Florida Senate - 2024 SB 1106 By Senator Hooper 21-01045A-24 20241106__ 1 A bill to be entitled 2 An act relating to coverage by Citizens Property 3 Insurance Corporation; amending s. 627.351, F.S.; 4 revising certain minimum replacement costs as risk 5 amounts ineligible for coverage by Citizens Property 6 Insurance Corporation for personal lines residential 7 structures; providing exceptions to rate increase 8 limitations on single policies issued by the 9 corporation; requiring surcharges for a specified 10 purpose for policies covering certain personal lines 11 residential structures; prohibiting coverage for 12 certain dwelling structures and single condominium 13 units under certain circumstances; deleting provisions 14 relating to rate increase limitations on certain 15 policies; deleting the definition of the term primary 16 residence; providing an effective date. 17 18 Be It Enacted by the Legislature of the State of Florida: 19 20 Section 1.Paragraphs (a) and (n) of subsection (6) of 21 section 627.351, Florida Statutes, are amended to read: 22 627.351Insurance risk apportionment plans. 23 (6)CITIZENS PROPERTY INSURANCE CORPORATION. 24 (a)The public purpose of this subsection is to ensure that 25 there is an orderly market for property insurance for residents 26 and businesses of this state. 27 1.The Legislature finds that private insurers are 28 unwilling or unable to provide affordable property insurance 29 coverage in this state to the extent sought and needed. The 30 absence of affordable property insurance threatens the public 31 health, safety, and welfare and likewise threatens the economic 32 health of the state. The state therefore has a compelling public 33 interest and a public purpose to assist in assuring that 34 property in the state is insured and that it is insured at 35 affordable rates so as to facilitate the remediation, 36 reconstruction, and replacement of damaged or destroyed property 37 in order to reduce or avoid the negative effects otherwise 38 resulting to the public health, safety, and welfare, to the 39 economy of the state, and to the revenues of the state and local 40 governments which are needed to provide for the public welfare. 41 It is necessary, therefore, to provide affordable property 42 insurance to applicants who are in good faith entitled to 43 procure insurance through the voluntary market but are unable to 44 do so. The Legislature intends, therefore, that affordable 45 property insurance be provided and that it continue to be 46 provided, as long as necessary, through Citizens Property 47 Insurance Corporation, a government entity that is an integral 48 part of the state, and that is not a private insurance company. 49 To that end, the corporation shall strive to increase the 50 availability of affordable property insurance in this state, 51 while achieving efficiencies and economies, and while providing 52 service to policyholders, applicants, and agents which is no 53 less than the quality generally provided in the voluntary 54 market, for the achievement of the foregoing public purposes. 55 Because it is essential for this government entity to have the 56 maximum financial resources to pay claims following a 57 catastrophic hurricane, it is the intent of the Legislature that 58 the corporation continue to be an integral part of the state and 59 that the income of the corporation be exempt from federal income 60 taxation and that interest on the debt obligations issued by the 61 corporation be exempt from federal income taxation. 62 2.The Residential Property and Casualty Joint Underwriting 63 Association originally created by this statute shall be known as 64 the Citizens Property Insurance Corporation. The corporation 65 shall provide insurance for residential and commercial property, 66 for applicants who are entitled, but, in good faith, are unable 67 to procure insurance through the voluntary market. The 68 corporation shall operate pursuant to a plan of operation 69 approved by order of the Financial Services Commission. The plan 70 is subject to continuous review by the commission. The 71 commission may, by order, withdraw approval of all or part of a 72 plan if the commission determines that conditions have changed 73 since approval was granted and that the purposes of the plan 74 require changes in the plan. For the purposes of this 75 subsection, residential coverage includes both personal lines 76 residential coverage, which consists of the type of coverage 77 provided by homeowner, mobile home owner, dwelling, tenant, 78 condominium unit owner, and similar policies; and commercial 79 lines residential coverage, which consists of the type of 80 coverage provided by condominium association, apartment 81 building, and similar policies. 82 3.With respect to coverage for personal lines residential 83 structures,: 84 a.effective July 1, 2024 January 1, 2014, a structure that 85 has a dwelling replacement cost of $1 million or more, or a 86 single condominium unit that has a combined dwelling and 87 contents replacement cost of $1 million or more, is not eligible 88 for coverage by the corporation. Such dwellings insured by the 89 corporation on December 31, 2013, may continue to be covered by 90 the corporation until the end of the policy term. The office 91 shall approve the method used by the corporation for valuing the 92 dwelling replacement cost for the purposes of this subparagraph. 