4: Amends 322.14, F.S.; relating to licenses issued to drivers.
Section 5: Creates 627.411, F.S.; relating to coverage for sex-assignment prescriptions or
procedures.
Section 6: Amends 627.657, F.S; relating to provisions of group health insurance policies.
Section 7: Amends 627.6699, F.S.; relating to Employee Health Care Access Act.
Section 8: Amends 641.31, F.S; relating to health maintenance contracts.
Section 9: Provides an effective date of July 1, 2024.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
32 See s. 456.001, F.S.
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2. Expenditures:
The bill has an insignificant fiscal impact on DHSMV for administrative costs to update driver
license and identification card applications and printed driver licenses to refer to “sex” instead of
“gender” and updating the operational manual, which can be absorbed within existing resources.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may have an indeterminate, negative fiscal impact on health insurers and HMOs, depending on
their current coverage options and offerings. Practitioners and facilities may experience an increase or
decrease in demand for such services, depending on the extent of current coverage and the market
response of health insurers and HMOs to the bill’s provisions.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments
2. Other:
The bill appears to make the contingent coverage mandate provision effective July 1, 2024, which
may implicate the impairment of contract provisions of Art. 1 Sec. X of the Florida Constitution.
B. RULE-MAKING AUTHORITY:
Current law provides sufficient rulemaking authority for OIR, AHCA and DHSMV to implement the
provisions of the bill.
C. DRAFTING ISSUES OR OTHER COMMENTS:
To avoid implicating the provisions of Art. 1 Sec. X of the Florida Constitution, the bill could be
amended to make the insurance provisions effective for contracts entered into or renewed after January
1, 2025.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On January 22, 2024, the Select Committee on Health Innovation adopted an amendment and reported the
bill favorably as a committee substitute.
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The amendment adds a definition of “sex” for application throughout chapter 322 relating to state driver
licenses and identification cards.
The analysis is drafted to the committee substitute as passed by the Select Committee on Health
Innovation.
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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
CS/HB 1639 2024
1 A bill to be entitled
2 An act relating to gender and biological sex; amending
3 s. 322.01, F.S.; defining the term "sex"; amending ss.
4 322.051, 322.08, and 322.14, F.S.; requiring
5 applications for driver licenses and identification
6 cards, as well as printed driver licenses, to indicate
7 a person's sex instead of his or her gender; creating
8 s. 627.6411, F.S.; requiring health insurance policies
9 that include coverage for sex-reassignment
10 prescriptions or procedures to also provide coverage
11 for certain detransition treatments; requiring health
12 insurers providing such coverage to also offer
13 insurance policies that do not provide such coverage;
14 prohibiting health insurance policies from prohibiting
15 coverage of certain mental health and therapeutic
16 services; amending ss. 627.657, 627.6699, and 641.31,
17 F.S.; requiring group health insurance policies,
18 health benefit plans, and health maintenance contracts
19 that include coverage for sex-reassignment
20 prescriptions or procedures to also provide coverage
21 for certain detransition treatments; requiring group
22 health insurers, carriers, and health maintenance
23 organizations providing such coverage to also offer
24 insurance policies that do not provide such coverage;
25 prohibiting group health insurance policies, health
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CS/HB 1639 2024
26 benefit plans, and health maintenance contracts from
27 prohibiting coverage of certain mental health and
28 therapeutic services; providing an effective date.
29
30 Be It Enacted by the Legislature of the State of Florida:
31
32 Section 1. Subsection (49) is added to section 322.01,
33 Florida Statutes, to read:
34 322.01 Definitions.—As used in this chapter:
35 (49) "Sex" means the classification of a person as either
36 male or female based on the organization of the human body of
37 such person for a specific reproductive role as indicated by the
38 person's sex chromosomes, naturally occurring sex hormones, and
39 internal and external genitalia present at birth.
40 Section 2. Paragraph (a) of subsection (1) of sec tion
41 322.051, Florida Statutes, is amended to read:
42 322.051 Identification cards.—
43 (1) Any person who is 5 years of age or older, or any
44 person who has a disability, regardless of age, who applies for
45 a disabled parking permit under s. 320.0848, may be issued an
46 identification card by the department upon completion of an
47 application and payment of an application fee.
48 (a) The application must include the following information
49 regarding the applicant:
50 1. Full name (first, middle or maiden, and last), sex
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CS/HB 1639 2024
51 gender, proof of social security card number satisfactory to the
52 department, which may include a military identification card,
53 county of residence, mailing address, proof of residential
54 address satisfactory to the department, country of birth, and a
55 brief description.
56 2. Proof of birth date satisfactory to the department.
57 3. Proof of identity satisfactory to the department. Such
58 proof must include one of the following documents issued to the
59 applicant:
60 a. A driver license record or identification card record
61 from another jurisdiction that required the applicant to submit
62 a document for identification which is substantially similar to
63 a document required under sub-subparagraph b., sub-subparagraph
64 c., sub-subparagraph d., sub-subparagraph e., sub-subparagraph
65 f., sub-subparagraph g., or sub-subparagraph h.;
66 b. A certified copy of a United States birth certificate;
67 c. A valid, unexpired United States passport;
68 d. A naturalization certificate issued by the United
69 States Department of Homeland Security;
70 e. A valid, unexpired alien registration receipt card
71 (green card);
72 f. A Consular Report of Birth Abroad provided by the
73 United States Department of State;
74 g. An unexpired employment authorization card issued by
75 the United States Department of Homeland Security; or
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76 h. Proof of nonimmigrant classification provided by the
77 United States Department of Homeland Security, for an original
78 identification card. In order to prove nonimmigrant
79 classification, an applicant must provide at least one of the
80 following documents. In addition, the department may require
81 applicants to produce United States Department of Homeland
82 Security documents for the sole purpose of establishing the
83 maintenance of, or efforts to maintain, continuous lawful
84 presence:
85 (I) A notice of hearing from an immigration court
86 scheduling a hearing on any proceeding.
87 (II) A notice from the Board of Immigration Appeals
88 acknowledging pendency of an appeal.
89 (III) A notice of the approval of an application for
90 adjustment of status issued by the United States Citizenship and
91 Immigration Services.
92 (IV) An official documentation confirming the filing of a
93 petition for asylum or refugee status or any other relief issued
94 by the United States Citizenship and Immigration Services.
95 (V) A notice of action transferring any pending matter
96 from another jurisdiction to Florida, issued by the United
97 States Citizenship and Immigration Services.
98 (VI) An order of an immigration judge or immigration
99 officer granting relief that authorizes the alien to live and
100 work in the United States, including, but not limited to,
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101 asylum.
102 (VII) Evidence that an application is pending for
103 adjustment of status to that of an alien lawfully admitted for
104 permanent residence in the United States or conditional
105 permanent resident status in the United States, if a visa number
106 is available having a current priority date for processing by
107 the United States Citizenship and Immigration Services.
108 (VIII) On or after January 1, 2010, an unexpired foreign
109 passport with an unexpired United States Visa affixed,
110 accompanied by an approved I-94, documenting the most recent
111 admittance into the United States.
112
113 An identification card issued based on documents required in
114 sub-subparagraph g. or sub-subparagraph h. is valid for a period
115 not to exceed the expiration date of the document presented or 1
116 year, whichever occurs first.
117 Section 3. Paragraph (a) of subsection (2) of section
118 322.08, Florida Statutes, is amended to read:
119 322.08 Application for license; requirements for l icense
120 and identification card forms.—
121 (2) Each such application shall include the following
122 information regarding the applicant:
123 (a) Full name (first, middle or maiden, and last), sex
124 gender, proof of social security card number satisfactory to the
125 department, which may include a military identification card,
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126 county of residence, mailing address, proof of residential
127 address satisfactory to the department, country of birth, and a
128 brief description.
129 Section 4. Paragraph (a) of subsection (1) of sect ion
130 322.14, Florida Statutes, is amended to read:
131 322.14 Licenses issued to drivers.—
132 (1)(a) The department shall, upon successful completion of
133 all required examinations and payment of the required fee, issue
134 to every qualified applicant a printed driver license that must
135 bear a color photograph or digital image of the licensee; the
136 name of the state; a distinguishing number assigned to the
137 licensee, which, beginning November 1, 2023, must have a minimum
138 of four randomly generated digits on each original, renewal, or
139 replacement driver license; and the licensee's full name, date
140 of birth, and residence address; a brief description of the
141 licensee, including, but not limited to, the licensee's sex
142 gender and height; and the dates of issuance and expiration of
143 the license. A space shall be provided upon which the licensee
144 shall affix his or her usual signature. A license is invalid
145 until it has been signed by the licensee except that the
146 signature of the licensee is not required if it appears thereon
147 in facsimile or if the licensee is not present within the state
148 at the time of issuance.
149 Section 5. Section 627.6411, Florida Statutes, is created
150 to read:
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151 627.6411 Coverage for sex-reassignment prescriptions or
152 procedures.—
153 (1) A health insurance policy that is delivered or issued
154 to a person in the state may offer, for an appropriate
155 additional premium, coverage for sex-reassignment prescriptions
156 or procedures, as defined in s. 456.001, only if the same health
157 insurance policy also provides coverage for treatment to
158 detransition from the sex-reassignment prescriptions or
159 procedures.
160 (2) A health insurer that delivers or issues a health
161 insurance policy that provides coverage described under
162 subsection (1) must also offer a health insurance policy that
163 does not provide such coverage.
164 (3) A health insurance policy that is delivered or issued
165 to a person in the state may not prohibit the coverage of mental
166 health or therapeutic services to treat a person's perception
167 that his or her sex, as defined in s. 456.001, is inconsistent
168 with such person's sex at birth by affirming the insured's sex.
169 Section 6. Subsections (4) and (5) are added to section
170 627.657, Florida Statutes, to read:
171 627.657 Provisions of group health insurance policies. —
172 (4)(a) A group health insurance policy that is delivered
173 or issued to any group in the state may offer, for an
174 appropriate additional premium, coverage for sex-reassignment
175 prescriptions or procedures, as defined in s. 456.001, only if
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176 the same group health insurance policy also provides coverage
177 for treatment to detransition from the sex-reassignment
178 prescriptions or procedures.
179 (b) A group health insurer that delivers or issues a group
180 health insurance policy that provides coverage described under
181 paragraph (a) must also offer a group health insurance policy
182 that does not provide such coverage.
183 (5) A group health insurance policy that is delivered or
184 issued to any group in the state may not prohibit the coverage
185 of mental health or therapeutic services to treat a person's
186 perception that his or her sex, as defined in s. 456.001, is
187 inconsistent with such person's sex at birth by affirming the
188 insured's sex.
189 Section 7. Paragraphs (h) and (i) are added to subsection
190 (5) of section 627.6699, Florida Statutes, to read:
191 627.6699 Employee Health Care Access Act.—
192 (5) AVAILABILITY OF COVERAGE.—
193 (h)1. A health benefit plan that is delivered or issued to
194 an individual or a group in the state may offer, for an
195 appropriate additional premium, coverage for sex-reassignment
196 prescriptions or procedures, as defined in s. 456.001, only if
197 the same health benefit plan also provides coverage for
198 treatment to detransition from the sex-reassignment
199 prescriptions or procedures.
200 2. A carrier that delivers or issues a health benefit plan
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201 that provides coverage described under subparagraph 1. must also
202 offer a health benefit plan that does not provide such coverage.
203 (i) A health benefit plan that is delivered or issued to
204 an individual or a group in the state may not prohibit the
205 coverage of mental health or therapeutic services to treat a
206 person's perception that his or her sex, as defined in s.
207 456.001, is inconsistent with such person's sex at birth by
208 affirming the insured's sex.
209 Section 8. Subsections (48) and (49) are added to section
210 641.31, Florida Statutes, to read:
211 641.31 Health maintenance contracts.—
212 (48)(a) A health maintenance contract that is delivered or
213 issued to a subscriber or group in the state may offer, for an
214 appropriate additional premium, coverage for sex-reassignment
215 prescriptions or procedures, as defined in s. 456.001, only if
216 the same health maintenance contract also provides coverage for
217 treatment to detransition from the sex-reassignment
218 prescriptions or procedures.
219 (b) A health maintenance organization that delivers or
220 issues a health maintenance contract that provides coverage
221 described under paragraph (a) must also offer a health
222 maintenance contract that does not provide such coverage.
223 (49) A health maintenance contract that is delivered or
224 issued to a subscriber or group in the state may not prohibit
225 the coverage of mental health or therapeutic services to treat a
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226 person's perception that his or her sex, as defined in s.
227 456.001, is inconsistent with such person's sex at birth by
228 affirming the insured's sex.
229 Section 9. This act shall take effect July 1, 2024.
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INSURANCE & BANKING SUBCOMMITTEE
CS/HB 1639 by Bankson
Gender and Bioloical Sex
AMENDMENT SUMMARY
February 1, 2024
Amendment 1 by Rep. Bankson (Line 169): provides that the health insurance contingent
mandate in the bill is applicable to policies delivered, issued, or renewed on or after January 1,
2025.
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. CS/HB 1639 (2024)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Bankson offered the following:
4
5 Amendment (with title amendment)
6 Between lines 168 and 169, insert:
7 (4) The provisions of this section are applicable to
8 policies delivered, issued, or renewed on or after January 1,
9 2025.
10 Between lines 188 and 189, insert:
11 (6) The provisions of this section are applicable to group
12 health insurance policies delivered, issued, or renewed on or
13 after January 1, 2025.
14 Between lines 208 and 209, insert:
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Page 1 of 2
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. CS/HB 1639 (2024)
Amendment No. 1
15 (ii) The provisions of this section are applicable to
16 health benefit plans delivered, issued, or renewed on or a fter
17 January 1, 2025.
18 Between lines 228 and 229, insert:
19 (50) The provisions of this section are applicable to
20 health maintenance organization contracts delivered, issued, or
21 renewed on or after January 1, 2025.
22
23 -----------------------------------------------------
24 T I T L E A M E N D M E N T
25 Remove line 16 and insert:
26 services; requiring health insurance policies, group health
27 insurance plans, and health maintenance organizations to meet
28 certain contract and policy deadlines; amending ss. 627.657,
29 627.6699. and 641.31,
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Page 2 of 2
PCS for HB 1503
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: PCS for HB 1503 Citizens Property Insurance Corporation
SPONSOR(S): Insurance & Banking Subcommittee
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
Orig. Comm.: Insurance & Banking Subcommittee Fortenberry Lloyd
SUMMARY ANALYSIS
The bill makes various changes to Citizens Property Insurance Corporation (Citizens), including:
Eligibility: increases the maximum home value eligible for Citizens coverage from $700,000 to $1
million throughout the state; with the exception of homes in counties that lack a reasonable degree of
competition (currently Miami-Dade and Monroe), policyholders with homes between $700,000 and $1
million will be charged a rate that is actuarially sound and noncompetitive; properties in Miami-Dade
and Monroe counties, and any others in counties that the Office of Insurance Regulation determines
lack a reasonable degree of competition, will continue to be charged a premium within the glidepath.
Surplus Lines: permits surplus lines insurers to take out commercial residential policies from Citizens;
provides definitions to accomplish these take outs; establishes that new and renewal commercial lines
residential risks are not eligible for Citizens’ coverage if the risk is offered coverage by a surplus lines
insurer at the insurer’s approved rate under a policy including wind coverage.
Flood coverage: effective upon becoming law, requires Citizens’ policyholders who must purchase
flood insurance as a condition of eligibility for Citizens’ coverage to purchase only dwelling coverage for
a flood loss rather than dwelling and contents coverage.
Combining Accounts: eliminates a significant amount of statutory language that is no longer needed
because Citizens has combined the Personal Lines Account, the Commercial Lines Account, and the
Coastal Account, into one Citizens Account, as of January 1, 2024.
Operations and Management: allows Citizens’ executive director to appoint a designee to act as its
agency head; allows Citizens to share information with NICB to assist in efforts to fight insurance fraud;
allows Citizens to obtain patents, copyrights, and trademarks, and to enforce related rights.
The bill has no impact on local or state government revenues or expenditures. It has a likely indeterminate
positive and negative direct economic impact on the private sector.
Except as otherwise expressly provided, the bill is effective on July 1, 2024.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
STORAGE NAME: pcs1503.IBS
DATE: 1/30/2024
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
General Background
Citizens Property Insurance Corporation (Citizens) is a not-for-profit, tax-exempt government entity that
provides property insurance to those who are unable to find affordable coverage in the private market.
Citizens was created to serve as Florida’s property insurer of last resort.1 Applicants are eligible for
coverage if no admitted private carrier2 will write them a policy for a premium that is within 20 percent
greater than what Citizens would offer for comparable coverage. 3
The policies that Citizens writes include the following:
Standard Personal Lines Policies – comprehensive multiperil policies providing full coverage of
residential property equivalent to the coverage provided in the private insurance market;
Basic Personal Lines Policies – similar to dwelling fire policies that provide coverage meeting
the requirements of the secondary mortgage market, but are more limited in coverage than
under a standard policy;
Commercial Lines Residential and Nonresidential Policies – generally similar to the basic perils
of full coverage obtainable for commercial residential structures and commercial nonresidential
structures in the private market;
Personal Lines and Commercial Lines Residential Property Insurance Policies – cover the peril
of wind only;
Commercial Lines Nonresidential Property Insurance Policies – cover the peril of wind only.4
Citizens’ Rates
From 2007 until 2010, Citizens’ rates were frozen by statute at the level that had been established in
2006. In 2010, the Legislature established a “glidepath” to impose annual rate increases up to a level
that is actuarially sound. Under the original established glidepath, Citizens had to implement an annual
rate increase which, except for sinkhole coverage, did not exceed 10 percent above the previous year
for any individual policyholder, adjusted for coverage changes and surcharges. In 2021, the Legislature
revised this glidepath to increase it one percentage point per year to 15 percent, as follows: 5
11 percent for 2022.
12 percent for 2023.
13 percent for 2024.
14 percent for 2025.
15 percent for 2026 and all subsequent years.
Citizens’ rate cap, also known as the “glidepath,” is not closing the gap between Citizens rates and
private market rates. Instead, because of the rate cap and the increasing rates of private property
insurance, the gap is growing and making Citizens more like a competitor to private insurers than an
insurer of last resort. Because Citizens’ rates are often well below those of private carriers, Citizens
may be more competitive than otherwise intended. Due to Citizens’ structure, its rates do not contain
certain elements that the rates of private insurers contain. Citizens does not pay taxes like private
insurers and does not need to purchase as much reinsurance as private insurers because of Citizens’
higher levels of capital and surplus.6
1 Citizens Property Insurance Corporation (Citizens), Programs, https://www.citizensfla.com/programs (last visited Jan. 30, 2024).
2 The admitted market is comprised of insurance companies licenses to transact insurance in Florida.
3 S. 627.351(6)(c)5.a, F.S.
4 S. 627.351(6)(c)1., F.S.
5 S. 627.351(6)(n)5., F.S.
6 S. 627.351(6)(t), F.S. See also s. 627.351(6)(c)9. for information regarding Citizens purchase of reinsurance.
STORAGE NAME: pcs1503.IBS PAGE: 2
DATE: 1/30/2024
The implementation of this increase ceases when Citizens has achieved actuarially sound rates. 7 In
addition to the overall glidepath rate increase, Citizens can increase its rates to recover the additional
reimbursement premium it pays to the Florida Hurricane Catastrophe Fund (FHCF) as a result of the
annual cash build-up factor added to the price of the mandatory layer of the FHCF coverage, pursuant
to s. 215.555(5)(b), F.S.8
In addition to eventually being actuarially sound, Citizens’ rates must not be competitive with approved
rates charged by admitted insurers so that Citizens functions as a residual market to provide insurance
only when it cannot be obtained from admitted insurers. 9 This eliminates localized rate reductions
among Citizens policies. Additionally, OIR must provide Citizens with the information necessary to
determine whether Citizens’ rates are competitive.10
Until Special Session 2022A, in December 2022, Citizens’ rates did not differ based upon whether the
property insured is a policyholders’ primary residence, a policyholder’s second home (e.g. a vacation
home,) or occupied by a long-term tenant.11 However, the Legislature removed the glidepath rate
limitations for any new or renewal personal lines policy for non-primary residences written on or after
November 1, 2023.12 The rate for these residences rate must be no more than 50% above, but not less
than, the established rate for Citizens which was in effect one year before the date of the application for
coverage.13
Eligibility for Coverage
Current law requires Citizens to provide a procedure for determining the eligibility of a potential risk for
coverage from Citizens, and specific eligibility requirements based on premium amounts, value of the
property insured, and the location of the property. Risks not meeting the statutory eligibility
requirements cannot be insured by Citizens. Citizens also has additional eligibility requirements set out
in their underwriting rules. These rules are approved by OIR and set out in Citizens’ underwriting
manuals.14
Citizens may cover homes if the cost of replacing the dwelling, or the dwelling and its’ contents, is no
more than $700,000. In Miami-Dade and Monroe counties, Citizens may insure structures valued up to
$1 million as long as the Office of Insurance Regulation (OIR) continues to determine that these
counties are not competitive.15
Eligibility for Personal and Commercial Lines Residential Coverage at Renewal
When Citizens’ personal lines residential or commercial lines residential policyholders receive offers of
coverage at renewal from authorized insurers, the risks are not eligible for coverage from Citizens
unless the premiums from the authorized insurers are more than 20 percent greater than the rate for
comparable coverage from Citizens, inclusive of surcharges and assessments being levied on the
policy by Citizens.16 The bill also establishes that policies removed from Citizens under an assumption
agreement may remain on Citizen’s policy forms through the end of the policy term, but policy
administration and liability transfers to the assuming insurer.17
7 S. 627.351(6)(n)7., F.S.
8 S. 627.351(6)(n)6., F.S.
9 S. 627.351(6)(n)1., F.S.
10
Id.
11 Citizens would not issue a personal lines policy to someone using a home as a short-term vacation rental as that is considered a
business use of the home. Citizens is currently prohibited from issuing wind-only policies to commercial lines residential condominiums
when 50 percent or more of the units in the condominium are rented more than eight times per calendar year for less th an 30 days in
each rental period. S. 627.351(6)(a)6., F.S.
12 S. 627.351(6)(n)8., F.S.
13 Id.
14 See Citizens, Revised Underwriting Manuals, https://www.citizensfla.com/-/20160329-revised-underwriting-manuals (last visited Jan.
28, 2024).
15 S. 627.351(6)(a)3, F.S. If OIR makes a finding that other counties are not competitive, Citizens would be able to insure prop erties up
to $1 million in value in those counties, as well.
16 S. 627.351(6)(c)5., F.S.
17 Id.
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DATE: 1/30/2024
Effect of the Bill – Eligibility
The bill increases the maximum home value eligible for Citizens coverage from $700,000 to $1 million
throughout the state. With the exception of homes in counties that lack a reasonable degree of
competition (currently Miami-Dade and Monroe), policyholders with homes between $700,000 and $1
million will be charged a rate that is actuarially sound and noncompetitive. Policyholders with properties
in Miami-Dade and Monroe counties, and any others in counties that OIR determines lack a reasonable
degree of competition, will continue to be charged a premium within the glidepath.
Eligibility after a Take-out Offer
Florida law requires that Citizens create programs to help return its policyholders to the private property
insurance market and to reduce the risk of additional assessments for all Floridians in the event that
Citizens is unable to meet its obligations.18 In 2016, the Legislature passed requirements that by
January 1, 2017, Citizens amend its operations relating to take-out agreements, whereby private
insurers remove policies from Citizens.19 As part of these requirements, a policy may not be taken out
of Citizens, unless Citizens:
Publishes a periodic schedule of cycles during which an insurer may identify, and notify Citizens
of, policies the insurer requests to take out;20
Maintains and makes available to the agent of record a consolidated list of all insurers
requesting to take out a policy; the list must include a description of the coverage offered and
the estimated premium for each take-out request;
Provides written notice to the policyholder and the agent of record regarding all insurers
requesting to take-out the policy and regarding the policyholder’s option to accept a take-out
offer or to reject all take-out offers and to remain with Citizens. The notice must be in a format
prescribed by Citizens and include, for each take-out offer:
o The amount of the estimated premium;
o A description of coverage; and
o A comparison of the estimated premium and coverage offered by the insurer to the
estimated premium and coverage provided by Citizens. 21
When Citizens’ policyholders receive take-out offers from authorized insurers that include premiums
that are not more than 20 percent greater than Citizens’ renewal premium for comparable coverage,
inclusive of surcharges and assessments being levied on the policy by Citizens, they are no longer
eligible for Citizens’ coverage.22 Citizens’ must notify policyholders that they have received a take-out
offer and that the offer renders their risks ineligible for Citizens’ coverage. 23
Effect of the Bill – Surplus Lines
The bill permits surplus lines insurers to take out commercial residential policies from Citizens .24 The
bill includes various definitions to assist Citizens with these take outs. While surplus lines insurers do
not ordinarily have their rates approved by OIR, the definition of approved rate in the bill requires these
insurers to have rates approved for the purposes of their planned Citizens’ take outs.
The bill also establishes that new and renewal commercial lines residential risks are not eligible for
Citizens’ coverage if the risk is offered coverage by a surplus lines insurer at the insurer’s approved
rate under a policy including wind coverage.
18 S. 627.351(6)(q)3.a., F.S.
19 Ch. 2016-229, Laws of Fla.
20 These requests from insurers must include a description of the coverage offered and an estimated premium for it and must be
submitted to Citizens in a form prescribed by Citizens.
21 S. 627.351(6)(ii), F.S.
22 Id.
23 Id.
24 Surplus lines insurance refers to a category of insurance for which the admitted market is unable or unwilling to provide coverage.
The administration of surplus lines insurance business is managed by the Florida Surplus Lines Service Office. S. 626.921, F.S.
STORAGE NAME: pcs1503.IBS PAGE: 4
DATE: 1/30/2024
Flood Coverage Requirements
Until Special Session 2022A, in December 2022, Citizens could not require a policyholder or applicant
to obtain flood insurance as a condition of coverage from Citizens if a policyholder or applicant signs a
form affirming that Citizens does not provide flood insurance coverage, and that, if the policyholder or
applicant does not obtain flood coverage in addition to a policy from Citizens, the risk is not covered for
flood damage.25 A Citizens policyholder who did not obtain flood coverage and executed such a form,
and who made a claim for water damage against Citizens, had the burden of proving the damage was
not caused by flooding.26
Under s. 627.715, F.S., authorized insurers may issue personal lines residential flood coverage. Such
coverage includes, but is not limited to, standard flood insurance, which is equivalent to that provided
by the National Flood Insurance Program (NFIP), and preferred and customized flood insurance, which
provide additional coverage from that provided by standard flood coverage. 27
In April 2023, Citizens began to require personal lines residential policyholders and applicants purchase
and maintain flood insurance coverage that is at least equivalent to the coverage provided by the
NFIP.28 The policyholder or applicant must execute a form affirming that Citizens does not provide flood
insurance and that if the policyholder or applicant does not obtain flood insurance, his or her risk will not
be eligible for coverage from Citizens.29 Citizens may deny coverage to a personal lines residential
policyholder or applicant who refuses to purchase and maintain flood insurance. 30
The purchase of flood coverage by personal lines residential policyholders and applicants has been
implemented as follows:31
The following Citizens’ policyholders are not required to purchase flood overage as a condition
of maintain their Citizens policies:
o policyholders whose Citizens policies do not provide wind coverage; and
o policyholders whose Citizens policies provide coverage under a condominium unit
owners form.
