Coverage by Citizens Property Insurance Corporation

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A bill to be entitled 1
An act relating to coverage by Citizens Property 2
Insurance Corporation; amending s. 627.351, F.S.; 3
revising eligibility for coverage of residential 4
structures in certain counties by Citizens Property 5
Insurance Corporation; requiring the corporation to 6
implement certain rate increases annually in such 7
counties for single policies issued by the 8
corporation; providing additional policies issued by 9
the corporation which do not require policyholders to 10
purchase flood insurance as a condition for 11
maintaining the policies; providing an effective date. 12
13
Be It Enacted by the Legislature of the State of Florida: 14
15
Section 1. Paragraphs (a), (n), and (aa) of subsection (6) 16
of section 627.351, Florida Statutes, are amended to read: 17
627.351 Insurance risk apportionment plans.— 18
(6) CITIZENS PROPERTY INSURANCE CORPORATION.— 19
(a) The public purpose of this subsection is to ensure 20
that there is an orderly market for property insurance for 21
residents and businesses of this state. 22
1. The Legislature finds that private insurers are 23
unwilling or unable to provide affordable property insurance 24
coverage in this state to the extent sought and needed. The 25

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absence of affordable property insurance threatens the public 26
health, safety, and welfare and likewise threatens the economic 27
health of the state. The state therefore has a compelling public 28
interest and a public purpose to assist in assuring that 29
property in the state is insured and that it is insured at 30
affordable rates so as to facilitate the remediation, 31
reconstruction, and replacement of damaged or destroyed property 32
in order to reduce or avoid the negative effects otherwise 33
resulting to the public health, safety, and welfare, to the 34
economy of the state, and to the revenues of the state and local 35
governments which are needed to provide for the public welfare. 36
It is necessary, therefore, to provide affordable property 37
insurance to applicants who are in good faith entitled to 38
procure insurance through the voluntary market but are unable to 39
do so. The Legislature intends, therefore, that affordable 40
property insurance be provided and that it continue to be 41
provided, as long as necessary, through Citizens Property 42
Insurance Corporation, a government entity that is an integral 43
part of the state, and that is not a private insurance company. 44
To that end, the corporation shall strive to increase the 45
availability of affordable property insurance in this state, 46
while achieving efficiencies and economies, and while providing 47
service to policyholders, applicants, and agents which is no 48
less than the quality generally provided in the voluntary 49
market, for the achievement of the foregoing public purposes. 50

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Because it is essential for this government entity to have the 51
maximum financial resources to pay claims following a 52
catastrophic hurricane, it is the intent of the Legislature that 53
the corporation continue to be an integral part of the state and 54
that the income of the corporation be exempt from federal income 55
taxation and that interest on the debt obligations issued by the 56
corporation be exempt from federal income taxation. 57
2. The Residential Property and Casualty Joint 58
Underwriting Association originally created by this statute 59
shall be known as the Citizens Property Insurance Corporation. 60
The corporation shall provide insurance for residential and 61
commercial property, for applicants who are entitled, but, in 62
good faith, are unable to procure insurance through the 63
voluntary market. The corporation shall operate pursuant to a 64
plan of operation approved by order of the Financial Services 65
Commission. The plan is subject to continuous review by the 66
commission. The commission may, by order, withdraw approval of 67
all or part of a plan if the commission determines that 68
conditions have changed since approval was granted and that the 69
purposes of the plan require changes in the plan. For the 70
purposes of this subsection, residential coverage includes both 71
personal lines residential coverage, which consists of the type 72
of coverage provided by homeowner, mobile home owner, dwelling, 73
tenant, condominium unit owner, and similar policies; and 74
commercial lines residential coverage, which consists of the 75

