This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0799c.COM
DATE: 4/20/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/CS/HB 799 Property Insurance
SPONSOR(S): Commerce Committee, State Administration & Technology Appropriations Subcommittee and
Insurance & Banking Subcommittee, Griffitts
TIED BILLS: IDEN./SIM. BILLS: CS/CS/SB 594
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Insurance & Banking Subcommittee 18 Y, 0 N, As CS Fortenberry Lloyd
2) State Administration & Technology
Appropriations Subcommittee
13 Y, 0 N, As CS Perez Topp
3) Commerce Committee 19 Y, 0 N, As CS Fortenberry Hamon
SUMMARY ANALYSIS
The bill makes changes related to property insurance, including:
Windstorm Coverage
Establishing that a property insurer’s residential rate filing with the Office of Insurance Regulation (OIR) must
allow for appropriate discounts for mitigation measures that reduce the potential for windstorm losses.
Adding wind uplift prevention to the list of fixtures or construction techniques for which an actuarially reasonable
discount, credit, or other rate differential, or appropriate reduction in deductibles, must be included in a rate filing
for residential property insurance. Wind uplift is the upward-acting pressure on parts of a roof caused by wind
traveling across it.
Citizens Property Insurance Corporation
Providing that the “glidepath” normally imposed on Citizens rates 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.
Making certain that a limitation on Citizens rates for non-primary residences (current law) and policies assumed
from unsound insurers (proposed by the bill) applies on a year-over-year basis, rather than based on a fixed date.
Making technical changes to the statutory language establishing when certain Citizens policyholders must obtain
flood coverage so that Citizens can implement the flood coverage requirements. It does not change flood
coverage requirements enacted in December 2022.
Establishing that, in addition to any other method of alternative dispute resolution authorized by law, Citizens
may adopt policy forms that allow both Citizens and Citizens’ policyholders to request a hearing by the Division
of Administrative Hearings (DOAH) to resolve claims disputes.
Flood Coverage Required by Windstorm Policies
Requiring that, if an insurer requires an insured or applicant to have flood coverage when issuing a policy
containing wind coverage, the insurer must verify that the insured or applicant has flood coverage.
Providing that, if insurer fails to verify that the insured or applicant has flood coverage, the insurer may not issue
a policy containing wind coverage.
Establishing that a master flood policy issued to someone other than the insured or applicant, and that includes
the insured or applicant as an intended third-party beneficiary is acceptable proof of flood coverage.
The bill provides a $750,000 nonrecurring appropriation from the Insurance Regulatory Trust Fund to the Office of
Insurance Regulation to conduct a wind-loss mitigation study. The bill has no impact on local government revenues
or expenditures. It will likely have a positive direct economic impact on the private sector.
The bill is effective on July 1, 2023, except as otherwise provided. STORAGE NAME: h0799c.COM PAGE: 2
DATE: 4/20/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Windstorm Coverage
Background
APPROVAL OF INSURANCE RATE FILINGS
In general, insurers must file a copy of rates, rating schedules, rating manuals, premium credits or
discount schedules, and surcharge schedules, and changes to these documents, for approval by the
Office of Insurance Regulation (OIR).
1
OIR must review insurers’ rate filings to determine whether rates
are excessive, inadequate, or unfairly discriminatory.
2
In doing so, OIR must consider factors including,
but not limited to, the following:
Past and prospective loss experience in and out of Florida.
Past and prospective expenses.
Degree of competition among insurers for particular risk to be insured.
Investment income reasonably expected by the insurer.
Reasonableness of the judgment reflected in the filing.
Dividends, savings, or unabsorbed premium deposits allowed or returns to policyholders,
members or subscribers in Florida.
Adequacy of loss reserves.
Cost of reinsurance.
Trend factors.
Conflagration and catastrophe hazards, if applicable.
Projected hurricane losses.
Projected flood losses.
Reasonable margin for underwriting profit and contingencies.
Rate filings must also account for factors that should result in premium discounts or credited for
policyholders. A residential property insurance rate filing must account for mitigation measures that
policyholders undertake to reduce hurricane losses.
3
MITIGATION CREDITS IN RESIDENTIAL PROPERTY INSURANCE RATE FILINGS
Residential property insurers must provide credits, discounts, other rate differentials, or appropriate
reductions in deductibles to reduce insurance premiums for properties with mitigation features.
4
Mitigation features are construction techniques used or items installed to protect a structure against
windstorm damage or loss.
5
These features must be accounted for in residential property insurance
rate filings submitted to OIR for approval.
6
Such features include, but are not limited to, measures that
enhance roof strength, roof covering performance, roof-to-wall strength, wall-to-floor-to foundation
strength, or appropriate protection, window, door, and skylight strength.