All policyholders whose Citizens-insured property is located within the special flood hazard area
defined by the Federal Emergency Management Agency must have flood coverage in place:
o At the time of initial policy issuance for all new policies issued by Citizens on or after
April 1, 2023.
o By the time of policy renewal for all personal lines residential policies renewing on or
after July 1, 2023.
All other policyholders must have flood coverage in place for policies effective on or after:
o January 1, 2024, for property valued at $600,000 or more.
o January 1, 2025, for property valued at $500,000 or more.
o January 1, 2026, for property valued at $400,000 or more.
o January 1, 2027, for all other personal lines residential property insured by Citizens.
The law requiring certain Citizens’ policyholders to purchase flood coverage has been interpreted to
require the purchase of both dwelling and contents coverage for flood losses. When policyholders with
existing flood policies have added contents coverage to policies that covered the dwelling only, this has
triggered huge premium increases under the NFIP’s newly-implemented Risk Rating 2.0 pricing
approach.32
Effect of the Bill – Flood Coverage Requirements
25 See ch. 2022-271, Laws of Fla.
26 Id.
27 Current NFIP personal lines flood policies have limits of $250,000 per claim.
28 S. 627.351(6)(aa), F.S.
29 Id.
30 Id.
31 Id.
32 See Federal Emergency Management Agency, NFIP’s Pricing Approach, https://www.fema.gov/flood-insurance/risk-rating (last
visited Jan. 29, 2024).
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DATE: 1/30/2024
The bill requires Citizens’ policyholders who must purchase flood insurance as a condition of eligibility
for Citizens’ coverage to purchase only dwelling coverage for a flood loss rather than dwelling and
contents coverage. This will eliminate or avoid flood insurance rate increases triggered solely by the
purchase of contents coverage under a flood insurance policy in order to maintain eligibility for Citizens’
coverage.
Combining of Accounts
Three Accounts
Until very recently, Citizens had three different accounts through which it offered property insurance: a
personal lines account (PLA), a commercial lines account (CLA), and a Coastal Account. The PLA
offered personal lines residential policies that provide comprehensive, multi-peril coverage statewide,
except for those areas contained in the Coastal Account. The PLA also wrote policies that exclude
coverage for wind in areas contained within the Coastal Account. Personal lines residential coverage
consists of the types of coverage provided to homeowners’, mobile home owners’, dwellings, tenants’,
and condominium unit owners’ policies.33
The CLA offered commercial lines residential and non-residential policies that provide basic perils
coverage statewide, except for those areas contained in the Coastal Account. The CLA also wrote
policies that exclude coverage for wind in areas contained within the Coastal Account. Commercial
lines coverage includes commercial residential policies covering condominium associations,
homeowners’ associations, and apartment buildings. The coverage also includes commercial non-
residential policies covering business properties.34
The Coastal Account offered personal residential, commercial residential, and commercial non-
residential policies in coastal areas of the state. Citizens must offer policies that solely cover the peril of
wind (wind only policies) and may offer multi-peril policies.35
Financial Resources
Citizens’ financial resources include:
Insurance premiums
Investment income and operating surplus from prior years
FHCF reimbursements
Private reinsurance
Policyholder surcharges
Regular assessments
Emergency assessments
Non-weather water losses, reinsurance costs and litigation are currently the major determinants of
insurance rates.36 In the event of a catastrophic storm or series of smaller storms, reserves could be
exhausted, leaving Citizens unable to pay all claims. 37 Under Florida law, if the Citizens’ Board of
Directors determines a Citizens’ account has a projected deficit, Citizens is authorized to levy
assessments 38 on its policyholders and on each line of property and casualty line of business other
33 See s. 627.351(6)(b)2.a., F.S., and Account History and Characteristics, Citizens Property Insurance Corporation,
https://www.citizensfla.com/documents/20702/1183352/20160315+05A+C itizens+Account+History.pdf/31f51358-7105-40e9-aa75-
597f51a99563 (March 2016) (last visited Jan. 28, 2024).
34 Id.
35 Id.
36 Citizens Property Insurance Corporation, 2022 Rate Kit, Citizens 2021 Rates, Frequently Asked Questions,
https://www.citizensfla.com/documents/20702/15725518/20211213+2022+Rate+Kit.pdf/328181e5-1c41-a28d-76ea-
b7d911462c6a?t=1639433573548 (last visited Jan. 28, 2024).
37 Citizens Property Insurance Corporation, Insurance/Insurance 101/Assessments, https://www.citizensfla.com/assessments (last
visited Jan. 28, 2024).
38 Assessments are charges that Citizens and non-Citizens policyholders can be required to pay, in addition to their regular policy
premiums.
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than workers’ compensation insurance and medical malpractice insurance.39 Citizens could impose
three assessment tiers.40
A surcharge of up to 15 percent of premium on all Citizens’ policies, collected upon issuance or
renewal. When Citizens had three separate accounts, this 15 percent assessment could be levied for
each of the three Citizens’ accounts—the CLA, the PLA, and the Coastal Account— that project a
deficit. Thus, the total maximum premium surcharge a policyholder could be assessed is 45 percent.41
If the Citizens’ surcharge was insufficient to cure the deficit for the Coastal Account, Citizens could
require an assessment against all other insurers except medical malpractice and workers’
compensation. The assessment may be recouped from policyholders through a rate filing process of up
to two percent of premium or two percent of the deficit, whichever is greater. 42 This assessment is not
levied against Citizens’ policyholders.
An emergency assessment provision requires any remaining deficit for Citizens’ three accounts be
funded by multi-year emergency assessments on all insurance policyholders, except medical
malpractice and workers’ compensation, but including Citizens’ policyholders. This assessment 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. 43 The assessments may be cumulative.
During Special Session 2022A, the Legislature gave Citizens the authority to combine its three
accounts into a single account upon Citizens eliminating all outstanding financing obligations. 44 A single
account structure allows Citizens to access its entire surplus to pay claims. Previously, surplus in a
particular account could only be used to pay claims in that account.
OIR approved changes to “Citizens’ underwriting guidelines and application statements regarding
possible assessment and surcharge amounts to support the merging of Citizens’ three accounts. . .”
into the Citizens Account.45 The Citizens policyholder surcharge imposed in the event of a deficit has
been revised from 15 percent per account (maximum 45 percent total) to 25 percent for the single
account (an initial assessment of up to 15 percent plus a potential emergency assessment of up to 10
percent).46 Effective January 1, 2024, Citizens combined the three accounts into the Citizens Account. 47
Effect of the Bill – Combining Accounts
The bill eliminates a significant amount of statutory language that is no longer needed because Citizens
has combined its three accounts into one account. These statutory deletions include references to the
PLA, CLA, and Coastal Account. Citizens is now permitted to use its entire surplus to pay claims. The
bill does not make any additional changes regarding assessments beyond those that were enacted
during Special Session 2022A.
Citizens’ Operations and Management
39 Accident and health insurance and policies written under the NFIP or the Federal Crop Insurance Program are not assessable types
of property and casualty insurance. Surplus lines insurers are not assessable, but their policyholders are. S. 627.351.(6)(b)3.f.-h., F.S.
40
Citizens Property Insurance Corporation, Citizens Property Insurance Corporation: General Overview and Recent Issues, p. 14
7,https://myfloridahouse.gov/api/document/house?Leaf=HouseContent/Lists/LegislatorUResources/Attachments/75/Citizens%20Gener
al%20Overview%20and%20Recent%20Issues%20Presentation%2020221206.pdf (last visited Jan. 28, 2024).
41 Sections 627.351.(6)(b)3.i.(I) and 627.351.(6)(c)21., F.S. (2021).
42 S. 627.351(6)(b)3.a., F.S.
43 S. 627.351(6)(b)3.d., F.S.
44 S. 627.351(b)(b)2.b., F.S. The PLA, CLA, and coastal accounts combined to form one account known as the Citizens account.
45 Citizens, Comb ined Assessments and Surcharge Amounts, https://www.citizensfla.com/-/20231103-combined-assessments-and-
surcharge-amounts (last visited Jan. 28, 2024).
46 S. 627.351(6)b.5., F.S. While the text of SB 2-A (2022A) appeared to authorize Citizens to collect new, or additional surcharges, it did
not. Due to drafting requirements it establishes a new surcharge framework within the law to become effective upon the combining o f
the accounts, but does not actually authorize higher surcharges than those presently in law. See also Citizens, supra note 42.
47 Citizens, supra note 42.
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Citizens is overseen by a board and operated by an executive director. Citizens’ board consists of nine
individuals who must be residents of different geographical areas of Florida. 48 The Governor, Chief
Financial Officer, President of the Senate, and Speaker of the House, each appoint two members of the
board.49 The Governor appoints one additional member who serves solely to advocate on behalf of
consumers.50 At least one of the two members appointed by each appointing officer must have
demonstrated experience in insurance.51
Citizens’ executive director, often referred to as its president or chief executive officer, is engaged by
the board and serves “at the pleasure of the board.” 52 The executive director is subject to confirmation
by the Senate.53 He or she is responsible for employing other staff as Citizens requires, subject to
review and agreement by the board.54 However, current law does not specify the experience, character,
or qualifications that an individual must have in order to be qualified to serve as Citizens’ executive
director.
The special investigative units of private insurers typically share information with the National Insurance
Crime Bureau (NICB) to help fight insurance fraud.55 However, current law does not allow Citizens to
share information with NICB.
In addition, current law does not permit Citizens to obtain patents, copyrights, or trademarks, and to
enforce its related rights.
Effect of the Bill – Operations and Management
The bill makes the following changes regarding Citizens’ operations and management:
Allows Citizens’ executive director to appoint a designee to act as its agency head.56
Allows Citizens to share information with NICB to assist in efforts to fight insurance fraud.
Allows Citizens to obtain patents, copyrights, and trademarks, and to enforce related rights
to the same.
B. SECTION DIRECTORY:
Section 1. Amends s. 627.351, F.S., relating to insurance risk apportionment plans.
Section 2. Amends s. 627.3511, F.S., relating to depopulation of Citizens Property Insurance
Corporation.
Section 3. Amends s. 627.3518, F.S., relating to Citizens Property Insurance Corporation policyholder
eligibility clearinghouse program.
Section 4. Provides an effective date of July 1, 2024, except as otherwise provided.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
48 S. 627.351(6)(c)4., F.S.
49 Id.
50 Id.
51 Id.
52 Id.
53 Id.
54 Id.
55 See National Insurance Crime Bureau, Memb er Benefits, https://www.nicb.org/membership/member-benefits (last visited Jan. 28,
2024).
56 Allowing Citizens’ executive director to appoint a designee is consistent with the permission granted to state agency heads t o appoint
designees that is found throughout ch. 287, F.S.
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None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill will likely have an indeterminate positive and negative effect on the private sector. Citizens’
policyholders who are required to purchase flood coverage will likely see a decrease in their flood
insurance premiums as a result of only having to buy dwelling coverage.
It may have a negative effect on commercial residential policyholders who must take an offer from a
surplus lines carrier and end up paying more in premium than they were paying for a Citizens policy.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
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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
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1 A bill to be entitled
2
3 An act relating to Citizens Property Insurance
4 Corporation; amending s. 627.351, F.S.; removing
5 obsolete language; providing that certain accounts for
6 Citizens Property Insurance Corporation revenues,
7 assets, liability, losses, and expenses are now
8 maintained as the Citizens account; revising the
9 requirements for certain coverages by the corporation;
10 raising the dwelling replacement cost of properties
11 eligible for coverage by the corporation under certain
12 circumstances; requiring the inclusion of quota share
13 primary insurance in certain policies; removing
14 provisions relating to legislative goals; conforming
15 provisions to changes made by the act; revising the
16 definition of the term "assessments"; removing
17 provisions relating to surcharges and emergency
18 assessments upon determination of projected deficits;
19 removing provisions relating to funds available to the
20 corporation as sources of revenue and bonds; removing
21 definitions; removing provisions relating to the
22 duties of the Florida Surplus Lines Service Office ;
23 removing provisions relating to disposition of excess
24 amounts of assessments and surcharges; providing
25 definitions; providing nonapplicability of certain
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26 provisions relating to personal lines residential
27 risks coverage by the corporation; requiring insur ers
28 to pay, under certain circumstances, producing agents
29 a certain amount or fee if the agents are unable to
30 accept appointment due to failure to be licensed as
31 surplus lines agents; providing nonapplicability of
32 such payment requirement; revising eligibility for
33 commercial lines residential risks coverage by the
34 corporation; providing that commercial lines
35 residential risks are not eligible for coverage by the
36 corporation under certain circumstances; providing
37 that comparisons of comparable coverages under certain
38 personal lines residential risks and commercial lines
39 residential risks do not apply to policies that do not
40 cover primary residences; revising the corporation's
41 plan of operation; revising the required statements
42 from applicants for coverage; revising the duties of
43 the executive director of the corporation; authorizing
44 the executive director to assign and appoint
45 designees; removing a nonapplicability provision
46 relating to bond requirements; authorizing assessed
47 insureds of certain insurers to be relieved from
48 assessments under certain circumstances; removing
49 provisions relating to certain insurer assessment
50 deferments; removing provisions relating to the
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51 intangibles of and coverage by the Florida Windstorm
52 Underwriting Association and the corporation coastal
53 account; authorizing the corporation and certain
54 persons to make specified information obtained from
55 underwriting files and confidential claims files
56 available to licensed surplus lines agents;
57 prohibiting such agents from using such information
58 for specified purposes; providing nonapplicability of
59 provisions relating to take-out offers that are part
60 of applications to participate in depopulation;
61 authorizing the corporation to share its claims data
62 with a specified entity; amending s. 627.3511, F.S.;
63 conforming provisions to changes made by the act;
64 conforming cross-references; amending s. 627.3518,
65 F.S.; providing nonapplicability of provisions
66 relating to noneligibility for coverage by the
67 corporation; revising the flood coverage requirements
68 for personal lines residential policyholders;
69 providing effective dates.
70
71
72 Be It Enacted by the Legislature of the State of Florida:
73 Section 1. Subsection (7) of section 627.351, Florida
74 Statutes, is renumbered as subsection (8), paragraph (b) of
75 subsection (2) and subsection (6) are amended, and a new
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76 subsection (7) is added to that section, to read:
77 627.351 Insurance risk apportionment plans.—
78 (2) WINDSTORM INSURANCE RISK APPORTIONMENT.—
79 (b) The department shall require all insurers holding a
80 certificate of authority to transact property insurance on a
81 direct basis in this state, other than joint underwriting
82 associations and other entities formed pursuant to this section,
83 to provide windstorm coverage to applicants from areas
84 determined to be eligible pursuant to paragraph (c) who in good
85 faith are entitled to, but are unable to procure, such coverage
86 through ordinary means; or it shall adopt a reasonable plan or
87 plans for the equitable apportionment or sharing among such
88 insurers of windstorm coverage, which may include formation of
89 an association for this purpose. As used in this subsection, the
90 term "property insurance" means insurance on real or personal
91 property, as defined in s. 624.604, including insurance for
92 fire, industrial fire, allied lines, farmowners multiperil,
93 homeowners multiperil, commercial multiperil, and mobile homes,
94 and including liability coverages on all such insurance, but
95 excluding inland marine as defined in s. 624.607(3) and
96 excluding vehicle insurance as defined in s. 624.605(1)(a) other
97 than insurance on mobile homes used as permanent dwellings. The
98 department shall adopt rules that provide a formula for the
99 recovery and repayment of any deferred assessments.
100 1. For the purpose of this section, properties eligible
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101 for such windstorm coverage are defined as dwellings, buildings,
102 and other structures, including mobile homes which are used as
103 dwellings and which are tied down in compliance with mobile home
104 tie-down requirements prescribed by the Department of Highwa y
105 Safety and Motor Vehicles pursuant to s. 320.8325, and the
106 contents of all such properties. An applicant or policyholder is
107 eligible for coverage only if an offer of coverage cannot be
108 obtained by or for the applicant or policyholder from an
109 admitted insurer at approved rates.
110 2.a.(I) All insurers required to be members of such
111 association shall participate in its writings, expenses, and
112 losses. Surplus of the association shall be retained for the
113 payment of claims and shall not be distributed to the me mber
114 insurers. Such participation by member insurers shall be in the
115 proportion that the net direct premiums of each member insurer
116 written for property insurance in this state during the
117 preceding calendar year bear to the aggregate net direct
118 premiums for property insurance of all member insurers, as
119 reduced by any credits for voluntary writings, in this state
120 during the preceding calendar year. For the purposes of this
121 subsection, the term "net direct premiums" means direct written
122 premiums for property insurance, reduced by premium for
123 liability coverage and for the following if included in allied
124 lines: rain and hail on growing crops; livestock; association
125 direct premiums booked; National Flood Insurance Program direct
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126 premiums; and similar deductions specifically authorized by the
127 plan of operation and approved by the department. A member's
128 participation shall begin on the first day of the calendar year
129 following the year in which it is issued a certificate of
130 authority to transact property insurance in the state and shall
131 terminate 1 year after the end of the calendar year during which
132 it no longer holds a certificate of authority to transact
133 property insurance in the state. The commissioner, after review
134 of annual statements, other reports, and any other statistics
135 that the commissioner deems necessary, shall certify to the
136 association the aggregate direct premiums written for property
137 insurance in this state by all member insurers.
138 (II) Effective July 1, 2002, the association shall operate
139 subject to the supervision and approval of a board of governors
140 who are the same individuals that have been appointed by the
141 Treasurer to serve on the board of governors of the Citizens
142 Property Insurance Corporation.
143 (III) The plan of operation shall provide a formula
144 whereby a company voluntarily providing windstorm coverage in
145 affected areas will be relieved wholly or partially from
146 apportionment of a regular assessment pursuant to sub -sub-
147 subparagraph d.(I) or sub-sub-subparagraph d.(II).
148 (IV) A company which is a member of a group of companies
149 under common management may elect to have its credits applied on
150 a group basis, and any company or group may elect to have its
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151 credits applied to any other company or group.
152 (V) There shall be no credits or relief from apportionment
153 to a company for emergency assessments collected from its
154 policyholders under sub-sub-subparagraph d.(III).
155 (VI) The plan of operation may also provide for the award
156 of credits, for a period not to exceed 3 years, from a regular
157 assessment pursuant to sub-sub-subparagraph d.(I) or sub-sub-
158 subparagraph d.(II) as an incentive for taking policies out of
159 the Residential Property and Casualty Joint Underwriting
160 Association. In order to qualify for the exemption under this
161 sub-sub-subparagraph, the take-out plan must provide that at
162 least 40 percent of the policies removed from the Residential
163 Property and Casualty Joint Underwriting Association cover risks
164 located in Miami-Dade, Broward, and Palm Beach Counties or at
165 least 30 percent of the policies so removed cover risks located
166 in Miami-Dade, Broward, and Palm Beach Counties and an
167 additional 50 percent of the policies so removed cover risks
168 located in other coastal counties, and must also provide that no
169 more than 15 percent of the policies so removed may exclude
170 windstorm coverage. With the approval of the department, the
171 association may waive these geographic criteria for a take -out
172 plan that removes at least the lesser of 100,000 Residential
173 Property and Casualty Joint Underwriting Association policies or
174 15 percent of the total number of Residential Property and
175 Casualty Joint Underwriting Association policies, provided the
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176 governing board of the Residential Property and Casualty Joint
177 Underwriting Association certifies that the take-out plan will
178 materially reduce the Residential Property and Casualty Joint
179 Underwriting Association's 100-year probable maximum loss from
180 hurricanes. With the approval of the department, the board may
181 extend such credits for an additional year if the insurer
182 guarantees an additional year of renewability for all policies
183 removed from the Residential Property and Casualty Joint
184 Underwriting Association, or for 2 additional years if the
185 insurer guarantees 2 additional years of renewability for all
186 policies removed from the Residential Property and Casualty
187 Joint Underwriting Association.
188 b. Assessments to pay deficits in the association under
189 this subparagraph shall be included as an appropriate factor in
190 the making of rates as provided in s. 627.3512.
191 c. The Legislature finds that the potential for unlimited
192 deficit assessments under this subparagraph may induce insurers
193 to attempt to reduce their writings in the voluntary market, and
194 that such actions would worsen the availability problems that
195 the association was created to remedy. It is the intent of the
196 Legislature that insurers remain fully responsible for paying
197 regular assessments and collecting emergency assessments for any
198 deficits of the association; however, it is also the intent of
199 the Legislature to provide a means by which assessment
200 liabilities may be amortized over a period of years.
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201 d.(I) When the deficit incurred in a particular calendar
202 year is 10 percent or less of the aggregate statewide direct
203 written premium for property insurance for the prior calendar
204 year for all member insurers, the association shall levy an
205 assessment on member insurers in an amount equal to the deficit.
206 (II) When the deficit incurred in a particular calendar
207 year exceeds 10 percent of the aggregate statewide direc t
208 written premium for property insurance for the prior calendar
209 year for all member insurers, the association shall levy an
210 assessment on member insurers in an amount equal to the greater
211 of 10 percent of the deficit or 10 percent of the aggregate
212 statewide direct written premium for property insurance for the
213 prior calendar year for member insurers. Any remaining deficit
214 shall be recovered through emergency assessments under sub -sub-
215 subparagraph (III).
216 (III) Upon a determination by the board of directors that
217 a deficit exceeds the amount that will be recovered through
218 regular assessments on member insurers, pursuant to sub -sub-
219 subparagraph (I) or sub-sub-subparagraph (II), the board shall
220 levy, after verification by the department, emergency
221 assessments to be collected by member insurers and by
222 underwriting associations created pursuant to this section which
223 write property insurance, upon issuance or renewal of property
224 insurance policies other than National Flood Insurance policies
225 in the year or years following levy of the regular assessments.
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226 The amount of the emergency assessment collected in a particular
227 year shall be a uniform percentage of that year's direct written
228 premium for property insurance for all member insurers and
229 underwriting associations, excluding National Flood Insurance
230 policy premiums, as annually determined by the board and
231 verified by the department. The department shall verify the
232 arithmetic calculations involved in the board's determination
233 within 30 days after receipt of the information on which the
234 determination was based. Notwithstanding any other provision of
235 law, each member insurer and each underwriting association
236 created pursuant to this section shall collect emergency
237 assessments from its policyholders without such obligati on being
238 affected by any credit, limitation, exemption, or deferment. The
239 emergency assessments so collected shall be transferred directly
240 to the association on a periodic basis as determined by the
241 association. The aggregate amount of emergency assessments
242 levied under this sub-sub-subparagraph in any calendar year may
243 not exceed the greater of 10 percent of the amount needed to
244 cover the original deficit, plus interest, fees, commissions,
245 required reserves, and other costs associated with financing of
246 the original deficit, or 10 percent of the aggregate statewide
247 direct written premium for property insurance written by member
248 insurers and underwriting associations for the prior year, plus
249 interest, fees, commissions, required reserves, and other costs
250 associated with financing the original deficit. The board may
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251 pledge the proceeds of the emergency assessments under this sub -
252 sub-subparagraph as the source of revenue for bonds, to retire
253 any other debt incurred as a result of the deficit or events
254 giving rise to the deficit, or in any other way that the board
255 determines will efficiently recover the deficit. The emergency
256 assessments under this sub-sub-subparagraph shall continue as
257 long as any bonds issued or other indebtedness incurred with
258 respect to a deficit for which the assessment was imposed remain
259 outstanding, unless adequate provision has been made for the
260 payment of such bonds or other indebtedness pursuant to the
261 document governing such bonds or other indebtedness. Emergency
262 assessments collected under this sub-sub-subparagraph are not
263 part of an insurer's rates, are not premium, and are not subject
264 to premium tax, fees, or commissions; however, failure to pay
265 the emergency assessment shall be treated as failure to pay
266 premium.
267 (IV) Each member insurer's share of the total regular
268 assessments under sub-sub-subparagraph (I) or sub-sub-
269 subparagraph (II) shall be in the proportion that the insurer's
270 net direct premium for property insurance in this state, for the
271 year preceding the assessment bears to the aggregate statewide
272 net direct premium for property insurance of all member
273 insurers, as reduced by any credits for voluntary writings for
274 that year.
275 (V) If regular deficit assessments are made under sub-sub-
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276 subparagraph (I) or sub-sub-subparagraph (II), or by the
277 Residential Property and Casualty Joint Underwriting Association
278 under sub-subparagraph (6)(b)3.a., the association shall levy
279 upon the association's policyholders, as part of its next rate
280 filing, or by a separate rate filing solely for thi s purpose, a
281 market equalization surcharge in a percentage equal to the total
282 amount of such regular assessments divided by the aggregate
283 statewide direct written premium for property insurance for
284 member insurers for the prior calendar year. Market equali zation
285 surcharges under this sub-sub-subparagraph are not considered
286 premium and are not subject to commissions, fees, or premium
287 taxes; however, failure to pay a market equalization surcharge
288 shall be treated as failure to pay premium.
289 e. The governing body of any unit of local government, any
290 residents of which are insured under the plan, may issue bonds
291 as defined in s. 125.013 or s. 166.101 to fund an assistance
292 program, in conjunction with the association, for the purpose of
293 defraying deficits of the association. In order to avoid
294 needless and indiscriminate proliferation, duplication, and
295 fragmentation of such assistance programs, any unit of local
296 government, any residents of which are insured by the
297 association, may provide for the payment of losses, regardless
298 of whether or not the losses occurred within or outside of the
299 territorial jurisdiction of the local government. Revenue bonds
300 may not be issued until validated pursuant to chapter 75, unless
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301 a state of emergency is declared by executive order or
302 proclamation of the Governor pursuant to s. 252.36 making such
303 findings as are necessary to determine that it is in the best
304 interests of, and necessary for, the protection of the public
305 health, safety, and general welfare of residents of this state
306 and the protection and preservation of the economic stability of
307 insurers operating in this state, and declaring it an essential
308 public purpose to permit certain municipalities or counties to
309 issue bonds as will provide relief to claimants and
310 policyholders of the association and insurers responsible for
311 apportionment of plan losses. Any such unit of local government
312 may enter into such contracts with the association and with any
313 other entity created pursuant to this subsection as are
314 necessary to carry out this paragraph. Any bonds issued under
315 this sub-subparagraph shall be payable from and secured by
316 moneys received by the association from assessments under this
317 subparagraph, and assigned and pledged to or on behalf of the
318 unit of local government for the benefit of the holders of such
319 bonds. The funds, credit, property, and taxing power of the
320 state or of the unit of local government shall not be pledged
321 for the payment of such bonds. If any of the bonds remain unsold
322 60 days after issuance, the department shall require all
323 insurers subject to assessment to purchase the bonds, which
324 shall be treated as admitted assets; each insurer shall be
325 required to purchase that percentage of the unsold portion of
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326 the bond issue that equals the insurer's relative share of
327 assessment liability under this subsection. An insurer shall not
328 be required to purchase the bonds to the extent that the
329 department determines that the purchase would endanger or impair
330 the solvency of the insurer. The authority granted by this sub-
331 subparagraph is additional to any bonding authority granted by
332 subparagraph 6.
