This is the Public Hearing on the adoption of proposed amendments to Rules 69P-2.001 and 69P-2.002, Florida Administrative Code, published on September 8, 2006 in Vol. 32, No. 36, of the F.A.W. No notice of change was published. Pursuant to the ...

 

DEPARTMENT OF FINANCIAL SERVICES
OIR – Insurance Regulation

The Financial Services Commission announces a public hearing to which all persons are invited.

DATE AND TIME: October 3, 2006, 9:00 a.m., during a regular meeting of the Financial Services Commission.

PLACE: Cabinet Meeting Room, Lower Level, The Capitol, Tallahassee, Florida

GENERAL SUBJECT MATTER TO BE CONSIDERED: This is the Public Hearing on the adoption of proposed amendments to Rules 69P-2.001 and 69P-2.002, Florida Administrative Code, published on September 8, 2006 in Vol. 32, No. 36, of the F.A.W. No notice of change was published.

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this program, please advise the contact person at least 5 calendar days before the program by contacting: Abby London, [e-mail].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

69P-2.001 Purpose.

The purpose of this rule is to adopt a joint underwriting plan to equitably apportion among insurers authorized in this state to write property and casualty insurance the underwriting of insurance to persons with risks eligible, as defined in the statutes and this rule, and who are in good faith entitled to, but are unable to, obtain an adequate level of insurance coverage, including excess coverage, through the voluntary market. Upon adoption of this plan, all insurers authorized in this state to underwrite property or casualty insurance shall participate in this plan. This plan shall be construed to conform, and, when necessary, amended to conform to the provisions of Subsection 627.351(5), Florida Statutes. The purpose of these rules is to adopt a Plan for the provision of property and casualty insurance coverage to persons in Florida who are eligible for such insurance coverage when such coverage must be provided by the Florida Property and Casualty Joint Underwriting Association as specified in Section 627.351(5), Florida Statutes.

Specific Authority 624.308(1), 627.351(5) FS. Law Implemented 624.307(1), 627.351(5) FS. History–New 8-13-89, Formerly 4-87.001, 4J-2.001, Amended ___________.

 

69P-2.002 Adoption of Property and Casualty Risk Apportionment Plan.

The Florida Property and Casualty Joint Underwriting Association Plan of Operation, as amended April, 1991, and Articles of the Association are hereby adopted as the plan for property and casualty insurance risk apportionment in Florida and incorporated by reference.

(1) The following terms have the following meanings for purposes of this rule:

(a) “Adequate level of coverage” means that coverage which is required by state law or by responsible or prudent business practices.

(b) “Assessable Premium” means the net direct premiums of each participating insurer for commercial property insurance risks written by the insurer, excluding the premium associated with commercial residential insurance policies. Assessable Premium does not include premium associated with liability insurance or kinds of insurance other than property insurance.

(c) “The Association” means the Property and Casualty Joint Underwriting Association.

(d) “Market assistance plan” means the market assistance plan adopted pursuant to Section 627.3515, Florida Statutes.

(e) “Net direct premium” means gross direct premiums, including policy and membership fees less return premiums and premiums on policies not taken.

(f) “Office” means the Office of Insurance Regulation.

(g) “Participating insurer” means each and every insurer authorized in this state to underwrite commercial property insurance. The term does not include an insurer who writes only reinsurance and does not write direct insurance in this state.

(h) “Qualifying quoted premium” means a quote on coverage from an insurer that meets the following criteria:

1. In the case of an authorized carrier, the quoted premium must not exceed the premium available for a given classification currently in use by the Association or the premium developed by using the rates and rating plans on file with the Office by the quoting insurer, whichever is greater.

2. In the case of an unauthorized surplus lines insurer, the quoted premium must not exceed the premium available for a given classification currently in use by the Association by more than 25 percent, after consideration of any individual risk surcharge or credit.

(i) “Servicing carrier” means a participating insurer which agrees to be and is designated by the office to provide policyholder and claims service, including the issuance of policies, on behalf of the participating insurers.

