Committee/Subcommittee Amendment No. 1 to PCS for CS/HB 1503 (2024)
Summary
Committee/subcommittee amendment, Amendment No. 1, offered by Representative Esposito at the Commerce Committee hearing on PCS for CS/HB 1503 (2024). The inserted text defines quota share primary insurance as an arrangement in which hurricane coverage of an eligible risk is provided in specified percentages by the corporation and an authorized insurer. It allows quota share agreements at corporation coverage levels of 90 percent and 50 percent, subject to review and approval by the office, and states that entering into one is voluntary for the authorized insurer. It also covers the corporation's board of governors, a Market Accountability Advisory Committee and eligibility of risks for coverage.
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“Committee/Subcommittee Amendment No. 1 to PCS for CS/HB 1503 (2024).”
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COMMITTEE/SUBCOMMITTEE AMENDMENT
Bill No. PCS for CS/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WITHDRAWN (Y/N)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: Commerce Committee
2 Representative Esposito offered the following:
3
4 Amendment
5 Remove lines 1353-1733 and insert:
6 (A) That has a financial strength rating of "A-" or higher
7 from A.M. Best Company;
8 (B) That has a personal lines residential risk program
9 that is managed by a Florida resident surplus lines broker; and
10 (C) That offers coverage to applicants for new coverage
11 from the corporation or current policyholders of the corporation
12 through a take-out plan approved by the office.
13 (III) "Primary residence" means the dwelling that is the
14 policyholder's primary home or is a rental property that is the
15 primary home of the tenant, and which the policyholder or tenant
16 occupies for more than 9 months of each year.
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Amendment No. 1
17 (IV)(I) "Quota share primary insurance" means an
18 arrangement in which the primary hurricane coverage of an
19 eligible risk is provided in specified percentages by the
20 corporation and an authorized insurer. The corporation and
21 authorized insurer are each solely responsible for a specified
22 percentage of hurricane coverage of an eligible risk as set
23 forth in a quota share primary insurance agreement between the
24 corporation and an authorized insurer and the insurance
25 contract. The responsibility of the corporation or authorized
26 insurer to pay its specified percentage of hurricane losses of
27 an eligible risk, as set forth in the agreement, may not be
28 altered by the inability of the other party to pay its specified
29 percentage of losses. Eligible risks that are provided hurricane
30 coverage through a quota share primary insurance arrangement
31 must be provided policy forms that set forth the obligations of
32 the corporation and authorized insurer under the arrangement,
33 clearly specify the percentages of quota share primary insurance
34 provided by the corporation and authorized insurer, and
35 conspicuously and clearly state that the authorized insurer and
36 the corporation may not be held responsible beyond their
37 specified percentage of coverage of hurricane losses.
38 (II) "Eligible risks" means personal lines residential and
39 commercial lines residential risks that meet the underwriting
40 criteria of the corporation and are located in areas that were
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Bill No. PCS for CS/HB 1503 (2024)
Amendment No. 1
41 eligible for coverage by the Florida Windstorm Underwriting
42 Association on January 1, 2002.
43 b. The corporation may enter into quota share primary
44 insurance agreements with authorized insurers at corporation
45 coverage levels of 90 percent and 50 percent.
46 c. If the corporation determines that additional coverage
47 levels are necessary to maximize participation in quota share
48 primary insurance agreements by authorized insurers, the
49 corporation may establish additional coverage levels. However,
50 the corporation's quota share primary insurance coverage level
51 may not exceed 90 percent.
52 d. Any quota share primary insurance agreement entered
53 into between an authorized insurer and the corporation must
54 provide for a uniform specified percentage of coverage of
55 hurricane losses, by county or territory as set forth by the
56 corporation board, for all eligible risks of the authorized
57 insurer covered under the agreement.
58 e. Any quota share primary insurance agreement entered
59 into between an authorized insurer and the corporation is
60 subject to review and approval by the office. However, such
61 agreement shall be authorized only as to insurance contracts
62 entered into between an authorized insurer and an insured who is
63 already insured by the corporation for wind coverage.
64 f. For all eligible risks covered under quota share
65 primary insurance agreements, the exposure and coverage levels
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66 for both the corporation and authorized insurers shall be
67 reported by the corporation to the Florida Hurricane Catastrophe
68 Fund. For all policies of eligible risks covered under such
69 agreements, the corporation and the authorized insurer must
70 maintain complete and accurate records for the purpose of
71 exposure and loss reimbursement audits as required by fund
72 rules. The corporation and the authorized insurer shall each
73 maintain duplicate copies of policy declaration pages and
74 supporting claims documents.
75 g. The corporation board shall establish in its plan of
76 operation standards for quota share agreements which ensure that
77 there is no discriminatory application among insurers as to the
78 terms of the agreements, pricing of the agreements, incentive
79 provisions if any, and consideration paid for servicing policies
80 or adjusting claims.