333 3. The plan shall also provide that any member with a
334 surplus as to policyholders of $25 million or less writing 25
335 percent or more of its total countrywide property insurance
336 premiums in this state may petition the department, within the
337 first 90 days of each calendar year, to qualify as a limited
338 apportionment company. The apportionment of such a member
339 company in any calendar year for which it is qualified shall not
340 exceed its gross participation, which shall not be affected by
341 the formula for voluntary writings. In no event shall a limited
342 apportionment company be required to participate in any
343 apportionment of losses pursuant to sub-sub-subparagraph 2.d.(I)
344 or sub-sub-subparagraph 2.d.(II) in the aggregate which exceeds
345 $50 million after payment of available plan funds in any
346 calendar year. However, a limited apportionment company shall
347 collect from its policyholders any emergency assessment imposed
348 under sub-sub-subparagraph 2.d.(III). The plan shall provide
349 that, if the department determines that any regular assessment
350 will result in an impairment of the surplus of a limited
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351 apportionment company, the department may direct that all or
352 part of such assessment be deferred. However, there shall be no
353 limitation or deferment of an emergency assessment to be
354 collected from policyholders under sub-sub-subparagraph
355 2.d.(III).
356 4. The plan shall provide for the deferment, in whole or
357 in part, of a regular assessment of a member insure r under sub-
358 sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II), but
359 not for an emergency assessment collected from policyholders
360 under sub-sub-subparagraph 2.d.(III), if, in the opinion of the
361 commissioner, payment of such regular assessment would e ndanger
362 or impair the solvency of the member insurer. In the event a
363 regular assessment against a member insurer is deferred in whole
364 or in part, the amount by which such assessment is deferred may
365 be assessed against the other member insurers in a manner
366 consistent with the basis for assessments set forth in sub -sub-
367 subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II).
368 5.a. The plan of operation may include deductibles and
369 rules for classification of risks and rate modifications
370 consistent with the objective of providing and maintaining funds
371 sufficient to pay catastrophe losses.
372 b. It is the intent of the Legislature that the rates for
373 coverage provided by the association be actuarially sound and
374 not competitive with approved rates charged in the admi tted
375 voluntary market such that the association functions as a
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376 residual market mechanism to provide insurance only when the
377 insurance cannot be procured in the voluntary market. The plan
378 of operation shall provide a mechanism to assure that, beginning
379 no later than January 1, 1999, the rates charged by the
380 association for each line of business are reflective of approved
381 rates in the voluntary market for hurricane coverage for each
382 line of business in the various areas eligible for association
383 coverage.
384 c. The association shall provide for windstorm coverage on
385 residential properties in limits up to $10 million for
386 commercial lines residential risks and up to $1 million for
387 personal lines residential risks. If coverage with the
388 association is sought for a residential risk valued in excess of
389 these limits, coverage shall be available to the risk up to the
390 replacement cost or actual cash value of the property, at the
391 option of the insured, if coverage for the risk cannot be
392 located in the authorized market. The association must accept a
393 commercial lines residential risk with limits above $10 million
394 or a personal lines residential risk with limits above $1
395 million if coverage is not available in the authorized market.
396 The association may write coverage above the limits specified in
397 this subparagraph with or without facultative or other
398 reinsurance coverage, as the association determines appropriate.
399 d. The plan of operation must provide objective criteria
400 and procedures, approved by the department, to be unifo rmly
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401 applied for all applicants in determining whether an individual
402 risk is so hazardous as to be uninsurable. In making this
403 determination and in establishing the criteria and procedures,
404 the following shall be considered:
405 (I) Whether the likelihood of a loss for the individual
406 risk is substantially higher than for other risks of the same
407 class; and
408 (II) Whether the uncertainty associated with the
409 individual risk is such that an appropriate premium cannot be
410 determined.
411
412 The acceptance or rejection of a risk by the association
413 pursuant to such criteria and procedures must be construed as
414 the private placement of insurance, and the provisions of
415 chapter 120 do not apply.
416 e. If the risk accepts an offer of coverage through the
417 market assistance program or through a mechanism established by
418 the association, either before the policy is issued by the
419 association or during the first 30 days of coverage by the
420 association, and the producing agent who submitted the
421 application to the association is not currently appointed by the
422 insurer, the insurer shall:
423 (I) Pay to the producing agent of record of the policy,
424 for the first year, an amount that is the greater of the
425 insurer's usual and customary commission for the type of policy
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426 written or a fee equal to the usual and customary commission of
427 the association; or
428 (II) Offer to allow the producing agent of record of the
429 policy to continue servicing the policy for a period of not less
430 than 1 year and offer to pay the agent the greater of the
431 insurer's or the association's usual and customary commission
432 for the type of policy written.
433
434 If the producing agent is unwilling or unable to accept
435 appointment, the new insurer shall pay the agent in accordance
436 with sub-sub-subparagraph (I). Subject to the provisions of s.
437 627.3517, the policies issued by the association must provide
438 that if the association obtains an offer from an authorized
439 insurer to cover the risk at its approved rates under either a
440 standard policy including wind coverage or, if consistent with
441 the insurer's underwriting rules as filed with the department, a
442 basic policy including wind coverage, the risk is no longer
443 eligible for coverage through the association. Upon termination
444 of eligibility, the association shall provide written notice to
445 the policyholder and agent of record stating that the
446 association policy must be canceled as of 60 days after the date
447 of the notice because of the offer of coverage from an
448 authorized insurer. Other provisions of the insurance code
449 relating to cancellation and notice of cancellation do not apply
450 to actions under this sub-subparagraph.
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451 f. When the association enters into a contractual
452 agreement for a take-out plan, the producing agent of record of
453 the association policy is entitled to retain any unearned
454 commission on the policy, and the insurer shall:
455 (I) Pay to the producing agent of record of the
456 association policy, for the first year, an amount that is the
457 greater of the insurer's usual and customary commission for the
458 type of policy written or a fee equal to the usual and customary
459 commission of the association; or
460 (II) Offer to allow the producing agent of record of the
461 association policy to continue servicing the policy for a period
462 of not less than 1 year and offer to pay the agent the greater
463 of the insurer's or the association's usual and customary
464 commission for the type of policy written.
465
466 If the producing agent is unwilling or unable to accept
467 appointment, the new insurer shall pay the agent in accordance
468 with sub-sub-subparagraph (I).
469 6.a. The plan of operation may authorize the formation of
470 a private nonprofit corporation, a private nonprofit
471 unincorporated association, a partnership, a trust, a limited
472 liability company, or a nonprofit mutual company which may be
473 empowered, among other things, to borrow money by issuing bonds
474 or by incurring other indebtedness and to accumulate reserves or
475 funds to be used for the payment of insured catastrophe losses.
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476 The plan may authorize all actions necessary to facilitate the
477 issuance of bonds, including the pledging of assessments or
478 other revenues.
479 b. Any entity created under this subsection, or any entity
480 formed for the purposes of this subsection, may sue and be sued,
481 may borrow money; issue bonds, notes, or debt instruments;
482 pledge or sell assessments, market equalization surcharges and
483 other surcharges, rights, premiums, contractual rights,
484 projected recoveries from the Florida Hurricane Catastrophe
485 Fund, other reinsurance recoverables, and other assets as
486 security for such bonds, notes, or debt instruments; enter into
487 any contracts or agreements necessary or proper to accomplish
488 such borrowings; and take other actions necessary to carry out
489 the purposes of this subsection. The association may issue bonds
490 or incur other indebtedness, or have bonds issued on its behalf
491 by a unit of local government pursuant to subparagraph (6)(q)2.,
492 in the absence of a hurricane or other weather-related event,
493 upon a determination by the association subject to approval by
494 the department that such action would enable it to efficiently
495 meet the financial obligations of the association and that such
496 financings are reasonably necessary to effectuate the
497 requirements of this subsection. Any such entity may accumulate
498 reserves and retain surpluses as of the end of any associatio n
499 year to provide for the payment of losses incurred by the
500 association during that year or any future year. The association
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501 shall incorporate and continue the plan of operation and
502 articles of agreement in effect on the effective date of chapter
503 76-96, Laws of Florida, to the extent that it is not
504 inconsistent with chapter 76-96, and as subsequently modified
505 consistent with chapter 76-96. The board of directors and
506 officers currently serving shall continue to serve until their
507 successors are duly qualified as provided under the plan. The
508 assets and obligations of the plan in effect immediately prior
509 to the effective date of chapter 76-96 shall be construed to be
510 the assets and obligations of the successor plan created herein.
511 c. In recognition of s. 10, Art. I of the State
512 Constitution, prohibiting the impairment of obligations of
513 contracts, it is the intent of the Legislature that no action be
514 taken whose purpose is to impair any bond indenture or financing
515 agreement or any revenue source committed by contract to such
516 bond or other indebtedness issued or incurred by the association
517 or any other entity created under this subsection.
518 7. On such coverage, an agent's remuneration shall be that
519 amount of money payable to the agent by the terms of his or her
520 contract with the company with which the business is placed.
521 However, no commission will be paid on that portion of the
522 premium which is in excess of the standard premium of that
523 company.
524 8. Subject to approval by the department, the association
525 may establish different eligibility requirements and operational
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526 procedures for any line or type of coverage for any specified
527 eligible area or portion of an eligible area if the board
528 determines that such changes to the eligibility requirements and
529 operational procedures are justified due to the voluntary market
530 being sufficiently stable and competitive in such area or for
531 such line or type of coverage and that consumers who, in good
532 faith, are unable to obtain insurance through the voluntary
533 market through ordinary methods would continue to have access to
534 coverage from the association. When coverage is sought in
535 connection with a real property transfer, such requirements and
536 procedures shall not provide for an effective date of coverage
537 later than the date of the closing of the transfer as
538 established by the transferor, the transferee, and, if
539 applicable, the lender.
540 9. Notwithstanding any other provision of law:
541 a. The pledge or sale of, the lien upon, and the security
542 interest in any rights, revenues, or other assets of the
543 association created or purported to be created pursuant to any
544 financing documents to secure any bonds or other indebtedness of
545 the association shall be and remain valid and enforceable,
546 notwithstanding the commencement of and during the co ntinuation
547 of, and after, any rehabilitation, insolvency, liquidation,
548 bankruptcy, receivership, conservatorship, reorganization, or
549 similar proceeding against the association under the laws of
550 this state or any other applicable laws.
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551 b. No such proceeding shall relieve the association of its
552 obligation, or otherwise affect its ability to perform its
553 obligation, to continue to collect, or levy and collect,
554 assessments, market equalization or other surcharges, projected
555 recoveries from the Florida Hurricane Catastrophe Fund,
556 reinsurance recoverables, or any other rights, revenues, or
557 other assets of the association pledged.
558 c. Each such pledge or sale of, lien upon, and security
559 interest in, including the priority of such pledge, lien, or
560 security interest, any such assessments, emergency assessments,
561 market equalization or renewal surcharges, projected recoveries
562 from the Florida Hurricane Catastrophe Fund, reinsurance
563 recoverables, or other rights, revenues, or other assets which
564 are collected, or levied and collected, after the commencement
565 of and during the pendency of or after any such proceeding shall
566 continue unaffected by such proceeding.
567 d. As used in this subsection, the term "financing
568 documents" means any agreement, instrument, or other document
569 now existing or hereafter created evidencing any bonds or other
570 indebtedness of the association or pursuant to which any such
571 bonds or other indebtedness has been or may be issued and
572 pursuant to which any rights, revenues, or other assets of the
573 association are pledged or sold to secure the repayment of such
574 bonds or indebtedness, together with the payment of interest on
575 such bonds or such indebtedness, or the payment of any other
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576 obligation of the association related to such bonds or
577 indebtedness.
578 e. Any such pledge or sale of assessments, revenues,
579 contract rights or other rights or assets of the association
580 shall constitute a lien and security interest, or sale, as the
581 case may be, that is immediately effective and attaches to such
582 assessments, revenues, contract, or other rights or assets,
583 whether or not imposed or collected at the time the pledge or
584 sale is made. Any such pledge or sale is effective, valid,
585 binding, and enforceable against the association or other entity
586 making such pledge or sale, and valid and binding against and
587 superior to any competing claims or obligations owed to any
588 other person or entity, including policyholders in this state,
589 asserting rights in any such assessments, revenues, contract, or
590 other rights or assets to the extent set forth in and in
591 accordance with the terms of the pledge or sale contained in the
592 applicable financing documents, whether or not any such person
593 or entity has notice of such pledge or sale and without the need
594 for any physical delivery, recordation, filing, or other action.
595 f. There shall be no liability on the part of, and no
596 cause of action of any nature shall arise against, any member
597 insurer or its agents or employees, agents or employees of the
598 association, members of the board of directors of the
599 association, or the department or its representatives, for any
600 action taken by them in the performance of their duties or
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601 responsibilities under this subsection. Such immunity does not
602 apply to actions for breach of any contract or agreement
603 pertaining to insurance, or any willful tort.
604 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
605 (a) The public purpose of this subsection is to ensure
606 that there is an orderly market for property insurance for
607 residents and businesses of this state.
608 1. The Legislature finds that private insurers are
609 unwilling or unable to provide affordable property insurance
610 coverage in this state to the extent sought and needed. The
611 absence of affordable property insurance threatens the public
612 health, safety, and welfare and likewise threatens the economic
613 health of the state. The state therefore has a compelling public
614 interest and a public purpose to assist in assuring that
615 property in the state is insured and that it is insured at
616 affordable rates so as to facilitate the remediation,
617 reconstruction, and replacement of damaged or destroyed property
618 in order to reduce or avoid the negative effects otherwise
619 resulting to the public health, safety, and welfare, to the
620 economy of the state, and to the revenues of the state and local
621 governments which are needed to provide for the public welfare.
622 It is necessary, therefore, to provide affordable property
623 insurance to applicants who are in good faith entitled to
624 procure insurance through the voluntary market but are unable to
625 do so. The Legislature intends, therefore, that affordable
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626 property insurance be provided and that it continue to be
627 provided, as long as necessary, through Citizens Property
628 Insurance Corporation, a government entity that is an integral
629 part of the state, and that is not a private insurance company.
630 To that end, the corporation shall strive to increase the
631 availability of affordable property insurance in this state,
632 while achieving efficiencies and economies, and while providing
633 service to policyholders, applicants, and agents which is no
634 less than the quality generally provided in the voluntary
635 market, for the achievement of the foregoing public purposes.
636 Because it is essential for this government entity to have the
637 maximum financial resources to pay claims following a
638 catastrophic hurricane, it is the intent of the Legislature that
639 the corporation continue to be an integral part of the state and
640 that the income of the corporation be exempt from federal income
641 taxation and that interest on the debt obligations issu ed by the
642 corporation be exempt from federal income taxation.
643 2. The Residential Property and Casualty Joint
644 Underwriting Association originally created by this statute
645 shall be known as the Citizens Property Insurance Corporation.
646 The corporation shall provide insurance for residential and
647 commercial property, for applicants who are entitled, but, in
648 good faith, are unable to procure insurance through the
649 voluntary market. The corporation shall operate pursuant to a
650 plan of operation approved by order of the Financial Services
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651 Commission. The plan is subject to continuous review by the
652 commission. The commission may, by order, withdraw approval of
653 all or part of a plan if the commission determines that
654 conditions have changed since approval was granted an d that the
655 purposes of the plan require changes in the plan. For the
656 purposes of this subsection, residential coverage includes both
657 personal lines residential coverage, which consists of the type
658 of coverage provided by homeowner, mobile home owner, dwelling,
659 tenant, condominium unit owner, and similar policies; and
660 commercial lines residential coverage, which consists of the
661 type of coverage provided by condominium association, apartment
662 building, and similar policies.
663 3. With respect to coverage for personal lines residential
664 structures:
665 a. Effective January 1, 2014, a structure that has a
666 dwelling replacement cost of $1 million or more, or a single
667 condominium unit that has a combined dwelling and contents
668 replacement cost of $1 million or more, is not eligible for
669 coverage by the corporation. Such dwellings insured by the
670 corporation on December 31, 2013, may continue to be covered by
671 the corporation until the end of the policy term. The office
672 shall approve the method used by the corporation for val uing the
673 dwelling replacement cost for the purposes of this subparagraph.
674 If a policyholder is insured by the corporation before being
675 determined to be ineligible pursuant to this subparagraph and
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676 such policyholder files a lawsuit challenging the determination,
677 the policyholder may remain insured by the corporation until the
678 conclusion of the litigation.
679 b. Effective January 1, 2015, a structure that has a
680 dwelling replacement cost of $900,000 or more, or a single
681 condominium unit that has a combined dwelling and contents
682 replacement cost of $900,000 or more, is not eligible for
683 coverage by the corporation. Such dwellings insured by the
684 corporation on December 31, 2014, may continue to be covered by
685 the corporation only until the end of the policy term.
686 c. Effective January 1, 2016, a structure that has a
687 dwelling replacement cost of $800,000 or more, or a single
688 condominium unit that has a combined dwelling and contents
689 replacement cost of $800,000 or more, is not eligible for
690 coverage by the corporation. Such dwellings insured by the
691 corporation on December 31, 2015, may continue to be covered by
692 the corporation until the end of the policy term.
693 d. Except in the counties in which the office determines
694 there is not a reasonable degree of competition, effective
695 January 1, 2025 2017, a structure that has a dwelling
696 replacement cost of $1 million $700,000 or more, or a single
697 condominium unit that has a combined dwelling and contents
698 replacement cost of $1 million $700,000 or more, is not eligible
699 for coverage by the corporation. Such dwellings insured by the
700 corporation on December 31, 2016, may continue to be covered by
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701 the corporation until the end of the policy term.
702 The requirements of sub-subparagraphs b.-d. do not apply in
703 counties where the office determines there is not a reasonable
704 degree of competition. In such counties a personal lines
705 residential structure that has a dwelling replacement cost of
706 less than $1 million, or a single condominium unit that has a
707 combined dwelling and contents replacement cost of less than $1
708 million, is eligible for coverage by the corporation.
709 4. It is the intent of the Legislature that policyholders,
710 applicants, and agents of the corporation receive service and
711 treatment of the highest possible level but never less than that
712 generally provided in the voluntary market. It is also intended
713 that the corporation be held to service standards no less than
714 those applied to insurers in the voluntary market by the office
715 with respect to responsiveness, timeliness, customer courtesy,
716 and overall dealings with policyholders, applicants, or agents
717 of the corporation.
718 5.a. Effective January 1, 2009, a personal lines
719 residential structure that is located in the "wind-borne debris
720 region," as defined in s. 1609.2, International Building Code
721 (2006), and that has an insured value on the structure of
722 $750,000 or more is not eligible for coverage by the corporation
723 unless the structure has opening protections as required under
724 the Florida Building Code for a newly constructed residential
725 structure in that area. A residential structure is deemed to
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726 comply with this sub-subparagraph if it has shutters or opening
727 protections on all openings and if such opening protections
728 complied with the Florida Building Code at the time they were
729 installed.
730 b. Any major structure, as defined in s. 161.54(6)(a),
731 that is newly constructed, or rebuilt, repaired, restored, or
732 remodeled to increase the total square footage of finished area
733 by more than 25 percent, pursuant to a permit applied for after
734 July 1, 2015, is not eligible for coverage by the corporation if
735 the structure is seaward of the coastal construction control
736 line established pursuant to s. 161.053 or is within the Coastal
737 Barrier Resources System as designated by 16 U.S.C. ss. 3501 -
738 3510.
739 6. With respect to wind-only coverage for commercial lines
740 residential condominiums, effective July 1, 2014, a condominium
741 shall be deemed ineligible for coverage if 50 percent or more of
742 the units are rented more than eight times in a calendar year
743 for a rental agreement period of less than 30 days.
744 (b)1. All insurers authorized to write one or more subject
745 lines of business in this state are subject to assessment by the
746 corporation and, for the purposes of this subsection, are
747 referred to collectively as "assessable insurers." Insurers
748 writing one or more subject lines of business in this state
749 pursuant to part VIII of chapter 626 are not assessable
750 insurers; however, insureds who procure one or more subject
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751 lines of business in this state pursuant to part VIII of chapter
752 626 are subject to assessment by the corporation and are
753 referred to collectively as "assessable insureds." An insurer's
754 assessment liability begins on the first day of the calendar
755 year following the year in which the insurer was issu ed a
756 certificate of authority to transact insurance for subject lines
757 of business in this state and terminates 1 year after the end of
758 the first calendar year during which the insurer no longer holds
759 a certificate of authority to transact insurance for sub ject
760 lines of business in this state.
761 2.a. All revenues, assets, liabilities, losses, and
762 expenses of the corporation shall be maintained in the Citizens
763 account. The Citizens account may provide divided into three
764 separate accounts as follows:
765 a.(I) A personal lines account for Personal residential
766 policies that provide issued by the corporation which provides
767 comprehensive, multiperil coverage on risks that are not located
768 in areas eligible for coverage by the Florida Windstorm
769 Underwriting Association as those areas were defined on January
770 1, 2002, and for policies that do not provide coverage for the
771 peril of wind on risks that are located in such areas;
772 b.(II) A commercial lines account for Commercial
773 residential and commercial nonresidential policies that provide
774 issued by the corporation which provides coverage for basic
775 property perils on risks that are not located in areas eligible
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776 for coverage by the Florida Windstorm Underwriting Association
777 as those areas were defined on January 1, 2002, and for policies
778 that do not provide coverage for the peril of wind on risks that
779 are located in such areas; and
780 c.(III) A Coastal account for Personal residential
781 policies and commercial residential and commercial
782 nonresidential property policies that provide issued by the
783 corporation which provides coverage for the peril of wind on
784 risks that are located in areas eligible for coverage by the
785 Florida Windstorm Underwriting Association, as those areas were
786 defined on January 1, 2002. The corporation may offer policies
787 that provide multiperil coverage and shall offer policies that
788 provide coverage only for the peril of wind for risks located in
789 areas eligible for coverage by the Florida Windstorm
790 Underwriting Association, as those areas were defined on January
791 1, 2002 in the coastal account. Effective July 1, 2014, The
792 corporation may not offer shall cease offering new commercial
793 residential policies providing multiperil coverage but and shall
794 instead continue to offer commercial residential wind-only
795 policies, and may offer commercial residential policies
796 excluding wind. However, the corporation may, however, continue
797 to renew a commercial residential multiperil policy on a
798 building that was is insured by the corporation on June 30,
799 2014, under a multiperil policy. In issuing multiperil coverage
800 under this sub-subparagraph, the corporation may use its
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801 approved policy forms and rates for risks located in areas not
802 eligible for coverage by the Florida Windstorm Underwriting
803 Association, as those areas were defined on January 1, 2002, and
804 for policies that do not provide coverage for the peril of wind
805 on risks that are located in such areas the personal lines
806 account. An applicant or insured who is eligible to purchase a
807 multiperil policy from the corporation may purchase a multiperil
808 policy from an authorized insurer without prejudice to the
809 applicant's or insured's eligibility to prospectively purchase a
810 policy that provides coverage only for the peril of wind from
811 the corporation. An applicant or insured who is eligible for a
812 corporation policy that provides coverage only for the peril of
813 wind may elect to purchase or retain such policy and also
814 purchase or retain coverage excluding wind from an authorize d
815 insurer without prejudice to the applicant's or insured's
816 eligibility to prospectively purchase a policy that provides
817 multiperil coverage from the corporation. The following
818 policies, which provide coverage only for the peril of wind,
819 must also include quota share primary insurance under
820 subparagraph (c)2.:
821 (I) Personal residential policies and commercial
822 residential and commercial nonresidential property policies that
823 provide coverage for the peril of wind on risks that are located
824 in areas eligible for coverage by the Florida Windstorm
825 Underwriting Association, as those areas were defined on January
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826 1, 2002;
827 (II) Policies that provide multiperil coverage, if offered
828 by the corporation, and policies that provide coverage only for
829 the peril of wind for risks located in areas eligible for
830 coverage by the Florida Windstorm Underwriting Association, as
831 those areas were defined on January 1, 2002;
832 (III) Commercial residential wind-only policies;
833 (IV) Commercial residential policies excluding wind, if
834 offered by the corporation; and
835 (V) Commercial residential multiperil policies on a
836 building that was insured by the corporation on June 30, 2014 It
837 is the goal of the Legislature that there be an overall average
838 savings of 10 percent or more for a policyholder who currently
839 has a wind-only policy with the corporation, and an ex-wind
840 policy with a voluntary insurer or the corporation, and who
841 obtains a multiperil policy from the corporation. It is the
842 intent of the Legislature that the offer of multiperil coverage
843 in the coastal account be made and implemented in a manner that
844 does not adversely affect the tax-exempt status of the
845 corporation or creditworthiness of or security for currently
846 outstanding financing obligations or credit facilities of the
847 coastal account, the personal lines account, or the commer cial
848 lines account. The coastal account must also include quota share
849 primary insurance under subparagraph (c)2.
850
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851 The area eligible for coverage with the corporation under this
852 sub-subparagraph under the coastal account also includes the
853 area within Port Canaveral, which is bordered on the south by
854 the City of Cape Canaveral, bordered on the west by the Banana
855 River, and bordered on the north by Federal Government property.
856 3. With respect to a deficit in the Citizens account:
857 a. Upon a determination by the board of governors that the
858 Citizens account has a projected deficit, the board shall levy a
859 Citizens policyholder surcharge against all policyholders of the
860 corporation.
861 (I) The surcharge shall be levied as a uniform percentage
862 of the premium for the policy of up to 15 percent of such
863 premium, which funds shall be used to offset the deficit.
864 (II) The surcharge is payable upon cancellation or
865 termination of the policy, upon renewal of the policy, or upon
866 issuance of a new policy by the corporation within the first 12
867 months after the date of the levy or the period of time
868 necessary to fully collect the surcharge amount.
869 (III) The surcharge is not considered premium and is not
870 subject to commissions, fees, or premium taxes. However, failure
871 to pay the surcharge shall be treated as failure to pay premium.
872 b. The three separate accounts must be maintained as long
873 as financing obligations entered into by the Florida Windstorm
874 Underwriting Association or Residential Property and Casualty
875 Joint Underwriting Association are outstanding, in accordance
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876 with the terms of the corresponding financing documents. If no
877 such financing obligations remain outstanding or if the
878 financing documents allow for combining of accounts, the
879 corporation may consolidate the three separate accounts into a
880 new account, to be known as the Citizens account, for all
881 revenues, assets, liabilities, losses, and expenses of the
882 corporation. The Citizens account, if established by the
883 corporation, is authorized to provide coverage to the same
884 extent as provided under each of the three separate accounts.
885 The authority to provide coverage under the Citizens account is
886 set forth in subparagraph 4. Consistent with this subparagraph
887 and prudent investment policies that minimize the cost of
888 carrying debt, the board shall exercise its best efforts to
889 retire existing debt or obtain the approval of necessary parties
890 to amend the terms of existing debt, so as to structure the most
891 efficient plan for consolidating the three separate accounts
892 into a single account. Once the accounts are combined into one
893 account, this subparagraph and subparagraph 3. shall be replaced
894 in their entirety by subparagraphs 4. and 5.
895 c. Creditors of the Residential Property and Casualty
896 Joint Underwriting Association and the accounts specified in
897 sub-sub-subparagraphs a.(I) and (II) may have a claim against,
898 and recourse to, those accounts and no claim against, or
899 recourse to, the account referred to in sub-sub-subparagraph
900 a.(III). Creditors of the Florida Windstorm Underwriting
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901 Association have a claim against, and recourse to, the account
902 referred to in sub-sub-subparagraph a.(III) and no claim
903 against, or recourse to, the accounts referred to in sub -sub-
904 subparagraphs a.(I) and (II).
905 d. Revenues, assets, liabilities, losses, and expenses not
906 attributable to particular accounts shall be prorated among the
907 accounts.
908 e. The Legislature finds that the revenues of the
909 corporation are revenues that are necessary to meet the
910 requirements set forth in documents authorizing the issuance of
911 bonds under this subsection.
912 f. The income of the corporation may not inure to the
913 benefit of any private person.
914 3. With respect to a deficit in an account:
915 a. After accounting for the Citizens policyholder
916 surcharge imposed under sub-subparagraph j., if the remaining
917 projected deficit incurred in the coastal account in a
918 particular calendar year:
919 (I) Is not greater than 2 percent of the aggregate
920 statewide direct written premium for the subject lines of
921 business for the prior calendar year, the entire deficit shall
922 be recovered through regular assessments of assessable insurers
923 under paragraph (q) and assessable insureds.
924 (II) Exceeds 2 percent of the aggregate statewide direct
925 written premium for the subject lines of business f or the prior
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926 calendar year, the corporation shall levy regular assessments on
927 assessable insurers under paragraph (q) and on assessable
928 insureds in an amount equal to the greater of 2 percent of the
929 projected deficit or 2 percent of the aggregate statewide direct
930 written premium for the subject lines of business for the prior
931 calendar year. Any remaining projected deficit shall be
932 recovered through emergency assessments under sub-subparagraph
933 e.
934 b. Each assessable insurer's share of the amount being
935 assessed under sub-subparagraph a. must be in the proportion
936 that the assessable insurer's direct written premium for the
937 subject lines of business for the year preceding the assessment
938 bears to the aggregate statewide direct written premium for the
939 subject lines of business for that year. The assessment
940 percentage applicable to each assessable insured is the ratio of
941 the amount being assessed under sub-subparagraph a. to the
942 aggregate statewide direct written premium for the subject lines
943 of business for the prior year. Assessments levied by the
944 corporation on assessable insurers under sub-subparagraph a.
945 must be paid as required by the corporation's plan of operation
946 and paragraph (q). Assessments levied by the corporation on
947 assessable insureds under sub-subparagraph a. shall be collected
948 by the surplus lines agent at the time the surplus lines agent
949 collects the surplus lines tax required by s. 626.932, and paid
950 to the Florida Surplus Lines Service Office at the time the
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951 surplus lines agent pays the surplus lines tax to that office.
952 Upon receipt of regular assessments from surplus lines agents,
953 the Florida Surplus Lines Service Office shall transfer the
954 assessments directly to the corporation as determined by the
955 corporation.
956 c. The corporation may not levy regular assessments under
957 paragraph (q) pursuant to sub-subparagraph a. or sub-
958 subparagraph b. if the three separate accounts in sub -sub-
959 subparagraphs 2.a.(I)-(III) have been consolidated into the
960 Citizens account pursuant to sub-subparagraph 2.b. However, the
961 outstanding balance of any regular assessment levied by the
962 corporation before establishment of the Citizens account remains
963 payable to the corporation.
964 b.d. After accounting for the Citizens policyholder
965 surcharge imposed under sub-subparagraph a. j., the remaining
966 projected deficits in the Citizens personal lines account and in
967 the commercial lines account in a particular calendar year shall
968 be recovered through emergency assessments under sub-
969 subparagraph c. e.
970 c.e. Upon a determination by the board of governors that a
971 projected deficit in the Citizens an account exceeds the amount
972 that is expected to be recovered through surcharges regular
973 assessments under sub-subparagraph a., plus the amount that is
974 expected to be recovered through surcharges under sub-
975 subparagraph j., the board, after verification by the office,
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976 shall levy emergency assessments for as many years as necessary
977 to cover the deficits, to be collected by assessable insurers
978 and the corporation and collected from assessable insureds upon
979 issuance or renewal of policies for subject lines of business,
980 excluding National Flood Insurance Program policies. The amount
981 collected in a particular year must be a uniform percentage of
982 that year's direct written premium for subject lines of business
983 and the Citizens account all accounts of the corporation,
984 excluding National Flood Insurance Program policy premiums, as
985 annually determined by the board and verified by the office. The
986 office shall verify the arithmetic calculations involved in the
987 board's determination within 30 days after receipt of the
988 information on which the determination was based. The office
989 shall notify assessable insurers and the Florida Surplus Lines
990 Service Office of the date on which assessable insurers shall
991 begin to collect and assessable insureds shall begin to pay such
992 assessment. The date must be at least 90 days after the date the
993 corporation levies emergency assessments pursuant to this sub -
994 subparagraph. Notwithstanding any other provision of law, the
995 corporation and each assessable insurer that writes subject
996 lines of business shall collect emergency assessments from its
997 policyholders without such obligation being affected by any
998 credit, limitation, exemption, or deferment. Emergency
999 assessments levied by the corporation on assessable insureds
1000 shall be collected by the surplus lines agent at the time the
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1001 surplus lines agent collects the surplus lines tax required by
1002 s. 626.932 and paid to the Florida Surplus Lines Service Office
1003 at the time the surplus lines agent pays the surplus lines tax
1004 to that office. The emergency assessments collected shall be
1005 transferred directly to the corporation on a periodic basis as
1006 determined by the corporation and held by the corporation solely
1007 in the Citizens applicable account. The aggregate amount of
1008 emergency assessments levied for the Citizens an account in any
1009 calendar year may be less than but may not exceed the greater of
1010 10 percent of the amount needed to cover the deficit, plus
1011 interest, fees, commissions, required reserves, and other costs
1012 associated with financing the original deficit, or 10 percent of
1013 the aggregate statewide direct written premium for subject lines
1014 of business and the Citizens account all accounts of the
1015 corporation for the prior year, plus interest, fees,
1016 commissions, required reserves, and other costs associated with
1017 financing the deficit.
1018 d.f. The corporation may pledge the proceeds of
1019 assessments, projected recoveries from the Florida Hurricane
1020 Catastrophe Fund, other insurance and reinsurance recoverables,
1021 policyholder surcharges and other surcharges, and other funds
1022 available to the corporation as the source of revenue for and to
1023 secure bonds issued under paragraph (q), bonds or other
1024 indebtedness issued under subparagraph (c)3., or lines of credit
1025 or other financing mechanisms issued or created under this
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1026 subsection, or to retire any other debt incurred as a result of
1027 deficits or events giving rise to deficits, or in any other way
1028 that the board determines will efficiently recover such
1029 deficits. The purpose of the lines of credit or other financing
1030 mechanisms is to provide additional resources to assist the
1031 corporation in covering claims and expenses attributable to a
1032 catastrophe. As used in this subsection, the term "assessments"
1033 includes emergency regular assessments under sub-subparagraph c.
1034 a. or subparagraph (q)1. and emergency assessments under sub -
1035 subparagraph e. Emergency assessments collected under sub-
1036 subparagraph c. e. are not part of an insurer's rates, are not
1037 premium, and are not subject to premium tax, fees, or
1038 commissions; however, failure to pay the emergency assessment
1039 shall be treated as failure to pay premium. The emergency
1040 assessments shall continue as long as any bonds issued or other
1041 indebtedness incurred with respect to a deficit for which the
1042 assessment was imposed remain outstanding, unless adequate
1043 provision has been made for the payment of such bonds or other
1044 indebtedness pursuant to the documents governing such bonds or
1045 indebtedness.
1046 e.g. As used in this subsection and for purposes of any
1047 deficit incurred on or after January 25, 2007, the term "subject
1048 lines of business" means insurance written by assessable
1049 insurers or procured by assessable insureds for all property and
1050 casualty lines of business in this state, but not including
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1051 workers' compensation or medical malpractice. As used in this
1052 sub-subparagraph, the term "property and casualty lines of
1053 business" includes all lines of business identified on Form 2,
1054 Exhibit of Premiums and Losses, in the annual statement required
1055 of authorized insurers under s. 624.424 and any rule adopted
1056 under this section, except for those lines identified as
1057 accident and health insurance and except for policies written
1058 under the National Flood Insurance Program or the Federal Crop
1059 Insurance Program. For purposes of this sub-subparagraph, the
1060 term "workers' compensation" includes both workers' compensation
1061 insurance and excess workers' compensation insurance.
1062 f.h. The Florida Surplus Lines Service Office shall
1063 annually determine annually the aggregate statewide written
1064 premium in subject lines of business procured by assessable
1065 insureds and report that information to the corporation in a
1066 form and at a time the corporation specifies to ensure that the
1067 corporation can meet the requirements of this subsection and the
1068 corporation's financing obligations.
1069 g.i. The Florida Surplus Lines Service Office shall verify
1070 the proper application by surplus lines agents of assessment
1071 percentages for regular assessments and emergency assessments
1072 levied under this subparagraph on assessable insureds and assist
1073 the corporation in ensuring the accurate, timely collection and
1074 payment of assessments by surplus lines agents as required by
1075 the corporation.
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1076 j. Upon determination by the board of governors that an
1077 account has a projected deficit, the board shall levy a Citizens
1078 policyholder surcharge against all policyholders of the
1079 corporation.
1080 (I) The surcharge shall be levied as a uniform percentage
1081 of the premium for the policy of up to 15 percent of such
1082 premium, which funds shall be used to offset the deficit.
1083 (II) The surcharge is payable upon cancellation or
1084 termination of the policy, upon renewal of the policy, or upon
1085 issuance of a new policy by the corporation within the first 12
1086 months after the date of the levy or the period of time
1087 necessary to fully collect the surcharge amount.
1088 (III) The corporation may not levy any regular assessments
1089 under paragraph (q) pursuant to sub-subparagraph a. or sub-
1090 subparagraph b. with respect to a particular year's deficit
1091 until the corporation has first levied the full amount of the
1092 surcharge authorized by this sub-subparagraph.
1093 (IV) The surcharge is not considered premium and is not
1094 subject to commissions, fees, or premium taxes. However, fai lure
1095 to pay the surcharge shall be treated as failure to pay premium.
1096 h.k. If the amount of any assessments or surcharges
1097 collected from corporation policyholders, assessable insurers or
1098 their policyholders, or assessable insureds exceeds the amount
1099 of the deficits, such excess amounts shall be remitted to and
1100 retained by the corporation in a reserve to be used by the
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1101 corporation, as determined by the board of governors and
1102 approved by the office, to pay claims or reduce any past,
1103 present, or future plan-year deficits or to reduce outstanding
1104 debt.
1105 4. The Citizens account, if established by the corporation
1106 pursuant to sub-subparagraph 2.b., is authorized to provide:
1107 a. Personal residential policies that provide
1108 comprehensive, multiperil coverage on risks that are not located
1109 in areas eligible for coverage by the Florida Windstorm
1110 Underwriting Association, as those areas were defined on January
1111 1, 2002, and for policies that do not provide coverage for the
1112 peril of wind on risks that are located in such areas;
1113 b. Commercial residential and commercial nonresidential
1114 policies that provide coverage for basic property perils on
1115 risks that are not located in areas eligible for coverage by the
1116 Florida Windstorm Underwriting Association, as those areas were
1117 defined on January 1, 2002, and for policies that do not provide
1118 coverage for the peril of wind on risks that are located in such
1119 areas; and
1120 c. Personal residential policies and commercial
1121 residential and commercial nonresidential property policies that
1122 provide coverage for the peril of wind on risks that are located
1123 in areas eligible for coverage by the Florida Windstorm
1124 Underwriting Association, as those areas were defined on January
1125 1, 2002. The corporation may offer policies that provide
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1126 multiperil coverage and shall offer policies that provide
1127 coverage only for the peril of wind for risks located in areas
1128 eligible for coverage by the Florida Windstorm Underwriting
1129 Association, as those areas were defined on January 1, 2002. The
1130 corporation may not offer new commercial residential policies
1131 providing multiperil coverage, but shall continue to offer
1132 commercial residential wind-only policies, and may offer
1133 commercial residential policies excluding wind. However, the
1134 corporation may continue to renew a commercial residential
1135 multiperil policy on a building that was insured by the
1136 corporation on June 30, 2014, under a multiperil policy. In
1137 issuing multiperil coverage under this sub-subparagraph, the
1138 corporation may use its approved policy forms and rates for
1139 risks located in areas not eligible for coverage by the Florida
1140 Windstorm Underwriting Association as those areas were defined
1141 on January 1, 2002, and for policies that do not provide
1142 coverage for the peril of wind on risks that are located in such
1143 areas. An applicant or insured who is eligible to purchase a
1144 multiperil policy from the corporation may purchase a multiperil
1145 policy from an authorized insurer without prejudice to the
1146 applicant's or insured's eligibility to prospectively purchase a
1147 policy that provides coverage only for the peril of wind from
1148 the corporation. An applicant or insured who is eligible for a
1149 corporation policy that provides coverage only for the peril of
1150 wind may elect to purchase or retain such policy and also
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1151 purchase or retain coverage excluding wind from an authorized
1152 insurer without prejudice to the applicant's or insured's
1153 eligibility to prospectively purchase a policy that provides
1154 multiperil coverage from the corporation. The following
1155 policies, which provide coverage only for the peril of wind,
1156 must also include quota share primary insurance under
1157 subparagraph (c)2.: Personal residential policies and commercial
1158 residential and commercial nonresidential property policies that
1159 provide coverage for the peril of wind on risks that are located
1160 in areas eligible for coverage by the Florida Windstorm
1161 Underwriting Association, as those areas were defined on January
1162 1, 2002; policies that provide multiperil coverage, if offered
1163 by the corporation, and policies that provide coverage only f or
1164 the peril of wind for risks located in areas eligible for
1165 coverage by the Florida Windstorm Underwriting Association, as
1166 those areas were defined on January 1, 2002; commercial
1167 residential wind-only policies; commercial residential policies
1168 excluding wind, if offered by the corporation; and commercial
1169 residential multiperil policies on a building that was insured
1170 by the corporation on June 30, 2014. The area eligible for
1171 coverage with the corporation under this sub-subparagraph
1172 includes the area within Port Canaveral, which is bordered on
1173 the south by the City of Cape Canaveral, bordered on the west by
1174 the Banana River, and bordered on the north by Federal
1175 Government property.
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1176 5. With respect to a deficit in the Citizens account:
1177 a. Upon a determination by the board of governors that the
1178 Citizens account has a projected deficit, the board shall levy a
1179 Citizens policyholder surcharge against all policyholders of the
1180 corporation.
1181 (I) The surcharge shall be levied as a uniform percentage
1182 of the premium for the policy of up to 15 percent of such
1183 premium, which funds shall be used to offset the deficit.
1184 (II) The surcharge is payable upon cancellation or
1185 termination of the policy, upon renewal of the policy, or upon
1186 issuance of a new policy by the corporation within the first 12
1187 months after the date of the levy or the period of time
1188 necessary to fully collect the surcharge amount.
1189 (III) The surcharge is not considered premium and is not
1190 subject to commissions, fees, or premium taxes. However, failure
1191 to pay the surcharge shall be treated as failure to pay premium.
1192 b. After accounting for the Citizens policyholder
1193 surcharge imposed under sub-subparagraph a., the remaining
1194 projected deficit incurred in the Citizens account in a
1195 particular calendar year shall be recovered through emergency
1196 assessments under sub-subparagraph c.
1197 c. Upon a determination by the board of governors that a
1198 projected deficit in the Citizens account exceeds the amount
1199 that is expected to be recovered through surcharges under sub-
1200 subparagraph a., the board, after verification by the office,
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1201 shall levy emergency assessments for as many years as necessary
1202 to cover the deficits, to be collected by assessable insurers
1203 and the corporation and collected from assessable insureds upon
1204 issuance or renewal of policies for subject lines of business,
1205 excluding National Flood Insurance Program policies. The amount
1206 collected in a particular year must be a uniform percentage of
1207 that year's direct written premium for subject lines of business
1208 and the Citizens account, National Flood Insurance Program
1209 policy premiums, as annually determined by the board and
1210 verified by the office. The office shall verify the arithmetic
1211 calculations involved in the board's determination within 30
1212 days after receipt of the information on which the determination
1213 was based. The office shall notify assessable insurers and the
1214 Florida Surplus Lines Service Office of the date on which
1215 assessable insurers shall begin to collect and assessable
1216 insureds shall begin to pay such assessment. The date must be at
1217 least 90 days after the date the corporation levies emergency
1218 assessments pursuant to this sub-subparagraph. Notwithstanding
1219 any other law, the corporation and each assessable insurer that
1220 writes subject lines of business shall collect emergency
1221 assessments from its policyholders without such obligation being
1222 affected by any credit, limitation, exemption, or deferment.
1223 Emergency assessments levied by the corporation on assessable
1224 insureds shall be collected by the surplus lines agent at the
1225 time the surplus lines agent collects the surplus lines tax
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1226 required by s. 626.932 and paid to the Florida Surplus Lines
1227 Service Office at the time the surplus lines agent pays the
1228 surplus lines tax to that office. The emergency assessments
1229 collected shall be transferred directly to the corporation on a
1230 periodic basis as determined by the corporation and held by the
1231 corporation solely in the Citizens account. The aggregate amount
1232 of emergency assessments levied for the Citizens ac count in any
1233 calendar year may be less than, but may not exceed the greater
1234 of, 10 percent of the amount needed to cover the deficit, plus
1235 interest, fees, commissions, required reserves, and other costs
1236 associated with financing the original deficit or 10 percent of
1237 the aggregate statewide direct written premium for subject lines
1238 of business and the Citizens accounts for the prior year, plus
1239 interest, fees, commissions, required reserves, and other costs
1240 associated with financing the deficit.
1241 d. The corporation may pledge the proceeds of assessments,
1242 projected recoveries from the Florida Hurricane Catastrophe
1243 Fund, other insurance and reinsurance recoverables, policyholder
1244 surcharges and other surcharges, and other funds available to
1245 the corporation as the source of revenue for and to secure bonds
1246 issued under paragraph (q), bonds or other indebtedness issued
1247 under subparagraph (c)3., or lines of credit or other financing
1248 mechanisms issued or created under this subsection; or to retire
1249 any other debt incurred as a result of deficits or events giving
1250 rise to deficits, or in any other way that the board determines
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1251 will efficiently recover such deficits. The purpose of the lines
1252 of credit or other financing mechanisms is to provide additional
1253 resources to assist the corporation in covering claims and
1254 expenses attributable to a catastrophe. As used in this
1255 subsection, the term "assessments" includes emergency
1256 assessments under sub-subparagraph c. Emergency assessments
1257 collected under sub-subparagraph c. are not part of an insurer's
1258 rates, are not premium, and are not subject to premium tax,
1259 fees, or commissions; however, failure to pay the emergency
1260 assessment shall be treated as failure to pay premium. The
1261 emergency assessments shall continue as long as any bonds issued
1262 or other indebtedness incurred with respect to a deficit for
1263 which the assessment was imposed remain outstanding, unless
1264 adequate provision has been made for the payment of such bonds
1265 or other indebtedness pursuant to the documents governing such
1266 bonds or indebtedness.
1267 e. As used in this subsection and for purposes of any
1268 deficit incurred on or after January 25, 2007, the term "subject
1269 lines of business" means insurance written by assessable
1270 insurers or procured by assessable insureds for all prop erty and
1271 casualty lines of business in this state, but not including
1272 workers' compensation or medical malpractice. As used in this
1273 sub-subparagraph, the term "property and casualty lines of
1274 business" includes all lines of business identified on Form 2,
1275 Exhibit of Premiums and Losses, in the annual statement required
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1276 of authorized insurers under s. 624.424 and any rule adopted
1277 under this section, except for those lines identified as
1278 accident and health insurance and except for policies written
1279 under the National Flood Insurance Program or the Federal Crop
1280 Insurance Program. For purposes of this sub-subparagraph, the
1281 term "workers' compensation" includes both workers' compensation
1282 insurance and excess workers' compensation insurance.
1283 f. The Florida Surplus Lines Service Office shall annually
1284 determine the aggregate statewide written premium in subject
1285 lines of business procured by assessable insureds and report
1286 that information to the corporation in a form and at a time the
1287 corporation specifies to ensure that the corporation can meet
1288 the requirements of this subsection and the corporation's
1289 financing obligations.
1290 g. The Florida Surplus Lines Service Office shall verify
1291 the proper application by surplus lines agents of assessment
1292 percentages for emergency assessments levied under this
1293 subparagraph on assessable insureds and assist the corporation
1294 in ensuring the accurate, timely collection and payment of
1295 assessments by surplus lines agents as required by the
1296 corporation.
1297 h. If the amount of any assessments or surcharges
1298 collected from corporation policyholders, assessable insurers or
1299 their policyholders, or assessable insureds exceeds the amount
1300 of the deficits, such excess amounts shall be remitted to and
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1301 retained by the corporation in a reserve to be used by the
1302 corporation, as determined by the board of governors and
1303 approved by the office, to pay claims or reduce any past,
1304 present, or future plan-year deficits or to reduce outstanding
1305 debt.
1306 (c) The corporation's plan of operation:
1307 1. Must provide for adoption of residential property and
1308 casualty insurance policy forms and commercial residential and
1309 nonresidential property insurance forms, which must be approved
1310 by the office before use. The corporation shall adopt the
1311 following policy forms:
1312 a. Standard personal lines policy forms that are
1313 comprehensive multiperil policies providing full coverage of a
1314 residential property equivalent to the coverage provided in the
1315 private insurance market under an HO-3, HO-4, or HO-6 policy.
1316 b. Basic personal lines policy forms that are policies
1317 similar to an HO-8 policy or a dwelling fire policy that provide
1318 coverage meeting the requirements of the secondary mortgage
1319 market, but which is more limited than the coverage under a
1320 standard policy.
1321 c. Commercial lines residential and nonresidential policy
1322 forms that are generally similar to the basic perils of full
1323 coverage obtainable for commercial residential structures and
1324 commercial nonresidential structures in the admitted voluntary
1325 market.
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1326 d. Personal lines and commercial lines residential
1327 property insurance forms that cover the peril of wind only. The
1328 forms are applicable only to residential properties located in
1329 areas eligible for coverage by the Florida Windstorm
1330 Underwriting Association, as those areas were defined on January
1331 1, 2002.
1332 e. Commercial lines nonresidential property insurance
1333 forms that cover the peril of wind only. The forms are
1334 applicable only to nonresidential properties located in areas
1335 eligible for coverage by the Florida Windstorm Underwriting
1336 Association, as those areas were defined on January 1, 2002.
1337 f. The corporation may adopt variations of the policy
1338 forms listed in sub-subparagraphs a.-e. which contain more
1339 restrictive coverage.
1340 g. The corporation shall offer a basic personal lines
1341 policy similar to an HO-8 policy with dwelling repair based on
1342 common construction materials and methods.
1343 2. Must provide that the corporation adopt a program in
1344 which the corporation and authorized insurers enter into quota
1345 share primary insurance agreements for hurricane coverage, as
1346 defined in s. 627.4025(2)(a), for eligible risks, and adopt
1347 property insurance forms for eligible risks which cover the
1348 peril of wind only.
1349 a. As used in this subsection, the term:
1350 (I) "Approved rate" means:
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1351 (A) With respect to an authorized insurer that holds a
1352 certificate of authority, such insurer's filed and approved
1353 rate.
1354 (B) With respect to an authorized insurer that is an
1355 eligible surplus lines insurer, the rate approved by the office
1356 as part of such insurer's take-out plan.
1357 (II) "Authorized insurer" means:
1358 (A) An insurer holding a certificate of authority; or
1359 (B) An eligible surplus lines insurer that is rated "A -"
1360 or higher by A.M. Best Company and whose Florida personal lines
1361 residential risk or commercial lines residential risk program is
1362 managed by a Florida resident surplus lines broker.
1363 (IV) "Primary residence" means the dwelling that is the
1364 policyholder's primary home or is a rental property that is the
1365 primary home of the tenant, and which the policyholder or tenant
1366 occupies for more than 9 months of each year.
1367 (V)(I) "Quota share primary insurance" means an
1368 arrangement in which the primary hurricane coverage of an
1369 eligible risk is provided in specified percentages by the
1370 corporation and an authorized insurer. The corporation and
1371 authorized insurer are each solely responsible for a specified
1372 percentage of hurricane coverage of an eligible risk as set
1373 forth in a quota share primary insurance agreement between the
1374 corporation and an authorized insurer and the insurance
1375 contract. The responsibility of the corporation or authorized
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1376 insurer to pay its specified percentage of hurricane losses of
1377 an eligible risk, as set forth in the agreement, may not be
1378 altered by the inability of the other party to pay its specified
1379 percentage of losses. Eligible risks that are provided hurricane
1380 coverage through a quota share primary insurance arrangement
1381 must be provided policy forms that set forth the obligations of
1382 the 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 th eir
1387 specified percentage of coverage of hurricane losses.
1388 (III)(II) "Eligible risks" means personal lines
1389 residential and commercial lines residential risks that meet the
1390 underwriting criteria of the corporation and are located in
1391 areas that were eligible for coverage by the Florida Windstorm
1392 Underwriting 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
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1401 may not exceed 90 percent.
1402 d. Any quota share primary insurance agreement entered
1403 into between an authorized insurer and the corporation must
1404 provide for a uniform specified percentage of coverage of
1405 hurricane losses, by county or territory as set forth by the
1406 corporation board, for all eligible risks of the authorized
1407 insurer covered under the agreement.
1408 e. Any quota share primary insurance agreement entered
1409 into between an authorized insurer and the corporation is
1410 subject to review and approval by the office. However, such
1411 agreement shall be authorized only as to insurance contracts
1412 entered into between an authorized insurer and an insured who is
1413 already insured by the corporation for wind coverage.
1414 f. For all eligible risks covered under quota share
1415 primary insurance agreements, the exposure and coverage levels
1416 for both the corporation and authorized insurers shall be
1417 reported by the corporation to the Florida Hurricane Catastrophe
1418 Fund. For all policies of eligible risks covered under such
1419 agreements, the corporation and the authorized insurer must
1420 maintain complete and accurate records for the purpose of
1421 exposure and loss reimbursement audits as required by fund
1422 rules. The corporation and the authorized insurer shall each
1423 maintain duplicate copies of policy declaration pages and
1424 supporting claims documents.
