Citizens Property Insurance Corporation

Revises the legislative findings for establishing Citizens in order to ensure its federal tax-exempt status. Among other things, the bill clarifies that the absence of affordable property insurance threatens the public health, safety, and welfare and that the state has a compelling public interest in assuring that property is insured at affordable rates.

The bill prohibits Citizens from implementing any rate increase until January 1, 2009. This extends for an additional year the current prohibition against a rate increase passed by lawmakers earlier this year. The rates in effect on December 31, 2006 shall remain in effect for 2007 and 2008 except for any rate change that results in a lower rate.

Provides that if a new applicant to Citizens is offered coverage from an insurer at its approved rate, the applicant is not eligible for a Citizens policy unless the insurer's premium is more than 15 percent greater than the premium for comparable Citizens coverage. The prior standard was 25 percent. The bill also provides criteria for determining when “comparable coverage” has been offered and allows an insurance agent to make this initial determination.

Extends until January 1, 2009 (rather than July 1, 2008) the provision that makes personal lines residential structures that have a dwelling replacement cost of $1 million or more ineligible for Citizens coverage. The one except is for dwellings insured by Citizens as of December 31 2008, which may reapply and obtain coverage under certain conditions.

Permits a policyholder whose coverage with Citizens has been assumed by another insurer to continue to be eligible for Citizens coverage through the end of the assumption period regardless of any offer of coverage by the insurer.

Deletes the requirement that an insurer that writes the ex-wind coverage must contract with Citizens to adjust the windstorm claims on behalf of Citizens.

Creates the “Citizens Property Insurance Corporation Mission Review Task Review Task Force” to analyze and compile data for a report specifying the statutory and operational changes needed to return Citizens to its former role as a state created, noncompetitive residual market.

1. The task force will consist of 19 members: Governor Charlie Crist will appoint four members, of which two must be consumer representatives. Senate President Ken Pruitt will appoint three members along with House Speaker Marco Rubio. Six task force members will be representatives of private insurance companies, with three members appointed by Crist, Pruitt, and Rubio. Chief Financial Officer Alex Sink will appoint three members representing insurance agents.

2. The task force must submit its report to the Governor, President of the Senate, and Speaker of the House by January 31, 2008.

3. The task force will be funded through a $600,000 appropriation from the Insurance Regulatory Trust Fund. The Department of Financial Services will provide the task force with staff and the monies will also allow the task force to employ consultants.

Prohibition on Florida-Only Pup Companies

The bill prevents regulators from issuing a new certificate of authority for the transaction of residential property insurance to any insurer domiciled in Florida, which is a wholly owned subsidiary of an insurer authorized to do business in any other state. The provision takes effective on December 31, 2008.

The bill also requires the rate filings of an insurer domiciled in Florida that is a wholly owned subsidiary of an insurer authorized to do business in any other state to include information relating to the profits of the parent company. The provision takes effect on December 31, 2008.

Claim Payments

Revises the requirement for a property insurer to pay or deny a claim within 90 days of receiving notice of a claim.

This requirement applies to residential property insurance claims and to commercial property claims for structural or contents coverage if the structure is 10,000 sq. ft. or less. However, this would not apply to a policy covering commercial nonresidential structures or contents' coverage in more than one state.

Alternatively, the insurer is required to pay a portion of the claim within the 90-day period.

Require an insurer to pay interest pursuant to Chapter. 55.03, Florida Statute, (as required for legal judgment) to a policyholder if the insurer fails to pay a claim within 90 days of receipt in a timely fashion, or 15 days after circumstances that have reasonably prevented payment no longer exist, whichever is later.

Policy Exclusions and Deductibles

Requires an insurer to make available a policy that excludes coverage for windstorm coverage (rather than hurricane or windstorm coverage), and requires that all property insurers (commercial and residential) offer this coverage.

Excludes a tenant's policy from the requirement for an insurer to offer an exclusion of contents coverage.

Specifies that the policy exclusions for windstorm or content coverage may only be implemented as of the date of a policy's renewal.

Specifies that a new deductible for residential property insurance may only be implemented as of the date of the policy's renewal.

Rating Law

Specifies that the temporary prohibition against making a “use and file” rate filing that applies to property insurance (but not casualty insurance) rate filings and clarifies that it applies to rate filings submitted after January 25, 2007.

Prohibits an insurer from recouping in its rates the interest payments the insurer makes for failure to pay or deny a property insurance claim within 90 days as required by statute.

Clarifies that multi-line discount may only be offered by an insurer to a consumer that has purchased another policy from the same insurer or insurer group.

Surplus Lines Policies

Requires a retail agent to inform a policyholder that coverage may be available and less expensive from Citizens before the policy is referred to the surplus lines insurance market. The notice must also include information that Citizens coverage may be less than the property's existing coverage.

Requires only one rejection from an authorized insurer, rather than three rejections, in order for coverage for a $1 million residential structure to be covered through the surplus lines market.

If a policyholder pays for a surplus lines insurance policy with a bad check, or fails to maintain membership in an organization necessary to obtain insurance coverage, the policy may be cancelled for nonpayment of premium. If a bad check is the initial premium payment, the policy is retroactively void unless payment is tendered within the earlier of five days after actual notice by a certified mail is received by the applicant, or 15 days after notice is sent to the applicant by certified or registered mail.