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type of coverage provided by condominium association, apartment 76
building, and similar policies. 77
3. With respect to coverage for personal lines residential 78
structures: 79
a. Effective January 1, 2017, a structure that has a 80
dwelling replacement cost of $700,000 or more, or a single 81
condominium unit that has a combined dwelling and contents 82
replacement cost of $700,000 or more, is not eligible for 83
coverage by the corporation. 84
b. The requirements of sub-subparagraph a. do not apply in 85
counties where the office determines there is not a reasonable 86
degree of competition. In such counties a personal lines 87
residential structure that has a dwelling replacement cost of 88
less than $1.5 $1 million, or a single condominium unit that has 89
a combined dwelling and contents replacement cost of less than 90
$1 million, is eligible for coverage by the corporation. 91
4. It is the intent of the Legislature that policyholders, 92
applicants, and agents of the corporation receive service and 93
treatment of the highest possible level but never less than that 94
generally provided in the voluntary market. It is also intended 95
that the corporation be held to service standards no less than 96
those applied to insurers in the voluntary market by the office 97
with respect to responsiveness, timeliness, customer courtesy, 98
and overall dealings with policyholders, applicants, or agents 99
of the corporation. 100

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5.a. Effective January 1, 2009, a personal lines 101
residential structure that is located in the "wind-borne debris 102
region," as defined in s. 1609.2, International Building Code 103
(2006), and that has an insured value on the structure of 104
$750,000 or more is not eligible for coverage by the corporation 105
unless the structure has opening protections as required under 106
the Florida Building Code for a newly constructed residential 107
structure in that area. A residential structure is deemed to 108
comply with this sub-subparagraph if it has shutters or opening 109
protections on all openings and if such opening protections 110
complied with the Florida Building Code at the time they were 111
installed. 112
b. Any major structure, as defined in s. 161.54(6)(a), 113
that is newly constructed, or rebuilt, repaired, restored, or 114
remodeled to increase the total square footage of finished area 115
by more than 25 percent, pursuant to a permit applied for after 116
July 1, 2015, is not eligible for coverage by the corporation if 117
the structure is seaward of the coastal construction control 118
line established pursuant to s. 161.053 or is within the Coastal 119
Barrier Resources System as designated by 16 U.S.C. ss. 3501-120
3510. 121
6. With respect to wind-only coverage for commercial lines 122
residential condominiums, effective July 1, 2014, a condominium 123
shall be deemed ineligible for coverage if 50 percent or more of 124
the units are rented more than eight times in a calendar year 125

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for a rental agreement period of less than 30 days. 126
(n)1. Rates for coverage provided by the corporation must 127
be actuarially sound pursuant to s. 627.062 and not competitive 128
with approved rates charged in the admitted voluntary market so 129
that the corporation functions as a residual market mechanism to 130
provide insurance only when insurance cannot be procured in the 131
voluntary market, except as otherwise provided in this 132
paragraph. The office shall provide the corporation such 133
information as would be necessary to determine whether rates are 134
competitive. The corporation shall file its recommended rates 135
with the office at least annually. The corporation shall provide 136
any additional information regarding the rates which the office 137
requires. The office shall consider the recommendations of the 138
board and issue a final order establishing the rates for the 139
corporation within 45 days after the recommended rates are 140
filed. The corporation may not pursue an administrative 141
challenge or judicial review of the final order of the office. 142
2. In addition to the rates otherwise determined pursuant 143
to this paragraph, the corporation shall impose and collect an 144
amount equal to the premium tax provided in s. 624.509 to 145
augment the financial resources of the corporation. 146
3. After the public hurricane loss-projection model under 147
s. 627.06281 has been found to be accurate and reliable by the 148
Florida Commission on Hurricane Loss Projection Methodology, the 149
model shall be considered when establishing the windstorm 150