1425 g. The corporation board shall establish in its plan of
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1426 operation standards for quota share agreements which ensure that
1427 there is no discriminatory application among insurers as to the
1428 terms of the agreements, pricing of the agreements, incentive
1429 provisions if any, and consideration paid for servicing policies
1430 or adjusting claims.
1431 h. The quota share primary insurance agreement between the
1432 corporation and an authorized insurer must set forth the
1433 specific terms under which coverage is provided, including, but
1434 not limited to, the sale and servicing of policies issued under
1435 the agreement by the insurance agent of the authorized insurer
1436 producing the business, the reporting of information concerning
1437 eligible risks, the payment of premium to the corporation, and
1438 arrangements for the adjustment and payment of hurricane claims
1439 incurred on eligible risks by the claims adjuster and personnel
1440 of the authorized insurer. Entering into a quota sharing
1441 insurance agreement between the corporation and an authorized
1442 insurer is voluntary and at the discretion of the authorized
1443 insurer.
1444 3. May provide that the corporation may employ or
1445 otherwise contract with individuals or other entities to provide
1446 administrative or professional services that may be appropriate
1447 to effectuate the plan. The corporation may borrow funds by
1448 issuing bonds or by incurring other indebtedness, and shall have
1449 other powers reasonably necessary to effectuate the requirements
1450 of this subsection, including, without limitation, the power to
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1451 issue bonds and incur other indebtedness in order to refinance
1452 outstanding bonds or other indebtedness. The corporation may
1453 seek judicial validation of its bonds or other indebtedness
1454 under chapter 75. The corporation may issue bonds or incur other
1455 indebtedness, or have bonds issued on its behalf by a unit of
1456 local government pursuant to subparagraph (q)2. in the absence
1457 of a hurricane or other weather-related event, upon a
1458 determination by the corporation, subject to approval by the
1459 office, that such action would enable it to efficiently meet the
1460 financial obligations of the corporation and that such
1461 financings are reasonably necessary to effectuate the
1462 requirements of this subsection. The corporation may take all
1463 actions needed to facilitate tax-free status for such bonds or
1464 indebtedness, including formation of trusts or other affiliated
1465 entities. The corporation may pledge assessments, projected
1466 recoveries from the Florida Hurricane Catastrophe Fund, other
1467 reinsurance recoverables, policyholder surcharges and other
1468 surcharges, and other funds available to the corporation as
1469 security for bonds or other indebtedness. In recognition of s.
1470 10, Art. I of the State Constitution, prohibiting the impairment
1471 of obligations of contracts, it is the intent of the Legislature
1472 that no action be taken whose purpose is to impair any bond
1473 indenture or financing agreement or any revenue source committed
1474 by contract to such bond or other indebtedness.
1475 4. Must require that the corporation operate subject to
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1476 the supervision and approval of a board of governors consisting
1477 of nine individuals who are residents of this state and who are
1478 from different geographical areas of the state, one of who m is
1479 appointed by the Governor and serves solely to advocate on
1480 behalf of the consumer. The appointment of a consumer
1481 representative by the Governor is deemed to be within the scope
1482 of the exemption provided in s. 112.313(7)(b) and is in addition
1483 to the appointments authorized under sub-subparagraph a.
1484 a. The Governor, the Chief Financial Officer, the
1485 President of the Senate, and the Speaker of the House of
1486 Representatives shall each appoint two members of the board. At
1487 least one of the two members appointed by each appointing
1488 officer must have demonstrated expertise in insurance and be
1489 deemed to be within the scope of the exemption provided in s.
1490 112.313(7)(b). The Chief Financial Officer shall designate one
1491 of the appointees as chair. All board members serve at the
1492 pleasure of the appointing officer. All members of the board are
1493 subject to removal at will by the officers who appointed them.
1494 All board members, including the chair, must be appointed to
1495 serve for 3-year terms beginning annually on a date designated
1496 by the plan. However, for the first term beginning on or after
1497 July 1, 2009, each appointing officer shall appoint one member
1498 of the board for a 2-year term and one member for a 3-year term.
1499 A board vacancy shall be filled for the unexpired term by the
1500 appointing officer. The Chief Financial Officer shall appoint a
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1501 technical advisory group to provide information and advice to
1502 the board in connection with the board's duties under this
1503 subsection. The executive director and senior managers of the
1504 corporation shall be engaged by the board and serve at the
1505 pleasure of the board. Any executive director appointed on or
1506 after July 1, 2006, is subject to confirmation by the Senate.
1507 The executive director is responsible for employing other staff
1508 as the corporation may require, subject to review and
1509 concurrence by the board.
1510 b. The board shall create a Market Accountability Advisory
1511 Committee to assist the corporation in developing awareness of
1512 its rates and its customer and agent service levels in
1513 relationship to the voluntary market insurers writing similar
1514 coverage.
1515 (I) The members of the advisory committee consist of the
1516 following 11 persons, one of whom must be elected chair by the
1517 members of the committee: four representatives, one appointed by
1518 the Florida Association of Insurance Agents, one by the Florida
1519 Association of Insurance and Financial Advisors, one by the
1520 Professional Insurance Agents of Florida, and one by the Latin
1521 American Association of Insurance Agencies; three
1522 representatives appointed by the insurers with the three highest
1523 voluntary market share of residential property insurance
1524 business in the state; one representative from the Office of
1525 Insurance Regulation; one consumer appointed by the board who is
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1526 insured by the corporation at the time of appointment to the
1527 committee; one representative appointed by the Florida
1528 Association of Realtors; and one representative appointed by the
1529 Florida Bankers Association. All members shall be appointed to
1530 3-year terms and may serve for consecutive terms.
1531 (II) The committee shall report to the corporation at each
1532 board meeting on insurance market issues which may include rates
1533 and rate competition with the voluntary market; service,
1534 including policy issuance, claims processing, and general
1535 responsiveness to policyholders, applicants, and agents; and
1536 matters relating to depopulation.
1537 5. Must provide a procedure for determining the
1538 eligibility of a risk for coverage, as follows:
1539 a. Subject to s. 627.3517, with respect to personal lines
1540 residential risks, if the risk is offered coverage from an
1541 authorized insurer at the insurer's approved rate under a
1542 standard policy including wind coverage or, if consistent with
1543 the insurer's underwriting rules as filed with the office, a
1544 basic policy including wind coverage, for a new application to
1545 the corporation for coverage, the risk is not eligible for any
1546 policy issued by the corporation unless the premium for coverage
1547 from the authorized insurer is more than 20 percent greater than
1548 the premium for comparable coverage from the corporation.
1549 Whenever an offer of coverage for a personal lines residential
1550 risk is received for a policyholder of the corporation at
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1551 renewal from an authorized insurer, if the offer is equal to or
1552 less than the corporation's renewal premium for comparable
1553 coverage, the risk is not eligible for coverage with the
1554 corporation for policies that renew before April 1, 2023; for
1555 policies that renew on or after that date, the risk is not
1556 eligible for coverage with the corporation unless the premium
1557 for coverage from the authorized insurer is more than 20 percent
1558 greater than the corporation's renewal premium for comparable
1559 coverage. If the risk is not able to obtain such offer, the risk
1560 is eligible for a standard policy including wind coverage or a
1561 basic policy including wind coverage issued by the corporation;
1562 however, if the risk could not be insured under a standard
1563 policy including wind coverage regardless of market conditions,
1564 the risk is eligible for a basic policy including wind coverage
1565 unless rejected under subparagraph 8. The corporation shall
1566 determine the type of policy to be provided on the basis of
1567 objective standards specified in the underwriting manual and
1568 based on generally accepted underwriting practices. A
1569 policyholder removed from the corporation through an assumption
1570 agreement does not remain eligible for coverage from the
1571 corporation after the end of the policy term. However, any
1572 policy removed from the corporation through an assumption
1573 agreement remains on the corporation's policy forms through the
1574 end of the policy term. However, notwithstanding any other
1575 provision of law, this sub-subparagraph does not apply to a
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1576 policy that does not cover a primary residence.
1577 (I) If the risk accepts an offer of coverage through the
1578 market assistance plan or through a mechanism established by the
1579 corporation other than a plan established by s. 627.3518, before
1580 a policy is issued to the risk by the corporation or during the
1581 first 30 days of coverage by the corporation, and the producing
1582 agent who submitted the application to the plan or to the
1583 corporation is not currently appointed by the insurer, the
1584 insurer shall:
1585 (A) Pay to the producing agent of record of the policy for
1586 the first year, an amount that is the greater of the insurer's
1587 usual and customary commission for the type of policy written or
1588 a fee equal to the usual and customary commission of the
1589 corporation; or
1590 (B) Offer to allow the producing agent of record of the
1591 policy to continue servicing the policy for at least 1 year and
1592 offer to pay the agent the greater of the insurer's or the
1593 corporation's usual and customary commission for the type of
1594 policy written.
1595
1596 If the producing agent is unwilling or unable to accept
1597 appointment for any reason, including the failure of such agent
1598 to be licensed as a surplus lines agent, the new insurer shall
1599 pay the agent in accordance with sub-sub-sub-subparagraph (A).
1600 (II) If the corporation enters into a contractual
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1601 agreement for a take-out plan, the producing agent of record of
1602 the corporation policy is entitled to retain any unearned
1603 commission on the policy, and the insurer shall:
1604 (A) Pay to the producing agent of record, for the first
1605 year, an amount that is the greater of the insurer's usual and
1606 customary commission for the type of policy written or a fee
1607 equal to the usual and customary commission of the corporation;
1608 or
1609 (B) Offer to allow the producing agent of record to
1610 continue servicing the policy for at least 1 year and offer to
1611 pay the agent the greater of the insurer's or the cor poration's
1612 usual and customary commission for the type of policy written.
1613
1614 If the producing agent is unwilling or unable to accept
1615 appointment for any reason, including the failure of such agent
1616 to be licensed as a surplus lines agent, the new insurer shall
1617 pay the agent in accordance with sub-sub-sub-subparagraph (A).
1618 This sub-sub-subparagraph does not apply to an authorized
1619 insurer that is an eligible surplus lines insurer.
1620 b. With respect to commercial lines residential risks, for
1621 a new application to the corporation for coverage, if the risk
1622 is offered coverage under a policy including wind coverage from
1623 an admitted authorized insurer at its approved rate, the risk is
1624 not eligible for a policy issued by the corporation unless the
1625 premium for coverage from the admitted authorized insurer is
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1626 more than 20 percent greater than the premium for comparable
1627 coverage from the corporation. Whenever an offer of coverage for
1628 a commercial lines residential risk is received for a
1629 policyholder of the corporation at renewal from an admitted
1630 authorized insurer, the risk is not eligible for coverage with
1631 the corporation unless the premium for coverage from the
1632 admitted authorized insurer is more than 20 percent greater than
1633 the corporation's renewal premium for comparable coverage. If
1634 the risk is not able to obtain any such offer, the risk is
1635 eligible for a policy including wind coverage issued by the
1636 corporation. A policyholder removed from the corporation through
1637 an assumption agreement remains eligible for coverage fr om the
1638 corporation until the end of the policy term. However, any
1639 policy removed from the corporation through an assumption
1640 agreement remains on the corporation's policy forms through the
1641 end of the policy term. With respect to commercial lines
1642 residential risks for a new application to the corporation for
1643 coverage, if the risk is offered coverage from an eligible
1644 surplus lines insurer at the insurer's approved rate under a
1645 policy including wind coverage, the risk is not eligible for a
1646 policy issued by the corporation. If an offer of coverage for a
1647 commercial lines residential risk is received for a policyholder
1648 of the corporation by an eligible surplus lines insurer at
1649 renewal, the risk is not eligible for coverage with the
1650 corporation.
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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 other than a plan established by s. 627.3518, before
1654 a policy is issued to the risk by the corporation or during the
1655 first 30 days of coverage by the corporation, and the producing
1656 agent who submitted the application to the plan or the
1657 corporation is not currently appointed by the insurer, the
1658 insurer shall:
1659 (A) Pay to the producing agent of record of the policy,
1660 for the first year, an amount that is the greater of the
1661 insurer's usual and customary commission for the type of policy
1662 written or a fee equal to the usual and customary commission of
1663 the corporation; or
1664 (B) Offer to allow the producing agent of record of the
1665 policy to continue servicing the policy for at least 1 year and
1666 offer to pay the agent the greater of the insurer's or the
1667 corporation's usual and customary commission for the type of
1668 policy written.
1669
1670 If the producing agent is unwilling or unable to accept
1671 appointment for any reason, including the failure of such agent
1672 to be licensed as a surplus lines agent, the new insurer shall
1673 pay the agent in accordance with sub-sub-sub-subparagraph (A).
1674 This sub-sub-subparagraph does not apply to an authorized
1675 insurer that is an eligible surplus lines insurer.
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1676 (II) If the corporation enters into a contractual
1677 agreement for a take-out plan, the producing agent of record of
1678 the corporation policy is entitled to retain any unearned
1679 commission on the policy, and the insurer shall:
1680 (A) Pay to the producing agent of record, for the first
1681 year, an amount that is the greater of the insurer's usual and
1682 customary commission for the type of policy written or a fee
1683 equal to the usual and customary commission of the corporation;
1684 or
1685 (B) Offer to allow the producing agent of record to
1686 continue servicing the policy for at least 1 year and offer to
1687 pay the agent the greater of the insurer's or the corporation's
1688 usual and customary commission for the type of policy written.
1689
1690 If the producing agent is unwilling or unable to accept
1691 appointment for any reason, including the failure of such agent
1692 to be licensed as a surplus lines agent, the new insurer shall
1693 pay the agent in accordance with sub-sub-sub-subparagraph (A).
1694 This sub-sub-subparagraph does not apply to an authorized
1695 insurer that is an eligible surplus lines insurer.
1696 c. For purposes of determining comparable coverage under
1697 sub-subparagraphs a. and b., the comparison must be based on
1698 those forms and coverages that are reasonably comparable. The
1699 corporation may rely on a determination of comparable coverage
1700 and premium made by the producing agent who submits the
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1701 application to the corporation, made in the agent's capacity as
1702 the corporation's agent. For purposes of comparing the premium
1703 for comparable coverage under sub-subparagraphs a. and b.,
1704 premium includes any surcharge or assessment that is actually
1705 applied to such policy. A comparison may be made solely of the
1706 premium with respect to the main building or structure only on
1707 the following basis: the same Coverage A or other building
1708 limits; the same percentage hurricane deductible that applies on
1709 an annual basis or that applies to each hurricane for commercial
1710 residential property; the same percentage of ordinance and law
1711 coverage, if the same limit is offered by both the corporation
1712 and the authorized insurer; the same mitigation credits, to the
1713 extent the same types of credits are offered both by the
1714 corporation and the authorized insurer; the same method for loss
1715 payment, such as replacement cost or actual cash value, if the
1716 same method is offered both by the corporation and the
1717 authorized insurer in accordance with underwriting rules; and
1718 any other form or coverage that is reasonably comparable as
1719 determined by the board. If an application is submitted to the
1720 corporation for wind-only coverage on a risk that is located in
1721 an area eligible for coverage by the Florida Windstorm
1722 Underwriting Association, as that area was defined on January 1,
1723 2002, the premium for the corporation's wind-only policy plus
1724 the premium for the ex-wind policy that is offered by an
1725 authorized insurer to the applicant must be compared to the
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1726 premium for multiperil coverage offered by an authorized
1727 insurer, subject to the standards for comparison specified in
1728 this subparagraph. If the corporation or the applicant requests
1729 from the authorized insurer a breakdown of the premium of the
1730 offer by types of coverage so that a comparison may be made by
1731 the corporation or its agent and the authorized insurer refuses
1732 or is unable to provide such information, the corporation may
1733 treat the offer as not being an offer of coverage from an
1734 authorized insurer at the insurer's approved rate. However,
1735 notwithstanding any other provision of law, this sub-
1736 subparagraph does not apply to a policy that does not cover a
1737 primary residence.
1738 6. Must include rules for classifications of risks and
1739 rates.
1740 7. Must provide that if premium and investment income:
1741 a. for the Citizens an account, which are attributable to
1742 a particular calendar year are in excess of projected losses and
1743 expenses for the Citizens account attributable to that year,
1744 such excess shall be held in surplus in the Citizens account.
1745 Such surplus must be available to defray deficits in the
1746 Citizens that account as to future years and used for that
1747 purpose before assessing assessable insurers and assessable
1748 insureds as to any calendar year; or
1749 b. For the Citizens account, if established by the
1750 corporation, which are attributable to a particular calendar
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1751 year are in excess of projected losses and expenses for the
1752 Citizens account attributable to that year, such excess shall be
1753 held in surplus in the Citizens account. Such surplus must be
1754 available to defray deficits in the Citizens account as to
1755 future years and used for that purpose before assessing
1756 assessable insurers and assessable insureds as to any calendar
1757 year.
1758 8. Must provide objective criteria and procedures to be
1759 uniformly applied to all applicants in determining whether an
1760 individual risk is so hazardous as to be uninsurable. In making
1761 this determination and in establishing the criteria and
1762 procedures, the following must be considered:
1763 a. Whether the likelihood of a loss for the individual
1764 risk is substantially higher than for other risks of the same
1765 class; and
1766 b. Whether the uncertainty associated with the individual
1767 risk is such that an appropriate premium cannot be determined.
1768
1769 The acceptance or rejection of a risk by the corporation shall
1770 be construed as the private placement of insurance, and the
1771 provisions of chapter 120 do not apply.
1772 9. Must provide that the corporation make its best efforts
1773 to procure catastrophe reinsurance at reasonable rates, to cover
1774 its projected 100-year probable maximum loss as determined by
1775 the board of governors. If catastrophe reinsurance is not
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1776 available at reasonable rates, the corporation need not purchase
1777 it, but the corporation shall include the costs of reinsurance
1778 to cover its projected 100-year probable maximum loss in its
1779 rate calculations even if it does not purchase catastrophe
1780 reinsurance.
1781 10. The policies issued by the corporation must provide
1782 that if the corporation or the market assistance plan obtains an
1783 offer from an authorized insurer to cover the risk at its
1784 approved rates, the risk is no longer eligible for renewal
1785 through the corporation, except as otherwise provided in this
1786 subsection.
1787 11. Corporation policies and applications must include a
1788 notice that the corporation policy could, under this section, be
1789 replaced with a policy issued by an authorized insurer which
1790 does not provide coverage identical to the coverage provided by
1791 the corporation. The notice must also specify that acceptance of
1792 corporation coverage creates a conclusive presumption that the
1793 applicant or policyholder is aware of this potential.
1794 12. May establish, subject to approval by the office,
1795 different eligibility requirements and operational procedures
1796 for any line or type of coverage for any specified county or
1797 area if the board determines that such changes are justified due
1798 to the voluntary market being sufficiently stable and
1799 competitive in such area or for such line or type of coverage
1800 and that consumers who, in good faith, are unable to obtain
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1801 insurance through the voluntary market through ordinary metho ds
1802 continue to have access to coverage from the corporation. If
1803 coverage is sought in connection with a real property transfer,
1804 the requirements and procedures may not provide an effective
1805 date of coverage later than the date of the closing of the
1806 transfer as established by the transferor, the transferee, and,
1807 if applicable, the lender.
1808 13. Must provide that:
1809 a. With respect to the coastal account, any assessable
1810 insurer with a surplus as to policyholders of $25 million or
1811 less writing 25 percent or more of its total countrywide
1812 property insurance premiums in this state may petition the
1813 office, within the first 90 days of each calendar year, to
1814 qualify as a limited apportionment company. A regular assessment
1815 levied by the corporation on a limited apportionment company for
1816 a deficit incurred by the corporation for the coastal account
1817 may be paid to the corporation on a monthly basis as the
1818 assessments are collected by the limited apportionment company
1819 from its insureds, but a limited apportionment company must
1820 begin collecting the regular assessments not later than 90 days
1821 after the regular assessments are levied by the corporation, and
1822 the regular assessments must be paid in full within 15 months
1823 after being levied by the corporation. A limited apportionme nt
1824 company shall collect from its policyholders any emergency
1825 assessment imposed under sub-subparagraph (b)3.e. The plan must
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1826 provide that, if the office determines that any regular
1827 assessment will result in an impairment of the surplus of a
1828 limited apportionment company, the office may direct that all or
1829 part of such assessment be deferred as provided in subparagraph
1830 (q)4. However, an emergency assessment to be collected from
1831 policyholders under sub-subparagraph (b)3.e. may not be limited
1832 or deferred; or
1833 b. With respect to the Citizens account, if established by
1834 the corporation pursuant to sub-subparagraph (b)2.b., any
1835 assessable insurer with a surplus as to policyholders of $25
1836 million or less and writing 25 percent or more of its total
1837 countrywide property insurance premiums in this state may
1838 petition the office, within the first 90 days of each calendar
1839 year, to qualify as a limited apportionment company. A limited
1840 apportionment company shall collect from its policyholders any
1841 emergency assessment imposed under sub-subparagraph (b)5.c. An
1842 emergency assessment to be collected from policyholders under
1843 sub-subparagraph (b)5.c. may not be limited or deferred.
1844 13.14. Must provide that the corporation appoint as its
1845 licensed agents only those agents who throughout such
1846 appointments also hold an appointment as defined in s. 626.015
1847 by at least three insurers an insurer who are is authorized to
1848 write and are is actually writing or renewing personal lines
1849 residential property coverage, commercial residential property
1850 coverage, or commercial nonresidential property coverage within
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1851 the state.
1852 14.15. Must provide a premium payment plan option to its
1853 policyholders which, at a minimum, allows for quarterly and
1854 semiannual payment of premiums. A monthly payment plan m ay, but
1855 is not required to, be offered.
1856 15.16. Must limit coverage on mobile homes or manufactured
1857 homes built before 1994 to actual cash value of the dwelling
1858 rather than replacement costs of the dwelling.
1859 16.17. Must provide coverage for manufactured or mobile
1860 home dwellings. Such coverage must also include the following
1861 attached structures:
1862 a. Screened enclosures that are aluminum framed or
1863 screened enclosures that are not covered by the same or
1864 substantially the same materials as those of the prim ary
1865 dwelling;
1866 b. Carports that are aluminum or carports that are not
1867 covered by the same or substantially the same materials as those
1868 of the primary dwelling; and
1869 c. Patios that have a roof covering that is constructed of
1870 materials that are not the same or substantially the same
1871 materials as those of the primary dwelling.
1872
1873 The corporation shall make available a policy for mobile homes
1874 or manufactured homes for a minimum insured value of at least
1875 $3,000.
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1876 17.18. May provide such limits of coverage as the board
1877 determines, consistent with the requirements of this subsection.
1878 18.19. May require commercial property to meet specified
1879 hurricane mitigation construction features as a condition of
1880 eligibility for coverage.
1881 19.20. Must provide that new or renewal policies issued by
1882 the corporation on or after January 1, 2012, which cover
1883 sinkhole loss do not include coverage for any loss to
1884 appurtenant structures, driveways, sidewalks, decks, or patios
1885 that are directly or indirectly caused by sinkhole activit y. The
1886 corporation shall exclude such coverage using a notice of
1887 coverage change, which may be included with the policy renewal,
1888 and not by issuance of a notice of nonrenewal of the excluded
1889 coverage upon renewal of the current policy.
1890 20.a.21.a. As of January 1, 2012, unless the Citizens
1891 account has been established pursuant to sub-subparagraph
1892 (b)2.b., Must require that the agent obtain from an applicant
1893 for coverage from the corporation the following an
1894 acknowledgment signed by the applicant, which includes, at a
1895 minimum, the following statement:
1896 ACKNOWLEDGMENT OF POTENTIAL SURCHARGE
1897 AND ASSESSMENT LIABILITY:
1898 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
1899 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
1900 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
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1901 MY POLICY COULD BE SUBJECT TO SURCHARGES AND ASSESSMENTS, WHICH
1902 WILL BE DUE AND PAYABLE UPON RENEWAL, CANCELLATION, OR
1903 TERMINATION OF THE POLICY, AND THAT THE SURCHARGES AND
1904 ASSESSMENTS COULD BE AS HIGH AS 25 45 PERCENT OF MY PREMIUM, OR
1905 A DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA LEGISLATURE.
1906 2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
1907 SURCHARGE, WHICH COULD BE AS HIGH AS 15 45 PERCENT OF MY
1908 PREMIUM, BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND
1909 THAT TO BE ELIGIBLE FOR COVERAGE BY CITIZENS, I MUST FIRST TRY
1910 TO OBTAIN PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR
1911 RENEWING COVERAGE WITH CITIZENS. I UNDERSTAND THAT PRIVATE
1912 MARKET INSURANCE RATES ARE REGULATED AND APPROVED BY THE STATE.
1913 3. I UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
1914 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
1915 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
1916 FLORIDA LEGISLATURE.
1917 4. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
1918 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
1919 STATE OF FLORIDA.
1920 b. The corporation must require, if it has established the
1921 Citizens account pursuant to sub-subparagraph (b)2.b., that the
1922 agent obtain from an applicant for coverage from the corporation
1923 the following acknowledgment signed by the applicant, which
1924 includes, at a minimum, the following statement:
1925 ACKNOWLEDGMENT OF POTENTIAL SURCHARGE
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1926 AND ASSESSMENT LIABILITY:
1927 1. AS A POLICYHOLDER OF CITIZENS PROPERTY INSURANCE
1928 CORPORATION, I UNDERSTAND THAT IF THE CORPORATION SUSTAINS A
1929 DEFICIT AS A RESULT OF HURRICANE LOSSES OR FOR ANY OTHER REASON,
1930 MY POLICY COULD BE SUBJECT TO SURCHARGES AND ASSESSMENTS, WHICH
1931 WILL BE DUE AND PAYABLE UPON RENEWAL, CANCELLATION, OR
1932 TERMINATION OF THE POLICY, AND THAT THE SURCHARGES AND
1933 ASSESSMENTS COULD BE AS HIGH AS 25 PERCENT OF MY PREMIUM, OR A
1934 DIFFERENT AMOUNT AS IMPOSED BY THE FLORIDA LEGISLATURE.
1935 2. I UNDERSTAND THAT I CAN AVOID THE CITIZENS POLICYHOLDER
1936 SURCHARGE, WHICH COULD BE AS HIGH AS 15 PERCENT OF MY PREMIUM,
1937 BY OBTAINING COVERAGE FROM A PRIVATE MARKET INSURER AND THAT TO
1938 BE ELIGIBLE FOR COVERAGE BY CITIZENS, I MUST FIRST TRY TO OBTAIN
1939 PRIVATE MARKET COVERAGE BEFORE APPLYING FOR OR RENEWING COVERAGE
1940 WITH CITIZENS. I UNDERSTAND THAT PRIVATE MARKET INSURANCE RATES
1941 ARE REGULATED AND APPROVED BY THE STATE.
1942 3. I UNDERSTAND THAT I MAY BE SUBJECT TO EMERGENCY
1943 ASSESSMENTS TO THE SAME EXTENT AS POLICYHOLDERS OF OTHER
1944 INSURANCE COMPANIES, OR A DIFFERENT AMOUNT AS IMPOSED BY THE
1945 FLORIDA LEGISLATURE.
1946 4. I ALSO UNDERSTAND THAT CITIZENS PROPERTY INSURANCE
1947 CORPORATION IS NOT SUPPORTED BY THE FULL FAITH AND CREDIT OF THE
1948 STATE OF FLORIDA.
1949 b.c. The corporation shall maintain, in electronic format
1950 or otherwise, a copy of the applicant's signed acknowledgment
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1951 and provide a copy of the statement to the policyholder as part
1952 of the first renewal after the effective date of sub-
1953 subparagraph a. or sub-subparagraph b., as applicable.