7
Examples of items that might
be installed to protect a structure include hurricane shutters, a hip roof, or a specific type of roof
covering.
WIND UPLIFT
1
S. 627.062(2)(a), F.S.
2
S. 627.062(1), F.S.
3
S. 627.062(2)(j), F.S.
4
See s. 627.0629, F.S.
5
See id.
6
S. 627.0629(1), F.S.
7
Id. STORAGE NAME: h0799c.COM PAGE: 3
DATE: 4/20/2023
Wind uplift is the upward-acting pressure on the parts of a roof caused by wind traveling across the
roof.
8
It is a force measure in pounds per square foot and occurs when the pressure below a roof
exceeds the pressure above it.
9
Wind uplift can intensify during high winds, as air enters a building,
causing an increase in the air pressure below the roof, while the speed of wind over the roof reduces
the pressure above the roof.
10
When wind uplift exceeds the limits of a building system design, a roof
deck could detach from a supporting structure.
11
Engineers and builders follow the applicable building
code for each jurisdiction to attempt to prevent wind uplift.
12
The standards vary based on building
location and likelihood of exposure to high winds.
13
Effect of the Bill
The bill establishes that, in addition to mitigation measures to reduce hurricane losses, an insurer’s rate
filing must allow for appropriate discounts for mitigation measures that policyholders undertake to
reduce the potential for windstorm losses.
The bill adds wind uplift prevention to the list of fixtures or construction techniques for which an
actuarially reasonable discount, credit, or other rate differential, or appropriate reduction in deductibles,
must be included in a rate filing for residential property insurance.
The bill also provides an appropriation for OIR to procure a wind-loss mitigation study. The study is
required to evaluate roof strength, roof covering performance, roof-to-wall strength, wall-to-floor-to-
foundation strength, opening protections, and window, door, and skylight strength. The findings of the
study shall be reported to the Governor, the President of the Senate, the Speaker of the House of
Representatives, the Chief Financial Officer, and the Commissioner of Insurance Regulation no later
than July 1, 2024.
Citizens Property Insurance Corporation (Citizens)
General Background
Citizens Property Insurance Corporation (Citizens or corporation) is a state-created, not-for-profit, tax-
exempt governmental entity whose public purpose is to provide property insurance coverage to those
unable to find affordable coverage in the voluntary admitted market.
14
Citizens is not a private
insurance company.
15
Citizens was statutorily created in 2002 when the Florida Legislature combined
the state’s two insurers of last resort, the Florida Residential Property and Casualty Joint Underwriting
Association (RPCJUA) and the Florida Windstorm Underwriting Association (FWUA).
16
POLICIES ASSUMED FROM OTHER INSURERS
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 the original established glidepath, Citizens had to implement an annual
rate increase which, except for sinkhole coverage, does not exceed 10 percent above the previous year
8
Certified Commercial Property Inspectors Association, How Wind Uplift can Affect a Commercial Building’s Roof,
https://ccpia.org/how-wind-uplift-can-affect-a-commercial-buildings-roof/ (last visited Mar. 6, 2023).
9
Id.
10
Id.
11
Id.
12
Id.
13
Id. Changes to Florida’s treatment of wind load were made in the 7
th
edition of the Florida Building Code in 2020. See
Wind Loads- Impacts from ASCE 7-16 (June 2020), https://floridabuilding.org/fbc/thecode/2020_7edition/ASCE_7-
16_Fact_Sheet_final_2_column_format052820final.pdf (last visited Mar. 6, 2023).
14
The term “admitted market” means insurance companies licensed to transact insurance in Florida.
15
Section 627.351(6)(a)1., F.S.
16
Section 2, ch. 2002-240, Laws of Fla. STORAGE NAME: h0799c.COM PAGE: 4
DATE: 4/20/2023
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:
17
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.
Until December 2022, Citizens’ rates did not differ based upon whether the property that is a
policyholder’s primary residence, a policyholder’s second home (e.g., a vacation home), or occupied by
a long-term tenant.
18
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% above, but not less than,
the established rate for Citizens which was in effect one year before the date of the application for
coverage. However, current law does not provide any similar exception for risks previously insured by
an unsound or insolvent insurer.
Effect of the Bill
The bill provides that, 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.
19
Instead, these risks 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. The bill also makes certain that 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).
17
S. 627.351(6)(n)5., F.S.
18
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.
19
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. STORAGE NAME: h0799c.COM PAGE: 5
DATE: 4/20/2023
CITIZENS ELIGIBILITY REQUIREMENTS
Background
Until December 2022, Citizens Property Insurance Corporation could not require a policyholder or
applicant to obtain flood insurance as a condition of coverage from Citizens if a policyholder or
applicant signed a form affirming that Citizens does not provide flood insurance coverage, and that, if
the policyholder or applicant did not obtain flood coverage in addition to a policy from Citizens, the risk
was not covered for flood damage.
20
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.
21
Additionally, Citizens could deny coverage to a
policyholder or applicant who refuses to execute the form.
22
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.
23
A bill passed on December 2022 (SB 2-A) mandated that Citizens require personal lines residential
policyholders and applicants to purchase and maintain flood insurance coverage that is at least
equivalent to the coverage provided by the NFIP. 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. Citizens may
deny coverage to a personal lines residential policyholder or applicant who refuses to purchase and
maintain flood insurance.
SB 2-A implemented the purchase of flood coverage by personal lines residential policyholders and
applicants as follows:
Policyholders whose Citizens’ policies do not provide wind coverage are not required to
purchase flood coverage as a condition of maintaining their Citizens’ policies.
All policyholders whose property insured by Citizens 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.
Citizens has expressed concerns with the ability to implement the flood coverage requirements for the
policyholders who must have flood coverage in place on or after January 1, 2024, because of the way
in which dwelling value is calculated for issuance of policies.
24
Effect of the Bill
The bill makes technical changes to the statutory language establishing when certain Citizens
policyholders must obtain flood coverage so that Citizens can implement the flood coverage
20
S. 627.351(6)(aa), F.S. (2021).
21
Id.
22
Id.
23
Current NFIP personal lines flood policies have limits of $250,000 per claim.
24
Current law used the phrase “property valued at . . .,” but Citizens issues policies based on the replacement cost of a
structure or unit (e.g. single-family home or condominium). STORAGE NAME: h0799c.COM PAGE: 6
DATE: 4/20/2023
requirements. It does not change the flood coverage requirements that were signed into law in
December 2022.
REFERRAL OF CASES TO THE DIVISION OF ADMINISTRATIVE HEARINGS (DOAH)
Background
The Division of Administrative Hearings (DOAH) is a state agency that employs full-time Administrative
Law Judges to conduct hearings in most cases in which the substantial interests of a person are
determined by an agency and which involve a disputed issue of material fact.
25
When a state agency
proposes to take some action that is adverse to a person, the affected person is normally entitled to
request an administrative hearing to determine the matter.
26
Requests for hearings are initially made to
the appropriate state agency.
27
If the case does not involve disputed facts, the agency itself will conduct
a proceeding and subsequently render a decision.
28
If the request for hearing indicates that the affected
person disputes facts upon which the proposed action is based, the agency ordinarily refers the case to
DOAH for a hearing.
29
DOAH provides a hearing conducted by an independent and neutral Administrative Law Judge who
thereafter enters a Recommendation or Final Order, which is provided to the state agency and the
parties in the case. In the case of a Recommended Order, the agency reviews the Recommended
Order and issues a Final Order which usually adopts the Judge's factual findings, but, under certain
circumstances, the agency may reject or modify certain legal conclusions of the Judge or the
recommended penalty, if any. If the Final Order is adverse to the non-agency party, an appeal may be
taken within a limited time to a District Court of Appeal.
30
Currently, disputes between Citizens and a Citizens policyholder that are not resolved via informal
negotiations or alternative dispute resolution may result in the filing of a civil suit in circuit court.
31
Effect of the Bill
The bill provides that, in addition to any other method of alternative dispute resolution authorized by
law, Citizens may adopt policy forms that allow both Citizens and Citizens’ policyholders to request a
hearing by DOAH to resolve claims disputes.
Flood Coverage Required by Windstorm Policies
Background
Property insurance policies generally do not include flood coverage. Damage from flooding, including
flooding from hurricane-generated storm surge, is not covered under a standard commercial policy,
including a Commercial Package Policy or a Business Owners Policy.
32
Standard homeowners,
condominium owners, and renters insurance policies do not provide flood coverage, including damage
from storm surge.
33
However, some property insurers include language in property insurance policies
25
Ch. 120, F.S.
26
s. 120.68(1), F.S.
27
See Uniform Rule 28-106.201(2).
28
s. 120.57(2), F.S.
29
s. 120.57(1), F.S.
30
s. 120.68(2)(a), F.S.
31
Bid protest resolutions involving Citizens are currently handled by the Division of Administrative Hearings. See Citizens,
Board of Governors Procedure Protests,
https://www.citizensfla.com/documents/20702/42664/Procurement+Protest+Procedure/816d9bfb-e636-40ec-a9f5-
34873d053bf7 (last visited Apr. 15, 2023).
32
Insurance Information Institute, Does my Business Need Flood Insurance?, https://www.iii.org/article/does-my-
business-need-flood-insurance (last visited Mar. 7, 2023).