81 h. The quota share primary insurance agreement between the
82 corporation and an authorized insurer must set forth the
83 specific terms under which coverage is provided, including, but
84 not limited to, the sale and servicing of policies issued under
85 the agreement by the insurance agent of the authorized insurer
86 producing the business, the reporting of information concerning
87 eligible risks, the payment of premium to the corporation, and
88 arrangements for the adjustment and payment of hurricane claims
89 incurred on eligible risks by the claims adjuster and personnel
90 of the authorized insurer. Entering into a quota sharing
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91 insurance agreement between the corporation and an authorized
92 insurer is voluntary and at the discretion of the authorized
93 insurer.
94 3. May provide that the corporation may employ or
95 otherwise contract with individuals or other entities to provide
96 administrative or professional services that may be appropriate
97 to effectuate the plan. The corporation may borrow funds by
98 issuing bonds or by incurring other indebtedness, and shall have
99 other powers reasonably necessary to effectuate the requirements
100 of this subsection, including, without limitation, the power to
101 issue bonds and incur other indebtedness in order to refinance
102 outstanding bonds or other indebtedness. The corporation may
103 seek judicial validation of its bonds or other indebtedness
104 under chapter 75. The corporation may issue bonds or incur other
105 indebtedness, or have bonds issued on its behalf by a unit of
106 local government pursuant to subparagraph (q)2. in the absence
107 of a hurricane or other weather-related event, upon a
108 determination by the corporation, subject to approval by the
109 office, that such action would enable it to efficiently meet the
110 financial obligations of the corporation and that s uch
111 financings are reasonably necessary to effectuate the
112 requirements of this subsection. The corporation may take all
113 actions needed to facilitate tax-free status for such bonds or
114 indebtedness, including formation of trusts or other affiliated
115 entities. The corporation may pledge assessments, projected
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116 recoveries from the Florida Hurricane Catastrophe Fund, other
117 reinsurance recoverables, policyholder surcharges and other
118 surcharges, and other funds available to the corporation as
119 security for bonds or other indebtedness. In recognition of s.
120 10, Art. I of the State Constitution, prohibiting the impairment
121 of obligations of contracts, it is the intent of the Legislature
122 that no action be taken whose purpose is to impair any bond
123 indenture or financing agreement or any revenue source committed
124 by contract to such bond or other indebtedness.
125 4. Must require that the corporation operate subject to
126 the supervision and approval of a board of governors consisting
127 of nine individuals who are residents of this state and who are
128 from different geographical areas of the state, one of whom is
129 appointed by the Governor and serves solely to advocate on
130 behalf of the consumer. The appointment of a consumer
131 representative by the Governor is deemed to be within the scope
132 of the exemption provided in s. 112.313(7)(b) and is in addition
133 to the appointments authorized under sub-subparagraph a.
134 a. The Governor, the Chief Financial Officer, the
135 President of the Senate, and the Speaker of the House of
136 Representatives shall each appoint two members of the board. At
137 least one of the two members appointed by each appointing
138 officer must have demonstrated expertise in insurance and be
139 deemed to be within the scope of the exemption provided in s.
140 112.313(7)(b). The Chief Financial Officer shall designate one
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141 of the appointees as chair. All board members serve at the
142 pleasure of the appointing officer. All members of the board are
143 subject to removal at will by the officers who appointed them.
144 All board members, including the chair, must be appointed to
145 serve for 3-year terms beginning annually on a date designated
146 by the plan. However, for the first term beginning on or after
147 July 1, 2009, each appointing officer shall appoint one member
148 of the board for a 2-year term and one member for a 3-year term.
149 A board vacancy shall be filled for the unexpired term by the
150 appointing officer. The Chief Financial Officer shall appoint a
151 technical advisory group to provide information and advice to
152 the board in connection with the board's duties under this
153 subsection. The executive director and senior managers of the
154 corporation shall be engaged by the board and serve at the
155 pleasure of the board. Any executive director appointed on or
156 after July 1, 2006, is subject to confirmation by the Senate.
157 The executive director is responsible for employing other staff
158 as the corporation may require, subject to review and
159 concurrence by the board.
160 b. The board shall create a Market Accountability Advisory
161 Committee to assist the corporation in developing awa reness of
162 its rates and its customer and agent service levels in
163 relationship to the voluntary market insurers writing similar
164 coverage.
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165 (I) The members of the advisory committee consist of the
166 following 11 persons, one of whom must be elected chair by t he
167 members of the committee: four representatives, one appointed by
168 the Florida Association of Insurance Agents, one by the Florida
169 Association of Insurance and Financial Advisors, one by the
170 Professional Insurance Agents of Florida, and one by the Latin
171 American Association of Insurance Agencies; three
172 representatives appointed by the insurers with the three highest
173 voluntary market share of residential property insurance
174 business in the state; one representative from the Office of
175 Insurance Regulation; one consumer appointed by the board who is
176 insured by the corporation at the time of appointment to the
177 committee; one representative appointed by the Florida
178 Association of Realtors; and one representative appointed by the
179 Florida Bankers Association. All members shall be appointed to
180 3-year terms and may serve for consecutive terms.
181 (II) The committee shall report to the corporation at each
182 board meeting on insurance market issues which may include rates
183 and rate competition with the voluntary market; ser vice,
184 including policy issuance, claims processing, and general
185 responsiveness to policyholders, applicants, and agents; and
186 matters relating to depopulation.
187 5. Must provide a procedure for determining the
188 eligibility of a risk for coverage, as follows:
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189 a. Subject to s. 627.3517, with respect to personal lines
190 residential risks that are primary residences, if the risk is
191 offered coverage from an authorized insurer at the insurer's
192 approved rate under a standard policy including wind coverage
193 or, if consistent with the insurer's underwriting rules as filed
194 with the office, a basic policy including wind coverage, for a
195 new application to the corporation for coverage, the risk is not
196 eligible for any policy issued by the corporation unless the
197 premium for coverage from the authorized insurer is more than 20
198 percent greater than the premium for comparable coverage from
199 the corporation. Whenever an offer of coverage for a personal
200 lines residential risk that is a primary residence is received
201 for a policyholder of the corporation at renewal from an
202 authorized insurer, if the offer is equal to or less than the
203 corporation's renewal premium for comparable coverage, the risk
204 is not eligible for coverage with the corporation for policies
205 that renew before April 1, 2023; for policies that renew on or
206 after that date, the risk is not eligible for coverage with the
207 corporation unless the premium for coverage from the authorized
208 insurer is more than 20 percent greater than the corporation's
209 renewal premium for comparable coverage. If the risk is not able
210 to obtain such offer, the risk is eligible for a standard policy
211 including wind coverage or a basic policy including wind
212 coverage issued by the corporation; however, if the risk could
213 not be insured under a standard policy including wind coverage
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Amendment No. 1
214 regardless of market conditions, the risk is eligible for a
215 basic policy including wind coverage unless rejected under
216 subparagraph 8. The corporation shall determine the type of
217 policy to be provided on the basis of objective standards
218 specified in the underwriting manual and based on generally
219 accepted underwriting practices. A policyholder removed from the
220 corporation through an assumption agreement does not remain
221 eligible for coverage from the corporation after the end of t he
222 policy term. However, any policy removed from the corporation
223 through an assumption agreement remains on the corporation's
224 policy forms through the end of the policy term. This sub-
225 subparagraph applies only to risks that are primary residences.
226 (I) If the risk accepts an offer of coverage through the
227 market assistance plan or through a mechanism established by the
228 corporation other than a plan established by s. 627.3518, before
229 a policy is issued to the risk by the corporation or during the
230 first 30 days of coverage by the corporation, and the producing
231 agent who submitted the application to the plan or to the
232 corporation is not currently appointed by the insurer, the
233 insurer shall:
234 (A) Pay to the producing agent of record of the policy for
235 the first year, an amount that is the greater of the insurer's
236 usual and customary commission for the type of policy written or
237 a fee equal to the usual and customary commission of the
238 corporation; or
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239 (B) Offer to allow the producing agent of record of the
240 policy to continue servicing the policy for at least 1 year and
241 offer to pay the agent the greater of the insurer's or the
242 corporation's usual and customary commission for the type of
243 policy written.
244
245 If the producing agent is unwilling or unable to accept
246 appointment, the new insurer shall pay the agent in accordance
247 with sub-sub-sub-subparagraph (A).
248 (II) If the corporation enters into a contractual
249 agreement for a take-out plan, the producing agent of record of
250 the corporation policy is entitled to retain any unearned
251 commission on the policy, and the insurer shall:
252 (A) Pay to the producing agent of record, for the first
253 year, an amount that is the greater of the insurer's usual and
254 customary commission for the type of policy written or a fee
255 equal to the usual and customary commission of the corporation;
256 or
257 (B) Offer to allow the producing agent of record to
258 continue servicing the policy for at least 1 year and offer to
259 pay the agent the greater of the insurer's or the corporation's
260 usual and customary commission for the type of policy written.
261
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262 If the producing agent is unwilling or unable to accept
263 appointment, the new insurer shall pay the agent in accordance
264 with sub-sub-sub-subparagraph (A).
265 b. With respect to commercial lines residential risks, for
266 a new application to the corporation for coverage, if the risk
267 is offered coverage under a policy including wind coverage from
268 an authorized insurer at its approved rate, the risk is not
269 eligible for a policy issued by the corporation unless the
270 premium for coverage from the authorized insurer is more than 20
271 percent greater than the premium for comparable coverage from
272 the corporation. Whenever an offer of coverage for a commercial
273 lines residential risk is received for a policyholder of the
274 corporation at renewal from an authorized insurer, the risk is
275 not eligible for coverage with the corporation unless the
276 premium for coverage from the authorized insurer is more than 20
277 percent greater than the corporation's renewal premium for
278 comparable coverage. If the risk is not able to obtain any such
279 offer, the risk is eligible for a policy including wind coverage
280 issued by the corporation. A policyholder removed from the
281 corporation through an assumption agreement remains eligible for
282 coverage from the corporation until the end of the policy term.
283 However, any policy removed from the corporation through an
284 assumption agreement remains on the corporation's policy forms
285 through the end of the policy term.
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286 (I) If the risk accepts an offer of coverage through the
287 market assistance plan or through a mechanism established by the
288 corporation other than a plan established by s. 627.3518, before
289 a policy is issued to the risk by the corporation or during the
290 first 30 days of coverage by the corporation, and the producing
291 agent who submitted the application to the plan or the
292 corporation is not currently appointed by the insurer, the
293 insurer shall:
294 (A) Pay to the producing agent of record of the policy,
295 for the first year, an amount that is the greater of the
296 insurer's usual and customary commission for the type of policy
297 written or a fee equal to the usual and customary commission of
298 the corporation; or
299 (B) Offer to allow the producing agent of record of the
300 policy to continue servicing the policy for at least 1 year and
301 offer to pay the agent the greater of the insurer's or the
302 corporation's usual and customary commission for the type of
303 policy written.
304
305 If the producing agent is unwilling or unable to accept
306 appointment, the new insurer shall pay the agent in accordance
307 with sub-sub-sub-subparagraph (A).
308 (II) If the corporation enters into a contractual
309 agreement for a take-out plan, the producing agent of record of
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310 the corporation policy is entitled to retain any unearned
311 commission on the policy, and the insurer shall:
312 (A) Pay to the producing agent of record, for the first
313 year, an amount that is the greater of the insurer's usual and
314 customary commission for the type of policy written or a fee
315 equal to the usual and customary commission of the corporation;
316 or
317 (B) Offer to allow the producing agent of record to
318 continue servicing the policy for at least 1 year and offer to
319 pay the agent the greater of the insurer's or the corporation's
320 usual and customary commission for the type of policy written.
321
322 If the producing agent is unwilling or unable to accept
323 appointment, the new insurer shall pay the agent in accordance
324 with sub-sub-sub-subparagraph (A).
325 c. For purposes of determining comparable coverage under
326 sub-subparagraphs a. and b., the comparison must be based on
327 those forms and coverages that are reasonably comparable. The
328 corporation may rely on a determination of comparable coverage
329 and premium made by the producing agent who submits the
330 application to the corporation, made in the agent's capa city as
331 the corporation's agent. For purposes of comparing the premium
332 for comparable coverage under sub-subparagraphs a. and b.,
333 premium includes any surcharge or assessment that is actually
334 applied to such policy. A comparison may be made solely of the
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Bill No. PCS for CS/HB 1503 (2024)
Amendment No. 1
335 premium with respect to the main building or structure only on
336 the following basis: the same Coverage A or other building
337 limits; the same percentage hurricane deductible that applies on
338 an annual basis or that applies to each hurricane for commercial
339 residential property; the same percentage of ordinance and law
340 coverage, if the same limit is offered by both the corporation
341 and the authorized insurer; the same mitigation credits, to the
342 extent the same types of credits are offered both by the
343 corporation and the authorized insurer; the same method for loss
344 payment, such as replacement cost or actual cash value, if the
345 same method is offered both by the corporation and the
346 authorized insurer in accordance with underwriting rules; and
347 any other form or coverage that is reasonably comparable as
348 determined by the board. If an application is submitted to the
349 corporation for wind-only coverage on a risk that is located in
350 an area eligible for coverage by the Florida Windstorm
351 Underwriting Association, as that area was defined on January 1,
352 2002, the premium for the corporation's wind-only policy plus
353 the premium for the ex-wind policy that is offered by an
354 authorized insurer to the applicant must be compared to the
355 premium for multiperil coverage offered by an autho rized
356 insurer, subject to the standards for comparison specified in
357 this subparagraph. If the corporation or the applicant requests
358 from the authorized insurer a breakdown of the premium of the
359 offer by types of coverage so that a comparison may be made by
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360 the corporation or its agent and the authorized insurer refuses
361 or is unable to provide such information, the corporation may
362 treat the offer as not being an offer of coverage from an
363 authorized insurer at the insurer's approved rate. However,
364 notwithstanding any other provision of law, this sub-
365 subparagraph does not apply to a policy that does not cover a
366 primary residence.
367 d. If the risk could not be insured under a standard
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