(j) “Substantially impair the ability of the entity to conduct its affairs” means that the lack of insurance would result in one or more of the following conditions:

1. An event of default on an existing business loan or mortgage; or

2. A structure that is necessary for the business to continue operations could not be rebuilt in the event of a catastrophe; or

3. The business entity could not continue to meet its legal obligations.

(k) “Unavailable in the voluntary market” means that the insured or agent has made a diligent search, has made a good-faith application for coverage from a minimum of one surplus lines insurance company, and three authorized insurance companies, and the Florida Market Assistance Plan has made a search and an adequate level of coverage has not been found or the quoted premium exceeds the limitations of Section 627.351(5)(a)1.e., Florida Statutes.

(2) Powers of the Association. The Association may perform any activity involved in the business of insurance including the borrowing of funds and entering into financing agreements.

(3) The Board of Governors. The Association shall be overseen by a thirteen-member Board of Governors (hereinafter “the Board”) as provided by statute. Board members shall be appointed to serve two-year terms, but may be removed and replaced at any time by the Chief Financial Officer. The first term of office for all Board members shall begin upon the date of the Chief Financial Officer’s first appointment and shall expire two years later unless replaced by the Chief Financial Officer at an earlier time. Any replacement appointments also shall be made for a period of two years. Four of the Board members shall be representatives of insurance company trade associations, and two members shall be representatives of agent associations. The remaining seven members may be any persons appointed by the Chief Financial Officer. The Board may appoint committees and advisory groups as it deems necessary. The Risk Underwriting Committee is appointed in the manner provided by the statute and is not a committee or subcommittee of the Board. However, its decisions are limited to the determination of eligibility of individual risks for coverage. The Board retains the authority to design the policy forms and rates for the insurance to be offered by the Association, subject to approval by the Office.

(4) Board Meetings. The Board shall meet as often as necessary, but at least twice annually. The Board will conduct its meetings in accordance with Robert’s Rules of Order and will make its decisions on a simple majority of all Board members present unless otherwise provided by statute. Board meetings shall be conducted in compliance with Chapter 286, Florida Statutes (the Sunshine Law).

(5) Board Powers and Immunities. Board members are authorized to perform any activity that Directors of corporations may perform and any activity of the Association. Pursuant to Section 627.351(5)(f), Florida Statutes, Board members and employees of the Association are immune from liability for their actions taken in the performance of their duties for the association. In the event that a Board member is served with a civil complaint with respect to any business of the Association, the Board member shall be entitled to indemnification from the Association for costs and reasonable attorney’s fees unless and until a determination is made by a court of competent jurisdiction that the Board member engaged in conduct that constitutes a felony under Florida law. Board members are also entitled to reimbursement for the ordinary costs of attending meetings, but are not otherwise entitled to salaries for Board service.

(6) Contracts and Employees.

(a) The Board may enter into contracts with experts and other advisors to assist in conducting the business of the Association at rates negotiated for each engagement. To the extent possible, unless the contract would be exempt from competitive bid for a state agency or unless the Board determines that an emergency exists, contracts for more than $100,000 in any year shall be competitively bid, and contracts under $100,000 shall be awarded only after a minimum of three quotes are obtained from competing vendors. The Association may enter into contracts with other statutorily-created entities such as other JUA’s, guaranty associations or their managers, the Market Assistance Plan, or the Florida Hurricane Catastrophe Fund without competitive bids or quotes.

(b) The Board may hire such staff and executive staff as it deems necessary to be compensated by the Association. The Board shall make every effort to retain executive staff with previous experience or expertise in the commercial property insurance market. Because Section 627.351(5), Florida Statutes, requires that a servicing carrier be used for policyholder services, the Association is not expected to hire an extensive staff. However, it shall retain as many employees as necessary to ensure that an appropriate level of policyholder service is maintained.

(c) The Board shall designate positions that are to function as Senior Management of the organization. All senior managers and Board members shall comply with Part III of Chapter 112, Florida Statutes, including the code of ethics, and the public disclosure and reporting of financial interests pursuant to Section 112.3145, Florida Statutes. