BILL: CS/CS/SB’s 2086 & 2498
, 498.024, 498.025, 498.027, 498.028, 498.029, 498.031, 498.033, 498.035, 498.037,
, 498.041, 498.047, 498.049, 498.051, 498.053, 498.059, 498.061, and 498.063. The bill
renumbers the following sections of the Florida Statutes: 498.009, 498.011, 498.013, 498.019, and 498.057.
Condominium Background A condominium is a “form of ownership of real property created pursuant to this chapter, which is comprised entirely of units that may be owned by one or more persons, and in which there is, appurtenant to each unit, an undivided share in common elements.”1 Condominiums are regulated by the Division of Florida Land Sales, Condominiums, and Mobile Homes (“division”) of the Department of Business and Professional Regulation (“DBPR” or “department”), in accordance with ch. 718, F.S.
Pooling of Condominium Associations to Secure Windstorm Insurance In 2007, the Legislature enacted a provision that specified what constituted “adequate windstorm insurance” under the condominium law for a group of at least three communities operating as residential condominiums (ch. 718, F.S.), cooperatives (ch. 719, F.S.), homeowners’ associations (ch. 720, F.S.), or timeshare entities (ch. 721, F.S.).2 The law provided that these entities could pool their resources to obtain and maintain windstorm insurance coverage if such coverage was sufficient to cover an amount equal to the probable maximum loss (PML) for such communities for a 250-year windstorm event. The PML must be determined through the use of a competent model that has been accepted by the Florida Commission on Hurricane Loss Projection Methodology. 3
The law did not amend or change any requirements for regulation of insurance policies by the Office of Insurance Regulation (OIR). Currently, property insurance policies sold by authorized insurers (i.e., insurers that have a certificate of authority issued by the OIR) are subject to approval of rates and policy forms. However, policies issued by surplus lines insurers are not subject to approval of rates and forms. Surplus lines insurers must be approved by OIR as “eligible” by meeting certain financial requirements. In general, an insurance agent cannot place business with a surplus lines insurer without documenting that coverage is unavailable from an authorized insurer.4 As a result of the 2007 legislation, some surplus lines insurers have written condominium association insurance policies with policy limits below the total value of the association properties. Representatives with Willis Group, an insurance broker, state that as of
1 2 3 Section 718.103(11), F.S. Chapter 2007-1, L.O.F. (House Bill 1A was passed during Special Session A and amended s. 718.111(11)(a)1., F.S. Established in 1995, the Florida Commission (Commission) on Hurricane Loss Projection Methodology’s role is to adopt findings relating to the accuracy or reliability of the methods, standards, models and other means used to project hurricane losses. Its members include experts in insurance, finance, statistics, computer system design, and meteorology. The Commission sets standards for loss projection methodology and examines the methods employed in proprietary hurricane loss models used by private insurers in setting rates to determine whether they meet the Commission standards. The law provides that an insurer may use in its rate filing hurricane loss models found by the Commission to be accurate or reliable and that such findings are admissible and relevant only if OIR and the consumer advocate appointed by Department of Financial Services have access to all of the assumptions and factors that were used in developing the model and are not precluded from disclosing such information in a rate proceeding. The Commission has approved five models.
Surplus lines insurers are not required to have their rates or forms approved by the OIR under ss 626.913-626.937, F.S.