33
Insurance Information Institute, Hurricane Insurance FAQ: What Your Insurance Does–and does not–Cover,
https://www.iii.org/article/hurricane-insurance-faq (last visited Mar. 7, 2023). STORAGE NAME: h0799c.COM PAGE: 7
DATE: 4/20/2023
providing windstorm coverage that requires that an insured or applicant maintain flood coverage in
order for the windstorm coverage to be valid if a claim is made for windstorm damage. Compliance with
this requirement may be problematic if an insurance agent has not made an insured or applicant aware
of it at the time a property insurance policy is purchased.
Effect of the Bill
For residential and commercial property insurance policies issued or renewed on or after October 1,
2023, the bill establishes that if the insurer requires an insured or applicant to have flood coverage
when the insurer issues a policy containing wind coverage, the insurer must verify that the insured or
applicant has flood coverage at the time of policy issuance or renewal. If the insurer fails to verify that
the insured or applicant has flood coverage, the insurer may not issue a policy containing wind
coverage.
Prior to issuing a policy containing wind coverage, but after verifying that the insured or applicant has
flood coverage, the insurer must obtain a written acknowledgment from the insured or applicant that he
or she understands that the policy containing wind coverage requires that the insured or applicant
maintain flood coverage.
In addition to flood coverage directly obtained by the insured or applicant, the bill establishes that a
master flood policy issued to someone other than the insured or applicant, but that covers the insured
or applicant as an intended third-party beneficiary is acceptable proof of flood coverage.
B. SECTION DIRECTORY:
Section 1. Amends s. 627.062, F.S., relating to rate standards.
Section 2. Amends s. 627.0629, F.S., relating to residential property insurance; rate filings.
Section 3. Amends s. 627.351, F.S., relating to insurance risk apportionment plans.
Section 4. Creates s. 627.7155, F.S., relating to wind and flood coverage in residential and commercial
property insurance policies.
Section 5. Provides an appropriation.
Section 6. Provides an effective date of July 1, 2023, except as otherwise provided.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
The bill provides a $750,000 nonrecurring appropriation from the Insurance Regulatory Trust Fund
to the Office of Insurance Regulation to conduct a wind-loss mitigation study. The findings of the
study shall be reported to the Governor, the President of the Senate, the Speaker of the House of
Representatives, the Chief Financial Officer, and the Commissioner of Insurance Regulation no
later than July 1, 2024.
STORAGE NAME: h0799c.COM PAGE: 8
DATE: 4/20/2023
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 direct economic impact on the private sector if rates are reduced due
to the consideration required 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.
B. RULE-MAKING AUTHORITY:
The bill neither authorizes nor requires administrative rulemaking.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On March 9, 2023, the Insurance & Banking Subcommittee considered a proposed committee substitute
and reported the bill favorably as a committee substitute. The proposed committee substitute made the
following changes to the bill:
Made technical changes to the statutory language establishing when certain Citizens
policyholders must obtain flood coverage sot that Citizens can implement the flood coverage
requirements. This did not change flood coverage requirements enacted in December 2022.
Established that, if an insurer requires an insured or applicant to have flood coverage when
issuing a policy containing wind coverage, the insurer must verify that the insured or applicant
has flood coverage. If the insurer fails to verify the flood coverage, it may not issue a policy
containing wind coverage.
Stated that a master flood policy issued to someone other than an insured or applicant, but that
includes the insured or applicant as a third-party beneficiary, is acceptable proof of flood
coverage.
On March 29,
2023, the State Administration and Technology Appropriations Subcommittee adopted one
amendment and reported the bill favorably as a committee substitute for a committee substitute. The
amendment: STORAGE NAME: h0799c.COM PAGE: 9
DATE: 4/20/2023
Provides a $750,000 nonrecurring appropriation to the OIR to procure a wind loss mitigation
study. The findings of the study shall be reported to the Governor, the President of the Senate,
the Speaker of the House of Representatives, the Chief Financial Officer, and the
Commissioner of Insurance Regulation no later than July 1, 2024.
On April 17, 2023, the Commerce Committee considered a proposed committee substitute, adopted one
amendment, and reported the bill favorably as a committee substitute. The proposed committee substitute:
Provided that the “glidepath” normally imposed on Citizens rates 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.
Established that, in addition to any other method of alternative dispute resolution authorized by
law, Citizens may adopt policy forms that allow both Citizens and its policyholders to request a
hearing by DOAH to resolve claims disputes.
The amendment to the proposed committee substitute makes certain that a limitation on Citizens rates for
non-primary residences (current law) and policies assumed from unsound insurers (proposed by the bill)
apply on a year-over-year basis, rather than Citizen rate in effect the year before the insurance application
was made.
The analysis is drafted to the committee substitute as passed by the Commerce Committee.