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portion of the corporation's rates. The corporation may use the 151
public model results in combination with the results of private 152
models to calculate rates for the windstorm portion of the 153
corporation's rates. This subparagraph does not require or allow 154
the corporation to adopt rates lower than the rates otherwise 155
required or allowed by this paragraph. 156
4. The corporation must make a recommended actuarially 157
sound rate filing for each personal and commercial line of 158
business it writes. 159
5. Notwithstanding the board's recommended rates and the 160
office's final order regarding the corporation's filed rates 161
under subparagraph 1., the corporation shall annually implement 162
a rate increase which, except for sinkhole coverage, does not 163
exceed the following for any single policy issued by the 164
corporation, excluding coverage changes and surcharges: 165
a. Twelve percent for 2023. 166
b. Thirteen percent for 2024. 167
c. Fourteen percent for 2025. 168
d. Fifteen percent for 2026 and all subsequent years. 169
6. In a county in which the office determines there is not 170
a reasonable degree of competition, the corporation shall 171
annually implement a rate increase that does not exceed 10 172
percent for any single policy issued by the corporation. 173
7.6. The corporation may also implement an increase to 174
reflect the effect on the corporation of the cash buildup factor 175

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pursuant to s. 215.555(5)(b). 176
8.7. The corporation's implementation of rates as 177
prescribed in subparagraphs 5. and 9. 8. shall cease for any 178
line of business written by the corporation upon the 179
corporation's implementation of actuarially sound rates. 180
Thereafter, the corporation shall annually make a recommended 181
actuarially sound rate filing that is not competitive with 182
approved rates in the admitted voluntary market for each 183
commercial and personal line of business the corporation writes. 184
9.8. New or renewal personal lines policies that do not 185
cover a primary residence are not subject to the rate increase 186
limitations in subparagraph 5., but may not be charged more than 187
50 percent above, nor less than, the prior year's established 188
rate for the corporation. 189
10.9. As used in this paragraph, the term "primary 190
residence" means the dwelling that is the policyholder's primary 191
home or is a rental property that is the primary home of the 192
tenant, and which the policyholder or tenant occupies for more 193
than 9 months of each year. 194
(aa) Except as otherwise provided in this paragraph, the 195
corporation shall require the securing and maintaining of flood 196
insurance as a condition of coverage of a personal lines 197
residential risk. The insured or applicant must execute a form 198
approved by the office affirming that flood insurance is not 199
provided by the corporation and that if flood insurance is not 200

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secured by the applicant or insured from an insurer other than 201
the corporation and in addition to coverage by the corporation, 202
the risk will not be eligible for coverage by the corporation. 203
The corporation may deny coverage of a personal lines 204
residential risk to an applicant or insured who refuses to 205
secure and maintain flood insurance. The requirement to purchase 206
flood insurance shall be implemented as follows: 207
1. Except as provided in subparagraphs 2. and 3., all 208
personal lines residential policyholders must have flood 209
coverage in place for policies effective on or after: 210
a. January 1, 2024, for a structure that has a dwelling 211
replacement cost of $600,000 or more. 212
b. January 1, 2025, for a structure that has a dwelling 213
replacement cost of $500,000 or more. 214
c. January 1, 2026, for a structure that has a dwelling 215
replacement cost of $400,000 or more. 216
d. January 1, 2027, for all other personal lines 217
residential property insured by the corporation. 218
2. All personal lines residential policyholders whose 219
property insured by the corporation is located within the 220
special flood hazard area defined by the Federal Emergency 221
Management Agency must have flood coverage in place: 222
a. At the time of initial policy issuance for all new 223
personal lines residential policies issued by the corporation on 224
or after April 1, 2023. 225

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b. By the time of the policy renewal for all personal 226
lines residential policies renewing on or after July 1, 2023. 227
3. Policyholders are not required to purchase flood 228
insurance as a condition for maintaining the following policies 229
issued by the corporation: 230
a. Policies that do not provide coverage for the peril of 231
wind. 232
b. Policies that provide coverage under a condominium unit 233
owners form. 234
c. Policies that provide coverage in Zone X as designated 235
by the Federal Emergency Management Agency or for structures 236
that are elevated at least 1 foot above the flood zone's minimum 237
base flood elevation, if the office determines there is not a 238
reasonable degree of competition in such zone or for such 239
structures. 240
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The flood insurance required under this paragraph must meet, at 242
a minimum, the dwelling coverage available from the National 243
Flood Insurance Program or the requirements of s. 244
627.715(1)(a)1., 2., and 3. 245
Section 2. This act shall take effect July 1, 2026. 246