93 If a policyholder is insured by the corporation before being 94 determined to be ineligible pursuant to this subparagraph and 95 such policyholder files a lawsuit challenging the determination, 96 the policyholder may remain insured by the corporation until the 97 conclusion of the litigation. 98 b.Effective January 1, 2015, a structure that has a 99 dwelling replacement cost of $900,000 or more, or a single 100 condominium unit that has a combined dwelling and contents 101 replacement cost of $900,000 or more, is not eligible for 102 coverage by the corporation. Such dwellings insured by the 103 corporation on December 31, 2014, may continue to be covered by 104 the corporation only until the end of the policy term. 105 c.Effective January 1, 2016, a structure that has a 106 dwelling replacement cost of $800,000 or more, or a single 107 condominium unit that has a combined dwelling and contents 108 replacement cost of $800,000 or more, is not eligible for 109 coverage by the corporation. Such dwellings insured by the 110 corporation on December 31, 2015, may continue to be covered by 111 the corporation until the end of the policy term. 112 d.Effective January 1, 2017, a structure that has a 113 dwelling replacement cost of $700,000 or more, or a single 114 condominium unit that has a combined dwelling and contents 115 replacement cost of $700,000 or more, is not eligible for 116 coverage by the corporation. Such dwellings insured by the 117 corporation on December 31, 2016, may continue to be covered by 118 the corporation until the end of the policy term. 119 120 The requirements of sub-subparagraphs b.-d. do not apply in 121 counties where the office determines there is not a reasonable 122 degree of competition. In such counties a personal lines 123 residential structure that has a dwelling replacement cost of 124 less than $1 million, or a single condominium unit that has a 125 combined dwelling and contents replacement cost of less than $1 126 million, is eligible for coverage by the corporation. 127 4.It is the intent of the Legislature that policyholders, 128 applicants, and agents of the corporation receive service and 129 treatment of the highest possible level but never less than that 130 generally provided in the voluntary market. It is also intended 131 that the corporation be held to service standards no less than 132 those applied to insurers in the voluntary market by the office 133 with respect to responsiveness, timeliness, customer courtesy, 134 and overall dealings with policyholders, applicants, or agents 135 of the corporation. 136 5.a.Effective January 1, 2009, a personal lines 137 residential structure that is located in the wind-borne debris 138 region, as defined in s. 1609.2, International Building Code 139 (2006), and that has an insured value on the structure of 140 $750,000 or more is not eligible for coverage by the corporation 141 unless the structure has opening protections as required under 142 the Florida Building Code for a newly constructed residential 143 structure in that area. A residential structure is deemed to 144 comply with this sub-subparagraph if it has shutters or opening 145 protections on all openings and if such opening protections 146 complied with the Florida Building Code at the time they were 147 installed. 148 b.Any major structure, as defined in s. 161.54(6)(a), that 149 is newly constructed, or rebuilt, repaired, restored, or 150 remodeled to increase the total square footage of finished area 151 by more than 25 percent, pursuant to a permit applied for after 152 July 1, 2015, is not eligible for coverage by the corporation if 153 the structure is seaward of the coastal construction control 154 line established pursuant to s. 161.053 or is within the Coastal 155 Barrier Resources System as designated by 16 U.S.C. ss. 3501 156 3510. 157 6.With respect to wind-only coverage for commercial lines 158 residential condominiums, effective July 1, 2014, a condominium 159 shall be deemed ineligible for coverage if 50 percent or more of 160 the units are rented more than eight times in a calendar year 161 for a rental agreement period of less than 30 days. 162 (n)1.Rates for coverage provided by the corporation must 163 be actuarially sound pursuant to s. 627.062 and not competitive 164 with approved rates charged in the admitted voluntary market so 165 that the corporation functions as a residual market mechanism to 166 provide insurance only when insurance cannot be procured in the 167 voluntary market, except as otherwise provided in this 168 paragraph. The office shall provide the corporation such 169 information as would be necessary to determine whether rates are 170 competitive. The corporation shall file its recommended rates 171 with the office at least annually. The corporation shall provide 172 any additional information regarding the rates which the office 173 requires. The office shall consider the recommendations of the 174 board and issue a final order establishing the rates for the 175 corporation within 45 days after the recommended rates are 176 filed. The corporation may not pursue an administrative 177 challenge or judicial review of the final order of the office. 