1954 c.d. The signed acknowledgment form creates a conclusive
1955 presumption that the policyholder understood and accepted his or
1956 her potential surcharge and assessment liability as a
1957 policyholder of the corporation.
1958 (d)1. All prospective employees for senior management
1959 positions, as defined by the plan of operation, are subject to
1960 background checks as a prerequisite for employment. The office
1961 shall conduct the background checks pursuant to ss. 624.34,
1962 624.404(3), and 628.261.
1963 2. On or before July 1 of each year, employees of the
1964 corporation must sign and submit a statement attesting that they
1965 do not have a conflict of interest, as defined in part III of
1966 chapter 112. As a condition of employment, all prospective
1967 employees must sign and submit to the corporation a conflict -of-
1968 interest statement.
1969 3. The executive director, senior managers, and members of
1970 the board of governors are subject to part III of chapter 112,
1971 including, but not limited to, the code of ethics and public
1972 disclosure and reporting of financial interests, pursuant to s.
1973 112.3145. For purposes of applying part III of chapter 112 to
1974 activities of the executive director, senior managers, and
1975 members of the board of governors, those persons shall be
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1976 considered public officers or employees and the corporation
1977 shall be considered their agency. Notwithstanding s.
1978 112.3143(2), a board member may not vote on any measure that
1979 would inure to his or her special private gain or loss; that he
1980 or she knows would inure to the special private gain or loss of
1981 any principal by whom he or she is retained or to the parent
1982 organization or subsidiary of a corporate principal by which he
1983 or she is retained, other than an agency as defined in s.
1984 112.312; or that he or she knows would inure to the special
1985 private gain or loss of a relative or business associate of the
1986 public officer. Before the vote is taken, such memb er shall
1987 publicly state to the assembly the nature of his or her interest
1988 in the matter from which he or she is abstaining from voting
1989 and, within 15 days after the vote occurs, disclose the nature
1990 of his or her interest as a public record in a memorandum filed
1991 with the person responsible for recording the minutes of the
1992 meeting, who shall incorporate the memorandum in the minutes.
1993 Senior managers and board members are also required to file such
1994 disclosures with the Commission on Ethics and the Office of
1995 Insurance Regulation. The executive director of the corporation
1996 or his or her designee shall notify each existing and newly
1997 appointed member of the board of governors and senior managers
1998 of their duty to comply with the reporting requirements of part
1999 III of chapter 112. At least quarterly, the executive director
2000 or his or her designee shall submit to the Commission on Ethics
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2001 a list of names of the senior managers and members of the board
2002 of governors who are subject to the public disclosure
2003 requirements under s. 112.3145.
2004 4. Notwithstanding s. 112.3148, s. 112.3149, or any other
2005 provision of law, an employee or board member may not knowingly
2006 accept, directly or indirectly, any gift or expenditure from a
2007 person or entity, or an employee or representative of s uch
2008 person or entity, which has a contractual relationship with the
2009 corporation or who is under consideration for a contract. An
2010 employee or board member who fails to comply with subparagraph
2011 3. or this subparagraph is subject to penalties provided under
2012 ss. 112.317 and 112.3173.
2013 5. Any senior manager of the corporation who is employed
2014 on or after January 1, 2007, regardless of the date of hire, who
2015 subsequently retires or terminates employment is prohibited from
2016 representing another person or entity before the corporation for
2017 2 years after retirement or termination of employment from the
2018 corporation.
2019 6. The executive director, members of the board of
2020 governors, and senior managers of the corporation are prohibited
2021 from having any employment or contractual relationship for 2
2022 years after retirement from or termination of service to the
2023 corporation with an insurer that has entered into a take -out
2024 bonus agreement with the corporation.
2025 (e) The corporation is subject to s. 287.057 for the
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2026 purchase of commodities and contractual services except as
2027 otherwise provided in this paragraph. Services provided by
2028 tradepersons or technical experts to assist a licensed adjuster
2029 in the evaluation of individual claims are not subject to the
2030 procurement requirements of this section. Additionally, the
2031 procurement of financial services providers and underwriters
2032 must be made pursuant to s. 627.3513. Contracts for goods or
2033 services valued at or more than $100,000 are subject to approval
2034 by the board.
2035 1. The corporation is an agency for purposes of s.
2036 287.057, except that, for purposes of s. 287.057(24), the
2037 corporation is an eligible user.
2038 a. The authority of the Department of Management Services
2039 and the Chief Financial Officer under s. 287.057 extends to the
2040 corporation as if the corporation were an agency.
2041 b. The executive director of the corporation is the agency
2042 head under s. 287.057, except for resolution of bid protests for
2043 which the board would serve as the agency head. The executive
2044 director may assign or appoint a designee to act on his or her
2045 behalf.
2046 2. The corporation must provide notice of a decision or
2047 intended decision concerning a solicitation, contract award, or
2048 exceptional purchase by electronic posting. Such notice must
2049 contain the following statement: "Failure to file a protest
2050 within the time prescribed in this section constitutes a waiver
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2051 of proceedings."
2052 a. A person adversely affected by the corporation's
2053 decision or intended decision to award a contract pursuant to s.
2054 287.057(1) or (3)(c) who elects to challenge the decision must
2055 file a written notice of protest with the executive director of
2056 the corporation within 72 hours after the corporation posts a
2057 notice of its decision or intended decision. For a protest of
2058 the terms, conditions, and specifications contained in a
2059 solicitation, including provisions governing the methods for
2060 ranking bids, proposals, replies, awarding contracts, reserving
2061 rights of further negotiation, or modifying or amending any
2062 contract, the notice of protest must be filed in writing within
2063 72 hours after posting the solicitation. Saturdays, Sundays, and
2064 state holidays are excluded in the computation of the 72 -hour
2065 time period.
2066 b. A formal written protest must be filed within 10 days
2067 after the date the notice of protest is filed. The formal
2068 written protest must state with particularity the facts and law
2069 upon which the protest is based. Upon receipt of a formal
2070 written protest that has been timely filed, the corporation must
2071 stop the solicitation or contract award process until the
2072 subject of the protest is resolved by final board action unless
2073 the executive director sets forth in writing particular facts
2074 and circumstances that require the continuance of the
2075 solicitation or contract award process without delay in order to
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2076 avoid an immediate and serious danger to the public health,
2077 safety, or welfare.
2078 (I) The corporation must provide an opportunity to resolve
2079 the protest by mutual agreement between the parties within 7
2080 business days after receipt of the formal written protest.
2081 (II) If the subject of a protest is not resolved by mutual
2082 agreement within 7 business days, the corporation's board must
2083 transmit the protest to the Division of Administrative Hearings
2084 and contract with the division to conduct a hearing to determine
2085 the merits of the protest and to issue a recommended order. The
2086 contract must provide for the corporation to reimburse the
2087 division for any costs incurred by the division for court
2088 reporters, transcript preparation, travel, facility rental, and
2089 other customary hearing costs in the manner set forth i n s.
2090 120.65(9). The division has jurisdiction to determine the facts
2091 and law concerning the protest and to issue a recommended order.
2092 The division's rules and procedures apply to these proceedings;
2093 the division's applicable bond requirements do not apply . The
2094 protest must be heard by the division at a publicly noticed
2095 meeting in accordance with procedures established by the
2096 division.
2097 c. In a protest of an invitation-to-bid or request-for-
2098 proposals procurement, submissions made after the bid or
2099 proposal opening which amend or supplement the bid or proposal
2100 may not be considered. In protesting an invitation-to-negotiate
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2101 procurement, submissions made after the corporation announces
2102 its intent to award a contract, reject all replies, or withdraw
2103 the solicitation that amends or supplements the reply may not be
2104 considered. Unless otherwise provided by law, the burden of
2105 proof rests with the party protesting the corporation's action.
2106 In a competitive-procurement protest, other than a rejection of
2107 all bids, proposals, or replies, the administrative law judge
2108 must conduct a de novo proceeding to determine whether the
2109 corporation's proposed action is contrary to the corporation's
2110 governing statutes, the corporation's rules or policies, or the
2111 solicitation specifications. The standard of proof for the
2112 proceeding is whether the corporation's action was clearly
2113 erroneous, contrary to competition, arbitrary, or capricious. In
2114 any bid-protest proceeding contesting an intended corporation
2115 action to reject all bids, proposals, or replies, the standard
2116 of review by the board is whether the corporation's intended
2117 action is illegal, arbitrary, dishonest, or fraudulent.
2118 d. Failure to file a notice of protest or failure to file
2119 a formal written protest constitutes a waiver of proceedings.
2120 3. The board, acting as agency head or his or her
2121 designee, shall consider the recommended order of an
2122 administrative law judge in a public meeting and take final
2123 action on the protest. Any further legal remedy lies with the
2124 First District Court of Appeal.
2125 (f) The corporation is subject to the provisions of
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2126 chapter 255.
2127 (g) The board shall determine whether it is more cost-
2128 effective and in the best interests of the corporation to use
2129 legal services provided by in-house attorneys employed by the
2130 corporation rather than contracting with outside counsel. In
2131 making such determination, the board shall document its findings
2132 and shall consider: the expertise needed; whether time
2133 commitments exceed in-house staff resources; whether local
2134 representation is needed; the travel, lodging and other costs
2135 associated with in-house representation; and such other factors
2136 that the board determines are relevant.
2137 (h) The corporation may not retain a lobbyist to represent
2138 it before the legislative branch or executive branch. However,
2139 full-time employees of the corporation may register as lobbyists
2140 and represent the corporation before the legislative branch or
2141 executive branch.
2142 (i)1. The Office of the Internal Auditor is established
2143 within the corporation to provide a central point for
2144 coordination of and responsibility for activities that promote
2145 accountability, integrity, and efficiency to the policyholders
2146 and to the taxpayers of this state. The internal auditor shall
2147 be appointed by the board of governors, shall report to and be
2148 under the general supervision of the board of governors, and is
2149 not subject to supervision by an employee of the corporation.
2150 Administrative staff and support shall be provided by the
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2151 corporation. The internal auditor shall be appointed without
2152 regard to political affiliation. It is the duty and
2153 responsibility of the internal auditor to:
2154 a. Provide direction for, supervise, conduct, and
2155 coordinate audits, investigations, and management reviews
2156 relating to the programs and operations of the corporation.
2157 b. Conduct, supervise, or coordinate other activities
2158 carried out or financed by the corporation for the purpose of
2159 promoting efficiency in the administration of, or preventing and
2160 detecting fraud, abuse, and mismanagement in, its programs and
2161 operations.
2162 c. Submit final audit reports, reviews, or investigative
2163 reports to the board of governors, the executive director, the
2164 members of the Financial Services Commission, and the President
2165 of the Senate and the Speaker of the House of Representatives.
2166 d. Keep the board of governors informed concerning fraud,
2167 abuses, and internal control deficiencies relating to programs
2168 and operations administered or financed by the corporation,
2169 recommend corrective action, and report on the progress made in
2170 implementing corrective action.
2171 e. Cooperate and coordinate activities with the
2172 corporation's inspector general.
2173 2. On or before February 15, the internal auditor shall
2174 prepare an annual report evaluating the effectiveness of the
2175 internal controls of the corporation and providing
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2176 recommendations for corrective action, if necessary, and
2177 summarizing the audits, reviews, and investigations conducted by
2178 the office during the preceding fiscal year. The final report
2179 shall be furnished to the board of governors and the executive
2180 director, the President of the Senate, the Speaker of the House
2181 of Representatives, and the Financial Services Commission.
2182 (j) All records of the corporation, except as otherwise
2183 provided by law, are subject to the record retention
2184 requirements of s. 119.021.
2185 (k)1. The corporation shall establish and maintain a unit
2186 or division to investigate possible fraudulent claims by
2187 insureds or by persons making claims for services or repairs
2188 against policies held by insureds; or it may contract with
2189 others to investigate possible fraudulent claims for services or
2190 repairs against policies held by the corporation pursuant to s.
2191 626.9891. The corporation must comply with reporting
2192 requirements of s. 626.9891. An employee of the corporatio n
2193 shall notify the corporation's Office of the Inspector General
2194 and the Division of Investigative and Forensic Services within
2195 48 hours after having information that would lead a reasonable
2196 person to suspect that fraud may have been committed by any
2197 employee of the corporation.
2198 2. The corporation shall establish a unit or division
2199 responsible for receiving and responding to consumer complaints,
2200 which unit or division is the sole responsibility of a senior
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2201 manager of the corporation.
2202 (l) The office shall conduct a comprehensive market
2203 conduct examination of the corporation every 2 years to
2204 determine compliance with its plan of operation and internal
2205 operations procedures. The first market conduct examination
2206 report shall be submitted to the President of the Senate and the
2207 Speaker of the House of Representatives no later than February
2208 1, 2009. Subsequent reports shall be submitted on or before
2209 February 1 every 2 years thereafter.
2210 (m) The Auditor General shall conduct an operational audit
2211 of the corporation every 3 years to evaluate management's
2212 performance in administering laws, policies, and procedures
2213 governing the operations of the corporation in an efficient and
2214 effective manner. The scope of the review shall include, but is
2215 not limited to, evaluating claims handling, customer service,
2216 take-out programs and bonuses, financing arrangements,
2217 procurement of goods and services, internal controls, and the
2218 internal audit function. The initial audit must be completed by
2219 February 1, 2009.
2220 (n)1. Rates for coverage provided by the corporation must
2221 be actuarially sound pursuant to s. 627.062 and not competitive
2222 with approved rates charged in the admitted voluntary market so
2223 that the corporation functions as a residual market mechanism to
2224 provide insurance only when insurance cannot be procured in the
2225 voluntary market, except as otherwise provided in this
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2226 paragraph. The office shall provide the corporation such
2227 information as would be necessary to determine whether rates are
2228 competitive. The corporation shall file its recommended rates
2229 with the office at least annually. The corporation shall provide
2230 any additional information regarding the rates which the office
2231 requires. The office shall consider the recommendations of the
2232 board and issue a final order establishing the rates for the
2233 corporation within 45 days after the recommended rates are
2234 filed. The corporation may not pursue an administrative
2235 challenge or judicial review of the final order of the office.
2236 2. In addition to the rates otherwise determined pursuant
2237 to this paragraph, the corporation shall impose and collect an
2238 amount equal to the premium tax provided in s. 624.509 to
2239 augment the financial resources of the corporation.
2240 3. After the public hurricane loss-projection model under
2241 s. 627.06281 has been found to be accurate and reliable by the
2242 Florida Commission on Hurricane Loss Projection Methodology, the
2243 model shall be considered when establishing the windstorm
2244 portion of the corporation's rates. The corporation may use the
2245 public model results in combination with the results of private
2246 models to calculate rates for the windstorm portion of the
2247 corporation's rates. This subparagraph does not require or allow
2248 the corporation to adopt rates lower than the rates otherwise
2249 required or allowed by this paragraph.
2250 4. The corporation must make a recommended actuarially
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2251 sound rate filing for each personal and commercial line of
2252 business it writes.
2253 5. Notwithstanding the board's recommended rates and the
2254 office's final order regarding the corporation's filed rates
2255 under subparagraph 1., the corporation shall annually implement
2256 a rate increase which, except for sinkhole coverage, does not
2257 exceed the following for any single policy issued by the
2258 corporation, excluding coverage changes and surcharges:
2259 a. Twelve percent for 2023.
2260 a.b. Thirteen percent for 2024.
2261 b.c. Fourteen percent for 2025.
2262 c.d. Fifteen percent for 2026 and all subsequent years.
2263
2264 With the exception of counties in which the office determines
2265 there is not a reasonable degree of competition, this
2266 subparagraph does not apply to a personal lines residential
2267 structure that has a dwelling replacement cost of $700,000 or
2268 more or a single condominium unit that has a combined dwelling
2269 and contents replacement cost of $700,000 or more.
2270 6. The corporation may also implement an increase to
2271 reflect the effect on the corporation of the cash buildup factor
2272 pursuant to s. 215.555(5)(b).
2273 7. The corporation's implementation of rates as prescribed
2274 in subparagraphs 5. and 8. shall cease for any line of bus iness
2275 written by the corporation upon the corporation's implementation
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2276 of actuarially sound rates. Thereafter, the corporation shall
2277 annually make a recommended actuarially sound rate filing that
2278 is not competitive with approved rates in the admitted volun tary
2279 market for each commercial and personal line of business the
2280 corporation writes.
2281 8. The following new or renewal personal lines policies
2282 written on or after November 1, 2023, are not subject to the
2283 rate increase limitations in subparagraph 5., but m ay not be
2284 charged more than 50 percent above, and may not be charged nor
2285 less than, the prior year's established rate for the
2286 corporation:
2287 a. Policies that do not cover a primary residence;
2288 b. New policies under which the coverage for the insured
2289 risk, before the date of application with the corporation, was
2290 last provided by an insurer determined by the office to be
2291 unsound or an insurer placed in receivership under chapter 631;
2292 or
2293 c. Subsequent renewals of those policies, including the
2294 new policies in sub-subparagraph b., under which the coverage
2295 for the insured risk, before the date of application with the
2296 corporation, was last provided by an insurer determined by the
2297 office to be unsound or an insurer placed in receivership under
2298 chapter 631.
2299 9. As used in this paragraph, the term "primary residence"
2300 means the dwelling that is the policyholder's primary home or is
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2301 a rental property that is the primary home of the tenant, and
2302 which the policyholder or tenant occupies for more than 9 months
2303 of each year.
2304 (o) If coverage in an account, or the Citizens account if
2305 established by the corporation, is deactivated pursuant to
2306 paragraph (p), coverage through the corporation shall be
2307 reactivated by order of the office only under one of the
2308 following circumstances:
2309 1. If the market assistance plan receives a minimum of 100
2310 applications for coverage within a 3-month period, or 200
2311 applications for coverage within a 1-year period or less for
2312 residential coverage, unless the market assistance plan provides
2313 a quotation from authorized admitted carriers at their approved
2314 filed rates for at least 90 percent of such applicants. Any
2315 market assistance plan application that is rejected because an
2316 individual risk is so hazardous as to be uninsurable using the
2317 criteria specified in subparagraph (c)8. shall not be included
2318 in the minimum percentage calculation provided herein. In the
2319 event that there is a legal or administrative challenge to a
2320 determination by the office that the conditions of this
2321 subparagraph have been met for eligibility for coverage in the
2322 corporation, any eligible risk may obtain coverage during the
2323 pendency of such challenge.
2324 2. In response to a state of emergency declared by the
2325 Governor under s. 252.36, the office may activate coverage by
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2326 order for the period of the emergency upon a finding by the
2327 office that the emergency significantly affects the availability
2328 of residential property insurance.
2329 (p)1. The corporation shall file with the office quarterly
2330 statements of financial condition, an annual statement of
2331 financial condition, and audited financial statements in the
2332 manner prescribed by law. In addition, the corporation shall
2333 report to the office monthly on the types, premium, exposure,
2334 and distribution by county of its policies in force, and shall
2335 submit other reports as the office requires to carry out its
2336 oversight of the corporation.
2337 2. The activities of the corporation shall be reviewed at
2338 least annually by the office to determine whether coverage shall
2339 be deactivated in an account, or in the Citizens account if
2340 established by the corporation, on the basis that the conditions
2341 giving rise to its activation no longer exist.
2342 (q)1. The corporation shall certify to the office its
2343 needs for annual assessments as to a particular calendar year,
2344 and for any interim assessments that it deems to be necessary to
2345 sustain operations as to a particular year pending the receipt
2346 of annual assessments. Upon verification, the office shall
2347 approve such certification, and the corporation shall levy such
2348 annual or interim assessments. Such assessments shall be
2349 prorated, if authority to levy exists, as provided in paragraph
2350 (b). The corporation shall take all reasonable and prudent steps
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2351 necessary to collect the amount of assessments due from each
2352 assessable insurer, including, if prudent, filing suit to
2353 collect the assessments, and the office may provide such
2354 assistance to the corporation it deems appropriate. If the
2355 corporation is unable to collect an assessment from any
2356 assessable insurer, the uncollected assessments shall be levied
2357 as an additional assessment against the assessable insurers and
2358 any assessable insurer required to pay an additional assessment
2359 as a result of such failure to pay shall have a cause of action
2360 against such nonpaying assessable insurer. Assessments shall be
2361 included as an appropriate factor in the making of rates. The
2362 failure of a surplus lines agent to collect and remit any
2363 regular or emergency assessment levied by the corporation is
2364 considered to be a violation of s. 626.936 and subjects the
2365 surplus lines agent to the penalties provided in that section.
2366 2. The governing body of any unit of local government, any
2367 residents of which are insured by the corporation, may issue
2368 bonds as defined in s. 125.013 or s. 166.101 from time to time
2369 to fund an assistance program, in conjunction with the
2370 corporation, for the purpose of defraying deficits of the
2371 corporation. In order to avoid needless and indiscriminate
2372 proliferation, duplication, and fragmentation of such assistance
2373 programs, any unit of local government, any residents of which
2374 are insured by the corporation, may provide for the payment of
2375 losses, regardless of whether or not the losses occurred within
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2376 or outside of the territorial jurisdiction of the local
2377 government. Revenue bonds under this subparagraph may not be
2378 issued until validated pursuant to chapter 75, unless a state of
2379 emergency is declared by executive order or proclamation of the
2380 Governor pursuant to s. 252.36 making such findings as are
2381 necessary to determine that it is in the best interests of, and
2382 necessary for, the protection of the public health, safety, and
2383 general welfare of residents of this state and declaring it an
2384 essential public purpose to permit certain municipalities or
2385 counties to issue such bonds as will permit relief to claimants
2386 and policyholders of the corporation. Any such unit of local
2387 government may enter into such contracts with the corporation
2388 and with any other entity created pursuant to this subsection as
2389 are necessary to carry out this paragraph. Any bonds issued
2390 under this subparagraph shall be payable from and secured by
2391 moneys received by the corporation from emergency assessments
2392 under sub-subparagraph (b)3.c. (b)3.e., and assigned and pledged
2393 to or on behalf of the unit of local government for the benefit
2394 of the holders of such bonds. The funds, credit, property, and
2395 taxing power of the state or of the unit of local government
2396 shall not be pledged for the payment of such bonds.
2397 3.a. The corporation shall adopt one or more programs
2398 subject to approval by the office for the reduction of both new
2399 and renewal writings in the corporation. Beginning January 1,
2400 2008, any program the corporation adopts for the payment of
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2401 bonuses to an insurer for each risk the insurer removes from the
2402 corporation shall comply with s. 627.3511(2) and may not exceed
2403 the amount referenced in s. 627.3511(2) for each risk removed.
2404 The corporation may consider any prudent and not unfairly
2405 discriminatory approach to reducing corporation writings, and
2406 may adopt a credit against assessment liability or other
2407 liability that provides an incentive for insurers to take risks
2408 out of the corporation and to keep risks out of the corporation
2409 by maintaining or increasing voluntary writings in counties or
2410 areas in which corporation risks are highly concentrated and a
2411 program to provide a formula under which an insurer voluntarily
2412 taking risks out of the corporation by maintaining or increasing
2413 voluntary writings will be relieved wholly or partially from
2414 assessments under sub-subparagraph (b)3.a. However, any "take-
2415 out bonus" or payment to an insurer must be conditioned on the
2416 property being insured for at least 5 years by the insurer,
2417 unless canceled or nonrenewed by the policyholder. If the policy
2418 is canceled or nonrenewed by the policyholder before the end of
2419 the 5-year period, the amount of the take-out bonus must be
2420 prorated for the time period the policy was insured. When the
2421 corporation enters into a contractual agreement for a take -out
2422 plan, the producing agent of record of the corporation policy is
2423 entitled to retain any unearned commission on such policy, and
2424 the insurer shall either:
2425 (I) Pay to the producing agent of record of the policy,
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2426 for the first year, an amount which is the greater of the
2427 insurer's usual and customary commission for the type of policy
2428 written or a policy fee equal to the usual and customary
2429 commission of the corporation; or
2430 (II) Offer to allow the producing agent of record of the
2431 policy to continue servicing the policy for a period of not less
2432 than 1 year and offer to pay the agent the insurer's usual and
2433 customary commission for the type of policy written. If the
2434 producing agent is unwilling or unable to accept appointment by
2435 the new insurer for any reason, including to the failure of such
2436 agent to be licensed as surplus lines agent, the new insurer
2437 shall pay the agent in accordance with sub-sub-subparagraph (I).
2438 b. Any credit or exemption from regular assessments
2439 adopted under this subparagraph shall last no longer than the 3
2440 years following the cancellation or expiration of the policy by
2441 the corporation. With the approval of the office, the board may
2442 extend such credits for an additional year if the insurer
2443 guarantees an additional year of renewability for all policies
2444 removed from the corporation, or for 2 additional years if the
2445 insurer guarantees 2 additional years of renewability for all
2446 policies so removed.
2447 c. There shall be no credit, limitation, exemption, or
2448 deferment from emergency assessments to be collected from
2449 policyholders pursuant to sub-subparagraph (b)3.c. (b)3.e. or
2450 sub-subparagraph (b)5.c.
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2451 4. The plan shall provide for the deferment, in whole or
2452 in part, of the assessment of an assessable insurer, other than
2453 an emergency assessment collected from policyholders pursuant to
2454 sub-subparagraph (b)3.e. or sub-subparagraph (b)5.c., if the
2455 office finds that payment of the assessment would endanger or
2456 impair the solvency of the insurer. In the event an assessment
2457 against an assessable insurer is deferred in whole or in part,
2458 the amount by which such assessment is deferred may be assessed
2459 against the other assessable insurers in a manner consistent
2460 with the basis for assessments set forth in paragraph (b).
2461 4.5. Effective July 1, 2007, in order to evaluate the
2462 costs and benefits of approved take-out plans, if the
2463 corporation pays a bonus or other payment to an insurer for an
2464 approved take-out plan, it shall maintain a record of the
2465 address or such other identifying information on the property or
2466 risk removed in order to track if and when the property or risk
2467 is later insured by the corporation.
2468 5.6. Any policy taken out, assumed, or removed from the
2469 corporation is, as of the effective date of the take-out,
2470 assumption, or removal, direct insurance issued by the insurer
2471 and not by the corporation, even if the corporation continues to
2472 service the policies. This subparagraph applies to polic ies of
2473 the corporation and not policies taken out, assumed, or removed
2474 from any other entity.
2475 6.7. For a policy taken out, assumed, or removed from the
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2476 corporation, the insurer may, for a period of no more than 3
2477 years, continue to use any of the corporation's policy forms or
2478 endorsements that apply to the policy taken out, removed, or
2479 assumed without obtaining approval from the office for use of
2480 such policy form or endorsement.
2481 (r) Nothing in this subsection shall be construed to
2482 preclude the issuance of residential property insurance coverage
2483 pursuant to part VIII of chapter 626.
2484 (s)1. There shall be no liability on the part of, and no
2485 cause of action of any nature shall arise against, any
2486 assessable insurer or its agents or employees, the corporatio n
2487 or its agents or employees, members of the board of governors or
2488 their respective designees at a board meeting, corporation
2489 committee members, or the office or its representatives, for any
2490 action taken by them in the performance of their duties or
2491 responsibilities under this subsection. Such immunity does not
2492 apply to:
2493 a. Any of the foregoing persons or entities for any
2494 willful tort;
2495 b. The corporation or its producing agents for breach of
2496 any contract or agreement pertaining to insurance coverage;
2497 c. The corporation with respect to issuance or payment of
2498 debt;
2499 d. Any assessable insurer with respect to any action to
2500 enforce an assessable insurer's obligations to the corporation
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2501 under this subsection; or
2502 e. The corporation in any pending or future action for
2503 breach of contract or for benefits under a policy issued by the
2504 corporation.
2505 2. The corporation shall manage its claim employees,
2506 independent adjusters, and others who handle claims to ensure
2507 they carry out the corporation's duty to its policyholders to
2508 handle claims carefully, timely, diligently, and in good faith,
2509 balanced against the corporation's duty to the state to manage
2510 its assets responsibly to minimize its assessment potential.
2511 (t) For the purposes of s. 199.183(1), the corporation
2512 shall be considered a political subdivision of the state and
2513 shall be exempt from the corporate income tax. The premiums,
2514 assessments, investment income, and other revenue of the
2515 corporation are funds received for providing property insurance
2516 coverage as required by this subsection, paying claims for
2517 Florida citizens insured by the corporation, securing and
2518 repaying debt obligations issued by the corporation, and
2519 conducting all other activities of the corporation, and shall
2520 not be considered taxes, fees, licenses, or charges for services
2521 imposed by the Legislature on individuals, businesses, or
2522 agencies outside state government. Bonds and other debt
2523 obligations issued by or on behalf of the corporation are not to
2524 be considered "state bonds" within the meaning of s. 215.58(8).
2525 The corporation is subject to the procurement provisions of
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2526 chapter 287 as provided in paragraph (e), and policies and
2527 decisions of the corporation relating to incurring debt, levying
2528 of assessments and the sale, issuance, continuation, terms and
2529 claims under corporation policies, and all services relating
2530 thereto, are not subject to the provisions of chapter 120. The
2531 corporation is not required to obtain or to hold a certificate
2532 of authority issued by the office, nor is it required to
2533 participate as a member insurer of the Florida Insurance
2534 Guaranty Association. However, the corporation is required to
2535 pay, in the same manner as an authorized insurer, assessments
2536 levied by the Florida Insurance Guaranty Association. It is the
2537 intent of the Legislature that the tax exemptions provided in
2538 this paragraph will augment the financial resources of the
2539 corporation to better enable the corporation to fulfill its
2540 public purposes. Any debt obligations issued by the corporation,
2541 their transfer, and the income therefrom, including any profit
2542 made on the sale thereof, shall at all times be free from
2543 taxation of every kind by the state and any political
2544 subdivision or local unit or other instrumentality thereof;
2545 however, this exemption does not apply to any tax imposed by
2546 chapter 220 on interest, income, or profits on debt obligations
2547 owned by corporations other than the corporation.
2548 (u) Upon a determination by the office that the conditions
2549 giving rise to the establishment and activation of the
2550 corporation no longer exist, the corporation is dissolved. Upon
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2551 dissolution, the assets of the corporation shall be applied
2552 first to pay all debts, liabilities, and obligations of the
2553 corporation, including the establishment of reasonable reserves
2554 for any contingent liabilities or obligations, and all remaining
2555 assets of the corporation shall become property of the state and
2556 shall be deposited in the Florida Hurricane Catastrophe Fund.
2557 However, no dissolution shall take effect as long as the
2558 corporation has bonds or other financial obligations outstanding
2559 unless adequate provision has been made for the payment of the
2560 bonds or other financial obligations pursuant to the documents
2561 authorizing the issuance of the bonds or other financial
2562 obligations.
2563 (v)1. Effective July 1, 2002, policies of the Residential
2564 Property and Casualty Joint Underwriting Association become
2565 policies of the corporation. All obligations, rights, assets and
2566 liabilities of the association, including bonds, note and debt
2567 obligations, and the financing documents pertaining to them
2568 become those of the corporation as of July 1, 2002. The
2569 corporation is not required to issue endorsements or
2570 certificates of assumption to insureds during the remaining term
2571 of in-force transferred policies.
2572 2. Effective July 1, 2002, policies of the Florida
2573 Windstorm Underwriting Association are transferred to the
2574 corporation and become policies of the corporation. All
2575 obligations, rights, assets, and liabilities of the association,
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2576 including bonds, note and debt obligations, and the financing
2577 documents pertaining to them are transferred to and assumed by
2578 the corporation on July 1, 2002. The corporation is not required
2579 to issue endorsements or certificates of assumption to insureds
2580 during the remaining term of in-force transferred policies.
2581 3. The Florida Windstorm Underwriting Association and the
2582 Residential Property and Casualty Joint Underwriting Association
2583 shall take all actions necessary to further evidence the
2584 transfers and provide the documents and instruments of further
2585 assurance as may reasonably be requested by the corporation for
2586 that purpose. The corporation shall execute assumptions and
2587 instruments as the trustees or other parties to the financing
2588 documents of the Florida Windstorm Underwriting Association o r
2589 the Residential Property and Casualty Joint Underwriting
2590 Association may reasonably request to further evidence the
2591 transfers and assumptions, which transfers and assumptions,
2592 however, are effective on the date provided under this paragraph
2593 whether or not, and regardless of the date on which, the
2594 assumptions or instruments are executed by the corporation.
2595 Subject to the relevant financing documents pertaining to their
2596 outstanding bonds, notes, indebtedness, or other financing
2597 obligations, the moneys, investments, receivables, choses in
2598 action, and other intangibles of the Florida Windstorm
2599 Underwriting Association shall be credited to the coastal
2600 account of the corporation, and those of the personal lines
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2601 residential coverage account and the commercial lin es
2602 residential coverage account of the Residential Property and
2603 Casualty Joint Underwriting Association shall be credited to the
2604 personal lines account and the commercial lines account,
2605 respectively, of the corporation.
2606 4. Effective July 1, 2002, a new applicant for property
2607 insurance coverage who would otherwise have been eligible for
2608 coverage in the Florida Windstorm Underwriting Association is
2609 eligible for coverage from the corporation as provided in this
2610 subsection.
2611 5. The transfer of all policies, obligations, rights,
2612 assets, and liabilities from the Florida Windstorm Underwriting
2613 Association to the corporation and the renaming of the
2614 Residential Property and Casualty Joint Underwriting Association
2615 as the corporation does not affect the coverage with respect to
2616 covered policies as defined in s. 215.555(2)(c) provided to
2617 these entities by the Florida Hurricane Catastrophe Fund. The
2618 coverage provided by the fund to the Florida Windstorm
2619 Underwriting Association based on its exposures as of June 30,
2620 2002, and each June 30 thereafter, unless the corporation has
2621 established the Citizens account, shall be redesignated as
2622 coverage for the coastal account of the corporation.
2623 Notwithstanding any other provision of law, the coverage
2624 provided by the fund to the Residential Property and Casualty
2625 Joint Underwriting Association based on its exposures as of June
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2626 30, 2002, and each June 30 thereafter, unless the corporation
2627 has established the Citizens account, shall be transferred to
2628 the personal lines account and the commercial lines account of
2629 the corporation. Notwithstanding any other provision of law, the
2630 coastal account, unless the corporation has established the
2631 Citizens account, shall be treated, for all Florida Hurricane
2632 Catastrophe Fund purposes, as if it were a separate
2633 participating insurer with its own exposures, reimbursement
2634 premium, and loss reimbursement. Likewise, the personal lines
2635 and commercial lines accounts, unless the corporation has
2636 established the Citizens account, shall be viewed together, for
2637 all fund purposes, as if the two accounts were one and represent
2638 a single, separate participating insurer with its own exposures,
2639 reimbursement premium, and loss reimbursement. The coverage
2640 provided by the fund to the corporation shall constitute and
2641 operate as a full transfer of coverage from the Florida
2642 Windstorm Underwriting Association and Residential Property and
2643 Casualty Joint Underwriting Association to the corporation.
2644 (w) Notwithstanding any other provision of law:
2645 1. The pledge or sale of, the lien upon, and the security
2646 interest in any rights, revenues, or other assets of the
2647 corporation created or purported to be created pursuant to any
2648 financing documents to secure any bonds or other indebtedness of
2649 the corporation shall be and remain valid and enforceable,
2650 notwithstanding the commencement of and during the continuation
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2651 of, and after, any rehabilitation, insolvency, liquidation,
2652 bankruptcy, receivership, conservatorship, reorganization, or
2653 similar proceeding against the corporation under th e laws of
2654 this state.
2655 2. The proceeding does not relieve the corporation of its
2656 obligation, or otherwise affect its ability to perform its
2657 obligation, to continue to collect, or levy and collect,
2658 assessments, policyholder surcharges or other surcharges under
2659 sub-subparagraph (b)3.j., or any other rights, revenues, or
2660 other assets of the corporation pledged pursuant to any
2661 financing documents.
2662 3. Each such pledge or sale of, lien upon, and security
2663 interest in, including the priority of such pledge, lien , or
2664 security interest, any such assessments, policyholder surcharges
2665 or other surcharges, or other rights, revenues, or other assets
2666 which are collected, or levied and collected, after the
2667 commencement of and during the pendency of, or after, any such
2668 proceeding shall continue unaffected by such proceeding. As used
2669 in this subsection, the term "financing documents" means any
2670 agreement or agreements, instrument or instruments, or other
2671 document or documents now existing or hereafter created
2672 evidencing any bonds or other indebtedness of the corporation or
2673 pursuant to which any such bonds or other indebtedness has been
2674 or may be issued and pursuant to which any rights, revenues, or
2675 other assets of the corporation are pledged or sold to secure
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2676 the repayment of such bonds or indebtedness, together with the
2677 payment of interest on such bonds or such indebtedness, or the
2678 payment of any other obligation or financial product, as defined
2679 in the plan of operation of the corporation related to such
2680 bonds or indebtedness.
2681 4. Any such pledge or sale of assessments, revenues,
2682 contract rights, or other rights or assets of the corporation
2683 shall constitute a lien and security interest, or sale, as the
2684 case may be, that is immediately effective and attaches to such
2685 assessments, revenues, or contract rights or other rights or
2686 assets, whether or not imposed or collected at the time the
2687 pledge or sale is made. Any such pledge or sale is effective,
2688 valid, binding, and enforceable against the corporation or other
2689 entity making such pledge or sale, and valid and binding against
2690 and superior to any competing claims or obligations owed to any
2691 other person or entity, including policyholders in this state,
2692 asserting rights in any such assessments, revenues, or contract
2693 rights or other rights or assets to the extent set forth in and
2694 in accordance with the terms of the pledge or sale contained in
2695 the applicable financing documents, whether or not any such
2696 person or entity has notice of such pledge or sale and without
2697 the need for any physical delivery, recordation, filing, or
2698 other action.
2699 5. As long as the corporation has any bonds outstanding,
2700 the corporation may not file a voluntary petition under chapter
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2701 9 of the federal Bankruptcy Code or such corresponding chapter
2702 or sections as may be in effect, from time to time, and a public
2703 officer or any organization, entity, or other person may not
2704 authorize the corporation to be or become a debtor under chapter
2705 9 of the federal Bankruptcy Code or such corresponding chapter
2706 or sections as may be in effect, from time to time, during any
2707 such period.
2708 6. If ordered by a court of competent jurisdiction, the
2709 corporation may assume policies or otherwise provide coverage
2710 for policyholders of an insurer placed in liquidation under
2711 chapter 631, under such forms, rates, terms, and conditions as
2712 the corporation deems appropriate, subject to approval by the
2713 office.
2714 (x)1. The following records of the corporation are
2715 confidential and exempt from the provisions of s. 119.07(1) and
2716 s. 24(a), Art. I of the State Constitution:
2717 a. Underwriting files, except that a policyholder or an
2718 applicant shall have access to his or her own underwriting
2719 files. Confidential and exempt underwriting file records may
2720 also be released to other governmental agencies upon written
2721 request and demonstration of need; such records held by the
2722 receiving agency remain confidential and exempt as provided
2723 herein.
2724 b. Claims files, until termination of all litigation and
2725 settlement of all claims arising out of the same incident,
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2726 although portions of the claims files may remain exempt, as
2727 otherwise provided by law. Confidential and exempt claims file
2728 records may be released to other governmental agencies upon
2729 written request and demonstration of need; such records held by
2730 the receiving agency remain confidential and exempt as provided
2731 herein.
2732 c. Records obtained or generated by an internal auditor
2733 pursuant to a routine audit, until the audit is completed, or if
2734 the audit is conducted as part of an investigation, until the
2735 investigation is closed or ceases to be active. An investigation
2736 is considered "active" while the investigation is being
2737 conducted with a reasonable, good faith belief that it could
2738 lead to the filing of administrative, civil, or criminal
2739 proceedings.
2740 d. Matters reasonably encompassed in privileged attorney-
2741 client communications.
2742 e. Proprietary information licensed to the corporation
2743 under contract and the contract provides for the confidentiality
2744 of such proprietary information.
2745 f. All information relating to the medical condition or
2746 medical status of a corporation employee which is not relevant
2747 to the employee's capacity to perform his or her duties, except
2748 as otherwise provided in this paragraph. Information that is
2749 exempt shall include, but is not limited to, information
2750 relating to workers' compensation, insurance benefits, and
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2751 retirement or disability benefits.
2752 g. Upon an employee's entrance into the employee
2753 assistance program, a program to assist any employee who has a
2754 behavioral or medical disorder, substance abuse problem, or
2755 emotional difficulty that affects the employee's job
2756 performance, all records relative to that participation shall be
2757 confidential and exempt from the provisions of s. 119.07(1) and
2758 s. 24(a), Art. I of the State Constitution, except as otherwise
2759 provided in s. 112.0455(11).
2760 h. Information relating to negotiations for financing,
2761 reinsurance, depopulation, or contractual services, until the
2762 conclusion of the negotiations.
2763 i. Minutes of closed meetings regarding underwriting
2764 files, and minutes of closed meetings regarding an open claims
2765 file until termination of all litigation and settlement of all
2766 claims with regard to that claim, except that information
2767 otherwise confidential or exempt by law shall be redacted.
2768 2. If an authorized insurer is considering underwriting a
2769 risk insured by the corporation, relevant underwriting files and
2770 confidential claims files may be released to the insurer
2771 provided the insurer agrees in writing, notarized and under
2772 oath, to maintain the confidentiality of such files. If a file
2773 is transferred to an insurer, that file is no longer a public
2774 record because it is not held by an agency subject to the
2775 provisions of the public records law. Underwriting files and
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2776 confidential claims files may also be released to sta ff and the
2777 board of governors of the market assistance plan established
2778 pursuant to s. 627.3515, who must retain the confidentiality of
2779 such files, except such files may be released to authorized
2780 insurers that are considering assuming the risks to which th e
2781 files apply, provided the insurer agrees in writing, notarized
2782 and under oath, to maintain the confidentiality of such files.
2783 Finally, the corporation or the board or staff of the market
2784 assistance plan may make the following information obtained from
2785 underwriting files and confidential claims files available to an
2786 entity that has obtained a permit to become an authorized
2787 insurer, a reinsurer that may provide reinsurance under s.
2788 624.610, a licensed reinsurance broker, a licensed rating
2789 organization, a modeling company, a licensed surplus lines
2790 agent, or a licensed general lines insurance agent: name,
2791 address, and telephone number of the residential property owner
2792 or insured; location of the risk; rating information; loss
2793 history; and policy type. The receiving person must retain the
2794 confidentiality of the information received and may use the
2795 information only for the purposes of developing a take-out plan
2796 or a rating plan to be submitted to the office for approval or
2797 otherwise analyzing the underwriting of a risk or risks insured
2798 by the corporation on behalf of the private insurance market. A
2799 licensed surplus lines agent or a licensed general lines
2800 insurance agent may not use such information for the direct
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2801 solicitation of policyholders.
2802 3. A policyholder who has filed suit against the
2803 corporation has the right to discover the contents of his or her
2804 own claims file to the same extent that discovery of such
2805 contents would be available from a private insurer in litigation
2806 as provided by the Florida Rules of Civil Procedure, the Florida
2807 Evidence Code, and other applicable law. Pursuant to subpoena, a
2808 third party has the right to discover the contents of an
2809 insured's or applicant's underwriting or claims file to the same
2810 extent that discovery of such contents would be available from a
2811 private insurer by subpoena as provided by the Florida Rules of
2812 Civil Procedure, the Florida Evidence Code, and other applicable
2813 law, and subject to any confidentiality protections requested by
2814 the corporation and agreed to by the seeking party or ordered by
2815 the court. The corporation may release confidential underwriting
2816 and claims file contents and information as it deems necessary
2817 and appropriate to underwrite or service insurance policies and
2818 claims, subject to any confidentiality protections deemed
2819 necessary and appropriate by the corporation.
2820 4. Portions of meetings of the corporation are exempt from
2821 the provisions of s. 286.011 and s. 24(b), Art. I of the State
2822 Constitution wherein confidential underwriting files or
2823 confidential open claims files are discussed. All portions of
2824 corporation meetings which are closed to the public shall be
2825 recorded by a court reporter. The court reporter shall record
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2826 the times of commencement and termination of the meeting, all
2827 discussion and proceedings, the names of all persons present at
2828 any time, and the names of all persons speaking. No portion of
2829 any closed meeting shall be off the record. Subject to the
2830 provisions hereof and s. 119.07(1)(d)-(f), the court reporter's
2831 notes of any closed meeting shall be retained by the corporation
2832 for a minimum of 5 years. A copy of the transcript, less any
2833 exempt matters, of any closed meeting wherein claims are
2834 discussed shall become public as to individual claims after
2835 settlement of the claim.
2836 (y) It is the intent of the Legislature that the
2837 amendments to this subsection enacted in 2002 should, over time,
2838 reduce the probable maximum windstorm losses in the residual
2839 markets and the potential assessments to be levied on property
2840 insurers and policyholders statewide.
2841 (z) In enacting the provisions of this section, the
2842 Legislature recognizes that both the Florida Windstorm
2843 Underwriting Association and the Residential Property and
2844 Casualty Joint Underwriting Association have entered into
2845 financing arrangements that obligate each entity to service its
2846 debts and maintain the capacity to repay funds secured under
2847 these financing arrangements. It is the intent of the
2848 Legislature that nothing in this section be construed to
2849 compromise, diminish, or interfere with the rights of creditors
2850 under such financing arrangements. It is further the intent of
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2851 the Legislature to preserve the obligations of the Florida
2852 Windstorm Underwriting Association and Residential Property and
2853 Casualty Joint Underwriting Association with regard to
2854 outstanding financing arrangements, with such obligations
2855 passing entirely and unchanged to the corporation and,
2856 specifically, to the Citizens applicable account of the
2857 corporation. So long as any bonds, notes, indebtedness, or other
2858 financing obligations of the Florida Windstorm Underwriting
2859 Association or the Residential Property and Casualty Joint
2860 Underwriting Association are outstanding, under the terms of the
2861 financing documents pertaining to them, the governing board of
2862 the corporation shall have and shall exercise the authority to
2863 levy, charge, collect, and receive all premiums, assessments,
2864 surcharges, charges, revenues, and receipts that the
2865 associations had authority to levy, charge, collect, or receive
2866 under the provisions of subsection (2) and this subsection,
2867 respectively, as they existed on January 1, 2002, to provide
2868 moneys, without exercise of the authority provided by this
2869 subsection, in at least the amounts, and by the times, as would
2870 be provided under those former provisions of subsection (2) or
2871 this subsection, respectively, so that the value, amount, and
2872 collectability of any assets, revenues, or revenue source
2873 pledged or committed to, or any lien thereon securing such
2874 outstanding bonds, notes, indebtedness, or other financing
2875 obligations will not be diminished, impaired, or adversely
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2876 affected by the amendments made by this act and to permit
2877 compliance with all provisions of financing documents pertaining
2878 to such bonds, notes, indebtedness, or other financing
2879 obligations, or the security or credit enhancement for them, and
2880 any reference in this subsection to bonds, notes, indebtedness,
2881 financing obligations, or similar obligations, of the
2882 corporation shall include like instruments or contracts of the
2883 Florida Windstorm Underwriting Association and the Residential
2884 Property and Casualty Joint Underwriting Association to the
2885 extent not inconsistent with the provisions of the financing
2886 documents pertaining to them.
2887 (aa) Except as otherwise provided in this paragraph, the
2888 corporation shall require the securing and maintaining of flood
2889 insurance as a condition of coverage of a personal lines
2890 residential risk. The insured or applicant must execute a form
2891 approved by the office affirming that flood insurance is not
2892 provided by the corporation and that if flood insurance is not
2893 secured by the applicant or insured from an insurer other than
2894 the corporation and in addition to coverage by the corporation,
2895 the risk will not be eligible for coverage by the corporation.
2896 The corporation may deny coverage of a personal lines
2897 residential risk to an applicant or insured who refuses to
2898 secure and maintain flood insurance. The requirement to purchase
2899 flood insurance shall be implemented as follows:
2900 1. Except as provided in subparagraphs 2. and 3., all
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2901 personal lines residential policyholders must have flood
2902 coverage in place for policies effective on or after:
2903 a. January 1, 2024, for a structure that has a dwelling
2904 replacement cost of $600,000 or more.
2905 b. January 1, 2025, for a structure that has a dwe lling
2906 replacement cost of $500,000 or more.
2907 c. January 1, 2026, for a structure that has a dwelling
2908 replacement cost of $400,000 or more.
2909 d. January 1, 2027, for all other personal lines
2910 residential property insured by the corporation.
2911 2. All personal lines residential policyholders whose
2912 property insured by the corporation is located within the
2913 special flood hazard area defined by the Federal Emergency
2914 Management Agency must have flood coverage in place:
2915 a. At the time of initial policy issuance for all new
2916 personal lines residential policies issued by the corporation on
2917 or after April 1, 2023.
2918 b. By the time of the policy renewal for all personal
2919 lines residential policies renewing on or after July 1, 2023.
2920 3. Policyholders are not required to purchase flood
2921 insurance as a condition for maintaining the following policies
2922 issued by the corporation:
2923 a. Policies that do not provide coverage for the peril of
2924 wind.
2925 b. Policies that provide coverage under a condominium unit
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2926 owners form.
2927
2928 The flood insurance required under this paragraph must meet, at
2929 a minimum, the coverage available from the National Flood
2930 Insurance Program or the requirements of subparagraphs s.
2931 627.715(1)(a)1., 2., and 3.
2932 (bb) A salaried employee of the corporation who performs
2933 policy administration services subsequent to the effectuation of
2934 a corporation policy is not required to be licensed as an agent
2935 under the provisions of s. 626.112.
2936 (cc) There shall be no liability on the part of, and no
2937 cause of action of any nature shall arise against, producing
2938 agents of record of the corporation or employees of such agents
2939 for insolvency of any take-out insurer.
2940 (dd) The assets of the corporation may be invested and
2941 managed by the State Board of Administration.
2942 (ee) The office may establish a pilot program to offer
2943 optional sinkhole coverage in one or more counties or other
2944 territories of the corporation for the purpose of implementing
2945 s. 627.706, as amended by s. 30, chapter 2007-1, Laws of
2946 Florida. Under the pilot program, the corporation is not
2947 required to issue a notice of nonrenewal to exclude sinkhole
2948 coverage upon the renewal of existing policies, but may exclude
2949 such coverage using a notice of coverage change.
2950 (ff) In establishing replacement costs for coverage on a
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2951 dwelling insured by the corporation, the corporation must accept
2952 a valuation from any of the following sources and must use the
2953 lowest valuation as the insured value of the dwelling, excluding
2954 land value, provided the valuation was completed within the 12
2955 months before the application or renewal date of coverage:
2956 1. A replacement cost valuation software that is
2957 specifically designed for use in establishing insurance
2958 replacement costs and that includes an itemized calculation of
2959 the cost of reconstruction;
2960 2. A replacement cost valuation prepared by a certified or
2961 licensed real estate appraiser under part II of chapter 475 that
2962 is specifically formulated to establish insurance replacement
2963 cost, rather than market value, and which includes an itemized
2964 calculation of the cost of reconstruction; or
2965 3. A replacement cost valuation prepared by a general,
2966 building, or residential contractor licensed under s. 489.113,
2967 or a professional engineer licensed under s. 471.015, which
2968 includes an itemized calculation of the total price of
2969 reconstruction.
2970 (gg) The Office of Inspector General is established within
2971 the corporation to provide a central point for coordination of
2972 and responsibility for activities that promote accountability,
2973 integrity, and efficiency. The office shall be headed by an
2974 inspector general, which is a senior management position that
2975 involves planning, coordinating, and performing activities
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2976 assigned to and assumed by the inspector general for the
2977 corporation.
2978 1. The inspector general shall be appointed by the
2979 Financial Services Commission and may only be removed from
2980 office by the commission. The inspector general shall be
2981 appointed without regard to political affiliation.
2982 a. At a minimum, the inspector general must possess a
2983 bachelor's degree from an accredited college or university and 8
2984 years of professional experience related to the duties of an
2985 inspector general as described in this paragraph, of which 5
2986 years must have been at a supervisory level.
2987 b. The inspector general shall report to, and be under the
2988 supervision of, the chair of the board of governors. The
2989 executive director or corporation staff may not prevent or
2990 prohibit the inspector general from initiating, carrying out, or
2991 completing any audit, review, evaluation, study, or
2992 investigation.
2993 2. The inspector general shall initiate, direct,
2994 coordinate, participate in, and perform audits, reviews,
2995 evaluations, studies, and investigations designed to assess
2996 management practices; compliance with laws, rules, and policies;
2997 and program effectiveness and efficiency. This includes:
2998 a. Conducting internal examinations; investigating
2999 allegations of fraud, waste, abuse, malfeasance, mismanagement,
3000 employee misconduct, or violations of corporation policies; and
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3001 conducting any other investigations as directed by the Financial
3002 Services Commission or as independently determined.
3003 b. Evaluating and recommending actions regarding security,
3004 the ethical behavior of personnel and vendors, and compliance
3005 with rules, laws, policies, and personnel matters; and rendering
3006 ethics opinions.
3007 c. Evaluating personnel and administrative policy
3008 compliance, management and operational matters, and human
3009 resources-related matters.
3010 d. Evaluating the application of a corporation code of
3011 ethics, providing reviews and recommendations on the design and
3012 content of ethics-related policy training courses, educating
3013 employees on the code and on appropriate conduct, and checking
3014 for compliance.
3015 e. Evaluating the activities of the senior management team
3016 and management's compliance with recommended solutions.
3017 f. Cooperating and coordinating activities with the chief
3018 of internal audit.
3019 g. Maintaining records of investigations and discipline in
3020 accordance with established policies, or as otherwise required.
3021 h. Supervising and directing the tasks and assignments of
3022 the staff assigned to assist with the inspector general's
3023 projects, including regular review and feedback regarding work
3024 in progress and providing recommendations regarding relevant
3025 training and staff development activities.
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3026 i. Directing, planning, preparing, and presenting interim
3027 and final reports and oral briefings which communicate the
3028 results of studies, reviews, and investigations.
3029 j. Providing the executive director with independent and
3030 objective assessments of programs and activities.
3031 k. Completing special projects, assignments, and other
3032 duties as requested by the Financial Services Commission.
3033 l. Reporting expeditiously to the Department of Law
3034 Enforcement or other law enforcement agencies, as appropriate,
3035 whenever the inspector general has reasonable grounds to believe
3036 there has been a violation of criminal law.
3037 (hh) The corporation shall prepare a report for each
3038 calendar year outlining both the statewide average and county -
3039 specific details of the loss ratio attributable to losses that
3040 are not catastrophic losses for residential coverage provided by
3041 the corporation, which information must be presented to the
3042 office and available for public inspection on the Internet
3043 website of the corporation by March 1 of the following calendar
3044 year.
3045 (ii) The corporation shall revise the programs adopted
3046 pursuant to sub-subparagraph (q)3.a. for personal lines
3047 residential policies to maximize policyholder options and
3048 encourage increased participation by insurers and agents. After
3049 January 1, 2017, a policy may not be taken out of the
3050 corporation unless the provisions of this paragraph are met.
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3051 1. The corporation must publish a periodic schedule of
3052 cycles during which an insurer may identify, and noti fy the
3053 corporation of, policies that the insurer is requesting to take
3054 out. A request must include a description of the coverage
3055 offered and an estimated premium and must be submitted to the
3056 corporation in a form and manner prescribed by the corporation.
3057 2. The corporation must maintain and make available to the
3058 agent of record a consolidated list of all insurers requesting
3059 to take out a policy. The list must include a description of the
3060 coverage offered and the estimated premium for each take -out
3061 request.
3062 3. If a policyholder receives a take-out offer from an
3063 authorized insurer, the risk is no longer eligible for coverage
3064 with the corporation unless the premium for coverage from the
3065 authorized insurer is more than 20 percent greater than the
3066 renewal premium for comparable coverage from the corporation
3067 pursuant to sub-subparagraph (c)5.c. This subparagraph applies
3068 to take-out offers that are part of an application to
3069 participate in depopulation submitted to the office on or after
3070 January 1, 2023. However, notwithstanding any other provision of
3071 law, this sub-subparagraph does not apply to a policy that does
3072 not cover a primary residence.
3073 4. The corporation must provide written notice to the
3074 policyholder and the agent of record regarding all insurers
3075 requesting to take out the policy. The notice must be in a
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3076 format prescribed by the corporation and include, for each take -
3077 out offer:
3078 a. The amount of the estimated premium;
3079 b. A description of the coverage; and
3080 c. A comparison of the estimated premium and coverage
3081 offered by the insurer to the estimated premium and coverage
3082 provided by the corporation.
3083 (jj) The corporation's budget allocations for the
3084 compensation of all corporation employees and any proposed raise
3085 for an individual employee exceeding 10 percent of that
3086 employee's current salary must be approved by the board of
3087 governors. The corporation must have an overall employee
3088 compensation plan approved by the board of governors.
3089 (kk) A corporation policyholder making a claim for water
3090 damage against the corporation has the burden of proving that
3091 the damage was not caused by flooding.
3092 (ll) The corporation may share its claims data with the
3093 National Insurance Crime Bureau, provided that the National
3094 Insurance Crime Bureau agrees to maintain the confidentiality of
3095 such documents as otherwise provided for in paragraph (x).
3096 (mm)(ll)1. In addition to any other method of alternative
3097 dispute resolution authorized by state law, the corporation may
3098 adopt policy forms that provide for the resolution of disputes
3099 regarding its claim determinations, including disputes regarding
3100 coverage for, or the scope and value of, a claim, in a
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3101 proceeding before the Division of Administrative Hearings. Any
3102 such policies are not subject to s. 627.70154. All proceedings
3103 in the Division of Administrative Hearings pursuant to such
3104 policies are subject to ss. 57.105 and 768.79 as if filed in the
3105 courts of this state and are not considered chapter 120
3106 administrative proceedings. Rule 1.442, Florida Rules of Civil
3107 Procedure, applies to any offer served pursuant to s. 768.79,
3108 except that, notwithstanding any provision in Rule 1.442,
3109 Florida Rules of Civil Procedure, to the contrary, an offer
3110 shall not be served earlier than 10 days after filing the
3111 request for hearing with the Division of Administrative Hearings
3112 and shall not be served later than 10 days before the date set
3113 for the final hearing. The administrative law judge in such
3114 proceedings shall award attorney fees and other relief pursuant
3115 to ss. 57.105 and 768.79. The corporation may not seek, and the
3116 office may not approve, a maximum hourly rate for attorney fees.
3117 2. The corporation may contract with the division to
3118 conduct proceedings to resolve disputes regarding its claim
3119 determinations as may be provided for in the applicable policies
3120 of insurance.
3121 (nn)(mm) The corporation may not determine that a risk is
3122 ineligible for coverage with the corporation solely because such
3123 risk has unrepaired damage caused by a covered loss that is the
3124 subject of a claim that has been filed with the Florida
3125 Insurance Guaranty Association. This paragraph applies to a risk
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3126 until the earlier of 24 months after the date the Florida
3127 Insurance Guaranty Association began servicing such claim or the
3128 Florida Insurance Guaranty Association closes the claim.
3129 (7) TRADEMARKS, COPYRIGHTS, OR PATENTS.—Notwithstanding
3130 any other provision of law to the contrary, the corporation may,
3131 in its own name:
3132 (a) Perform all things necessary to secure letters of
3133 patent, copyrights, or trademarks on any work products and
3134 enforce its rights therein.
3135 (b) License, lease, assign, or otherwise give written
3136 consent to any person, firm, or corporation for the manufacture
3137 or use thereof, on a royalty basis or for such other
3138 consideration as the corporation deems proper.
3139 (c) Take any action necessary, including legal action, to
3140 protect the manufacture or use thereof against improper or
3141 unlawful use or infringement.
3142 (d) Enforce the collection of any sums due the corporation
3143 for the manufacture or use thereof by any other party.
3144 (e) Sell any of the manufacture or use thereof and execute
3145 all instruments necessary to consummate any such sale.
3146 (f) Do all other acts necessary and proper for the
3147 execution of powers and duties conferred upon the corporation in
3148 order to administer this paragraph.
3149 Section 2. Subsections (3) and (5) and paragraphs (d),
3150 (e), and (f) of subsection (6) of section 627.3511, Florida
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3151 Statutes, are amended to read:
3152 627.3511 Depopulation of Citizens Property Insurance
3153 Corporation.—
3154 (3) EXEMPTION FROM DEFICIT ASSESSMENTS.—
3155 (a) The calculation of an insurer's assessment liability
3156 under s. 627.351(6)(b)3.a. shall, for an insurer that in any
3157 calendar year removes 50,000 or more risks from the Citizens
3158 Property Insurance Corporation, either by issuance of a policy
3159 upon expiration or cancellation of the corporation policy or by
3160 assumption of the corporation's obligations with respect to in-
3161 force policies, exclude such removed policies for the succeeding
3162 3 years, as follows:
3163 1. In the first year following removal of the risks, the
3164 risks are excluded from the calculation to the extent of 100
3165 percent.
3166 2. In the second year following removal of the risks, the
3167 risks are excluded from the calculation to the extent of 75
3168 percent.
3169 3. In the third year following removal of the risks, the
3170 risks are excluded from the calculation to the extent of 50
3171 percent.
3172
3173 If the removal of risks is accomplished through assumption of
3174 obligations with respect to in-force policies, the corporation
3175 shall pay to the assuming insurer all unearned premium with
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3176 respect to such policies less any policy acquisition costs
3177 agreed to by the corporation and assuming insurer. The term
3178 "policy acquisition costs" is defined as costs of issuance of
3179 the policy by the corporation which includes agent commissions,
3180 servicing company fees, and premium tax. This paragraph does not
3181 apply to an insurer that, at any time within 5 years before
3182 removing the risks, had a market share in excess of 0.1 percent
3183 of the statewide aggregate gross direct written premium for any
3184 line of property insurance, or to an affiliate of such an
3185 insurer. This paragraph does not apply unless either at least 40
3186 percent of the risks removed from the corporation are located in
3187 Miami-Dade, Broward, and Palm Beach Counties, or at least 30
3188 percent of the risks removed from the corporation are located in
3189 such counties and an additional 50 percent of the risks removed
3190 from the corporation are located in other coastal counties.
3191 (b) An insurer that first wrote personal lines residential
3192 property coverage in this state on or after July 1, 1994, is
3193 exempt from regular deficit assessments imposed pursuant to s.
3194 627.351(6)(b)3.a., but not emergency assessments collected from
3195 policyholders pursuant to s. 627.351(6)(b)3.e., of th e Citizens
3196 Property Insurance Corporation until the earlier of the
3197 following:
3198 1. The end of the calendar year in which it first wrote
3199 0.5 percent or more of the statewide aggregate direct written
3200 premium for any line of residential property coverage; or
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3201 2. December 31, 1997, or December 31 of the third year in
3202 which it wrote such coverage in this state, whichever is later.
3203 (c) Other than an insurer that is exempt under paragraph
3204 (b), an insurer that in any calendar year increases its total
3205 structure exposure subject to wind coverage by 25 percent or
3206 more over its exposure for the preceding calendar year is, with
3207 respect to that year, exempt from deficit assessments imposed
3208 pursuant to s. 627.351(6)(b)3.a., but not emergency assessments
3209 collected from policyholders pursuant to s. 627.351(6)(b)3.e.,
3210 of the Citizens Property Insurance Corporation attributable to
3211 such increase in exposure.
3212 (d) Any exemption or credit from regular assessments
3213 authorized by this section shall last no longer than 3 years
3214 following the cancellation or expiration of the policy by the
3215 corporation. With the approval of the office, the board may
3216 extend such credits for an additional year if the insurer
3217 guarantees an additional year of renewability for all policies
3218 removed from the corporation, or for 2 additional years if the
3219 insurer guarantees 2 additional years of renewability for all
3220 policies so removed.
3221 (5) APPLICABILITY.—
3222 (a) The take-out bonus provided by subsection (2) applies
3223 and the exemption from assessment provided by paragraph (3)(a)
3224 apply only if the corporation policy is replaced by a standard
3225 policy including wind coverage or, if consistent with the
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3226 insurer's underwriting rules filed with the office, a basic
3227 policy including wind coverage; however, for risks locat ed in
3228 areas where coverage through the coastal account of the
3229 corporation is available, the replacement policy need not
3230 provide wind coverage. The insurer must renew the replacement
3231 policy at approved rates on substantially similar terms for four
3232 additional 1-year terms, unless canceled or not renewed by the
3233 policyholder. If an insurer assumes the corporation's
3234 obligations for a policy, it must issue a replacement policy for
3235 a 1-year term upon expiration of the corporation policy and must
3236 renew the replacement policy at approved rates on substantially
3237 similar terms for four additional 1-year terms, unless canceled
3238 or not renewed by the policyholder. For each replacement policy
3239 canceled or nonrenewed by the insurer for any reason during the
3240 5-year coverage period, the insurer must remove from the
3241 corporation one additional policy covering a risk similar to the
3242 risk covered by the canceled or nonrenewed policy. In addition,
3243 the corporation must place the bonus moneys in escrow for 5
3244 years; such moneys may be released from escrow only to pay
3245 claims. If the policy is canceled or nonrenewed before the end
3246 of the 5-year period, the amount of the take-out bonus must be
3247 prorated for the time period the policy was insured. A take-out
3248 bonus provided by subsection (2) or subsection (6) is not
3249 premium income for purposes of taxes and assessments under the
3250 Florida Insurance Code and remains the property of the
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3251 corporation, subject to the prior security interest of the
3252 insurer under the escrow agreement until it is released from
3253 escrow; after it is released from escrow it is considered an
3254 asset of the insurer and credited to the insurer's capital and
3255 surplus.
3256 (b) It is the intent of the Legislature that an insurer
3257 eligible for the exemption under paragraph (3)(a) establish a
3258 preference in appointment of agents for those agents who lose a
3259 substantial amount of business as a result of risks being
3260 removed from the corporation.
3261 (6) COMMERCIAL RESIDENTIAL TAKE-OUT PLANS.—
3262 (d) The calculation of an insurer's regular assessment
3263 liability under s. 627.351(6)(b)3.a., but not emergency
3264 assessments collected from policyholders pursuant to s.
3265 627.351(6)(b)3.e., shall, with respect to commercial residential
3266 policies removed from the corporation under an approved take -out
3267 plan, exclude such removed policies for the succeeding 3 years,
3268 as follows:
3269 1. In the first year following removal of the policies,
3270 the policies are excluded from the calculation to the extent of
3271 100 percent.
3272 2. In the second year following removal of the policies,
3273 the policies are excluded from the calculation to the extent of
3274 75 percent.
3275 3. In the third year following removal of the policies,
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3276 the policies are excluded from the calculation to the extent of
3277 50 percent.
3278 (e) An insurer that first wrote commercial residential
3279 property coverage in this state on or after June 1, 1996, is
3280 exempt from regular assessments under s. 627.351(6)(b)3.a., but
3281 not emergency assessments collected from policyholders pursuant
3282 to s. 627.351(6)(b)3.e., with respect to commercial res idential
3283 policies until the earlier of:
3284 1. The end of the calendar year in which such insurer
3285 first wrote 0.5 percent or more of the statewide aggregate
3286 direct written premium for commercial residential property
3287 coverage; or
3288 2. December 31 of the third year in which such insurer
3289 wrote commercial residential property coverage in this state.
3290 (f) An insurer that is not otherwise exempt from regular
3291 assessments under s. 627.351(6)(b)3.a. with respect to
3292 commercial residential policies is, for any calendar year in
3293 which such insurer increased its total commercial residential
3294 hurricane exposure by 25 percent or more over its exposure for
3295 the preceding calendar year, exempt from regular assessments
3296 under s. 627.351(6)(b)3.a., but not emergency assessments
3297 collected from policyholders pursuant to s. 627.351(6)(b)3.e.,
3298 attributable to such increased exposure.
3299 Section 3. Subsections (5), (6), and (7) of section
3300 627.3518, Florida Statutes, are amended to read:
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3301 627.3518 Citizens Property Insurance Corporation
3302 policyholder eligibility clearinghouse program.—The purpose of
3303 this section is to provide a framework for the corporation to
3304 implement a clearinghouse program by January 1, 2014.
3305 (5) Notwithstanding s. 627.3517, any applicant for new
3306 coverage from the corporation is not eligible for coverage from
3307 the corporation if provided an offer of coverage from an
3308 authorized insurer through the program at a premium that is at
3309 or below the eligibility threshold for applicants for new
3310 coverage established in s. 627.351(6)(c)5.a. Whenever an offer
3311 of coverage for a personal lines risk is received for a
3312 policyholder of the corporation at renewal from an authorized
3313 insurer through the program which is at or below the eligibility
3314 threshold for policyholders of the corporation established in s.
3315 627.351(6)(c)5.a., the risk is not eligible for coverage with
3316 the corporation. In the event an offer of coverage for a new
3317 applicant is received from an authorized insurer through the
3318 program, and the premium offered exceeds the eligibility
3319 threshold for applicants for new coverage established in s.
3320 627.351(6)(c)5.a., the applicant or insured may elect to accept
3321 such coverage, or may elect to accept or continue coverage with
3322 the corporation. In the event an offer of coverage for a
3323 personal lines risk is received from an authorized insurer at
3324 renewal through the program, and the premium offered exceeds the
3325 eligibility threshold for policyholders of the corporation
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3326 established in s. 627.351(6)(c)5.a., the insured may elect to
3327 accept such coverage, or may elect to accept or continue
3328 coverage with the corporation. Section 627.351(6)(c)5.a.(I) does
3329 not apply to an offer of coverage from an authorized insurer
3330 obtained through the program. However, notwithstanding any other
3331 provision of law, this subsection does not apply to a policy
3332 that does not cover a primary residence. As used in this
3333 subsection, the term "primary residence" has the same meaning as
3334 in sub-subparagraph s. 627.351(6)(c)2.a.
3335 (6) Independent insurance agents submitting new
3336 applications for coverage or that are the agent of record on a
3337 renewal policy submitted to the program:
3338 (a) Are granted and must maintain ownership and the
3339 exclusive use of expirations, records, or other written or
3340 electronic information directly related to such applications or
3341 renewals written through the corporation or through an insurer
3342 participating in the program, notwithstanding s.
3343 627.351(6)(c)5.a.(I)(B) and (II)(B). Such ownership is granted
3344 for as long as the insured remains with the agency or until sold
3345 or surrendered in writing by the agent. Contracts with the
3346 corporation or required by the corporation must not amend,
3347 modify, interfere with, or limit such rights of ownership. Such
3348 expirations, records, or other written or electronic information
3349 may be used to review an application, issue a policy, or for any
3350 other purpose necessary for placing such business through the
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3351 program.
3352 (b) May not be required to be appointed by any insurer
3353 participating in the program for policies written solely through
3354 the program, notwithstanding the provisions of s. 626.112.
3355 (c) May accept an appointment from any insurer
3356 participating in the program.
3357 (d) May enter into either a standard or limited agency
3358 agreement with the insurer, at the insurer's option.
3359
3360 Applicants ineligible for coverage in accordance with subsection
3361 (5) remain ineligible if their independent agent is unwilling or
3362 unable for any reason, including the failure of such agent to be
3363 licensed as a surplus lines agent, to enter into a standard or
3364 limited agency agreement with an insurer participating in the
3365 program.
3366 (7) Exclusive agents submitting new applications for
3367 coverage or that are the agent of record on a renewal policy
3368 submitted to the program:
3369 (a) Must maintain ownership and the exclusive use of
3370 expirations, records, or other written or electronic information
3371 directly related to such applications or renewals written
3372 through the corporation or through an insurer participating in
3373 the program, notwithstanding s. 627.351(6)(c)5.a.(I)(B) and
3374 (II)(B). Contracts with the corporation or required by the
3375 corporation must not amend, modify, interfere with, or limit
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3376 such rights of ownership. Such expirations, records, or other
3377 written or electronic information may be used to review an
3378 application, issue a policy, or for any other purpose necessary
3379 for placing such business through the program.
3380 (b) May not be required to be appointed by any insurer
3381 participating in the program for policies written solely through
3382 the program, notwithstanding the provisions of s. 626.112.
3383 (c) Must only facilitate the placement of an offer of
3384 coverage from an insurer whose limited servicing agreement is
3385 approved by that exclusive agent's exclusive insurer.
3386 (d) May enter into a limited servicing agreement with the
3387 insurer making an offer of coverage, and only after the
3388 exclusive agent's insurer has approved the limited servicing
3389 agreement terms. The exclusive agent's insurer must approve a
3390 limited service agreement for the program for any insurer for
3391 which it has approved a service agreement for other purposes.
3392
3393 Applicants ineligible for coverage in accordance with subsection
3394 (5) remain ineligible if their exclusive agent is unwilling or
3395 unable for any reason, including the failure of such agent to be
3396 licensed as a surplus lines agent, to enter into a standard or
3397 limited agency agreement with an insurer making an offer of
3398 coverage to that applicant. This subsection does not apply to an
3399 authorized insurer that is an eligible surplus lines insurer.
3400 Section 4. Effective upon becoming law, paragraph (aa) of
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3401 subsection (6) of section 627.351, Florida Statutes, is amended
3402 to read:
3403 627.351 Insurance risk apportionment plans.—
3404 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
3405 (aa) Except as otherwise provided in this paragraph, the
3406 corporation shall require the securing and maintaining of flood
3407 insurance as a condition of coverage of a personal lines
3408 residential risk. The insured or applicant must execute a form
3409 approved by the office affirming that flood insurance is not
3410 provided by the corporation and that if flood insurance is not
3411 secured by the applicant or insured from an insurer other than
3412 the corporation and in addition to coverage by the corporation,
3413 the risk will not be eligible for coverage by the corporation.
3414 The corporation may deny coverage of a personal lines
3415 residential risk to an applicant or insured who refuses to
3416 secure and maintain flood insurance. The requirement to purchase
3417 flood insurance shall be implemented as follows:
3418 1. Except as provided in subparagraphs 2. and 3., all
3419 personal lines residential policyholders must have flood
3420 coverage in place for policies effective on or after:
3421 a. January 1, 2024, for a structure that has a dwelling
3422 replacement cost of $600,000 or more.
3423 b. January 1, 2025, for a structure that has a dwelling
3424 replacement cost of $500,000 or more.
3425 c. January 1, 2026, for a structure that has a dwelling
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3426 replacement cost of $400,000 or more.
3427 d. January 1, 2027, for all other personal lines
3428 residential property insured by the corporation.
3429 2. All personal lines residential policyholders whose
3430 property insured by the corporation is located within the
3431 special flood hazard area defined by the Federal Emergency
3432 Management Agency must have flood coverage in place:
3433 a. At the time of initial policy issuance for all new
3434 personal lines residential policies issued by the corporation on
3435 or after April 1, 2023.
3436 b. By the time of the policy renewal for all personal
3437 lines residential policies renewing on or after July 1, 2023.
3438 3. Policyholders are not required to purchase flood
3439 insurance as a condition for maintaining the following policies
3440 issued by the corporation:
3441 a. Policies that do not provide coverage for the peril of
3442 wind.
3443 b. Policies that provide coverage under a condominium uni t
3444 owners form.
3445
3446 The flood insurance required under this paragraph must meet, at
3447 a minimum, the dwelling coverage available from the National
3448 Flood Insurance Program or the requirements of subparagraphs s.
3449 627.715(1)(a)1., 2., and 3.
3450 Section 5. Except as otherwise expressly provided in this
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3451 act and except for this section, which shall take effect upon
3452 this act becoming a law, this act shall take effect July 1,
3453 2024.
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INSURANCE & BANKING SUBCOMMITTEE
PCS for HB 1503 by Esposito
Citizens Property Insurance Corporation
AMENDMENT SUMMARY
February 1, 2024
Amendment 1 by Rep. Esposito (Line 3128): Establishes an alternative determination for
eligibility for Citizens Property Insurance (Citizens) for certain properties as follows:
• In a county that Office of Insurance Regulation (OIR) has not determined to lack
reasonable competition (currently all counties except Miami-Dade and Monroe), OIR
may evaluate whether there is a reasonable degree of competition within zip codes in
that county;
• If OIR determines that zip codes within that county lack a reasonable degree of
competition, then, within those zip codes, Citizens coverage eligibility for single-family
homes and single condominium units includes structures with dwelling replacement
costs, and single condominium units with combined dwelling and contents replacement
costs, between $700,000 and $1 million.
o The rate charged for policies issued to these properties must be actuarially
sound and noncompetitive with the private market.
The amendment does not affect the glidepath controlled eligibility exception applicable to
counties that currently lack a reasonable degree of competition within a county (currently,
Miami-Dade and Monroe).
Amendments 2 and 3 by Rep. Esposito (Lines 693 and 2264): Preserves current law
regarding the eligibility of properties valued between $700,000 and $1 million for Citizens
coverage in counties where OIR has determined there is not a reasonable degree of
competition. (These counties are currently Miami-Dade and Monroe).
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 1503 (2024)
Amendment No. 1
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Esposito offered the following:
4
5 Amendment (with title amendment)
6 Between lines 3128 and 3129, insert:
7 (oo) In a county that has not been determined to lack a
8 reasonable degree of competition at the county level pursuant to
9 sub-subparagraph (6)(a)3.a. the office may evaluate whether
10 there is a reasonable degree of competition within an individual
11 zip code in a county. If the office determines that such zip
12 code lacks a reasonable degree of competition, then structures
13 with dwelling replacement costs between $700,000 and $1 million,
14 and single condominium units that have a combined dwelling and
15 contents replacement cost between $700,000 and $1 million are
16 eligible for coverage by the corporation. However, the rate
PCS for HB 1503 a1
Published On: 1/31/2024 8:35:34 PM
Page 1 of 2
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 1503 (2024)
Amendment No. 1
17 charged for policies issued on these risks is not subject to
18 subparagraph (n)5.
19
20
21 -----------------------------------------------------
22 T I T L E A M E N D M E N T
23 Remove line 62 and insert:
24 with a specified entity; creating new eligibility criteria for
25 coverage by the corporation; amending s. 627.3511, F.S.;
PCS for HB 1503 a1
Published On: 1/31/2024 8:35:34 PM
Page 2 of 2
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 1503 (2024)
Amendment No. 2
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Esposito offered the following:
4
5 Amendment (with title amendment)
6 Remove lines 693-708 and insert:
7 a.d. Effective January 1, 2017, a structure that has a
8 dwelling replacement cost of $700,000 or more, or a single
9 condominium unit that has a combined dwelling and contents
10 replacement cost of $700,000 or more, is not eligible for
11 coverage by the corporation. Such dwellings insured by the
12 corporation on December 31, 2016, may continue to be covered by
13 the corporation until the end of the policy term.
14 b. The requirements of sub-subparagraph a. sub-
15 subparagraphs b.-d. do not apply in counties where the office
16 determines there is not a reasonable degree of competition. In
PCS for HB 1503 a2
Published On: 1/31/2024 8:36:59 PM
Page 1 of 2
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 1503 (2024)
Amendment No. 2
17 such counties a personal lines residential structure that has a
18 dwelling replacement cost of less than $1 million, or a single
19 condominium unit that has a combined dwelling and contents
20 replacement cost of less than $1 million, is eligible for
21 coverage by the corporation.
22
23 -----------------------------------------------------
24 T I T L E A M E N D M E N T
25 Remove lines 10-12 and insert:
26 requiring the inclusion of quota share
PCS for HB 1503 a2
Published On: 1/31/2024 8:36:59 PM
Page 2 of 2
COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for HB 1503 (2024)
Amendment No. 3
COMMITTEE/SUBCOMMITTEE ACTION
ADOPTED (Y/N)
ADOPTED AS AMENDED (Y/N)
ADOPTED W/O OBJECTION (Y/N)
FAILED TO ADOPT (Y/N)
WITHDRAWN (Y/N)
OTHER
1 Committee/Subcommittee hearing bill: Insurance & Banking
2 Subcommittee
3 Representative Esposito offered the following:
4
5 Amendment
6 Remove lines 2264-2269
7
PCS for HB 1503 a3
Published On: 1/31/2024 8:37:43 PM
Page 1 of 1
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