178 2.In addition to the rates otherwise determined pursuant 179 to this paragraph, the corporation shall impose and collect an 180 amount equal to the premium tax provided in s. 624.509 to 181 augment the financial resources of the corporation. 182 3.After the public hurricane loss-projection model under 183 s. 627.06281 has been found to be accurate and reliable by the 184 Florida Commission on Hurricane Loss Projection Methodology, the 185 model shall be considered when establishing the windstorm 186 portion of the corporations rates. The corporation may use the 187 public model results in combination with the results of private 188 models to calculate rates for the windstorm portion of the 189 corporations rates. This subparagraph does not require or allow 190 the corporation to adopt rates lower than the rates otherwise 191 required or allowed by this paragraph. 192 4.The corporation must make a recommended actuarially 193 sound rate filing for each personal and commercial line of 194 business it writes. 195 5.Notwithstanding the boards recommended rates and the 196 offices final order regarding the corporations filed rates 197 under subparagraph 1., the corporation shall annually implement 198 a rate increase which, except for sinkhole coverage, does not 199 exceed the following for any single policy issued by the 200 corporation, excluding coverage changes and surcharges: 201 a.Twelve percent for 2023. 202 b.Thirteen percent for 2024. 203 c.Fourteen percent for 2025. 204 d.Fifteen percent for 2026 and all subsequent years. 205 206 This subparagraph does not apply to a personal lines residential 207 structure that has a dwelling replacement cost of $700,000 or 208 more or a single condominium unit that has a combined dwelling 209 and contents replacement cost of $700,000 or more. 210 6.The corporation may also implement an increase to 211 reflect the effect on the corporation of the cash buildup factor 212 pursuant to s. 215.555(5)(b). 213 7.The corporations implementation of rates as prescribed 214 in subparagraph subparagraphs 5. and 8. shall cease for any line 215 of business written by the corporation upon the corporations 216 implementation of actuarially sound rates. Thereafter, the 217 corporation shall annually make a recommended actuarially sound 218 rate filing that is not competitive with approved rates in the 219 admitted voluntary market for each commercial and personal line 220 of business the corporation writes. 221 8.Effective July 1, 2024, for the purpose of ensuring that 222 the corporations rates are not competitive with approved rates 223 charged in the admitted voluntary market as required by 224 subparagraph 1., a surcharge equal to the lesser of $2,500 or 25 225 percent of the corporations rate for each policy applies to 226 personal lines residential structures that have a dwelling 227 replacement cost of $700,000 or more and single condominium 228 units that have a combined dwelling and contents replacement 229 cost of $700,000 or more. Notwithstanding this subsection, 230 effective July 1, 2024, a personal lines residential structure 231 that has a dwelling replacement cost of $700,000 or more and a 232 single condominium unit that has a combined dwelling and 233 contents replacement cost of $700,000 or more are not eligible 234 for coverage by the corporation if the risk is offered 235 comparable coverage from an authorized insurer at the insurers 236 approved rate under a standard policy including wind coverage. 237 8.The following new or renewal personal lines policies 238 written on or after November 1, 2023, are not subject to the 239 rate increase limitations in subparagraph 5., but may not be 240 charged more than 50 percent above, nor less than, the prior 241 years established rate for the corporation: 242 a.Policies that do not cover a primary residence; 243 b.New policies under which the coverage for the insured 244 risk, before the date of application with the corporation, was 245 last provided by an insurer determined by the office to be 246 unsound or an insurer placed in receivership under chapter 631; 247 or 248 c.Subsequent renewals of those policies, including the new 249 policies in sub-subparagraph b., under which the coverage for 250 the insured risk, before the date of application with the 251 corporation, was last provided by an insurer determined by the 252 office to be unsound or an insurer placed in receivership under 253 chapter 631. 254 9.As used in this paragraph, the term primary residence 255 means the dwelling that is the policyholders primary home or is 256 a rental property that is the primary home of the tenant, and 257 which the policyholder or tenant occupies for more than 9 months 258 of each year. 259 Section 2.This act shall take effect July 1, 2024.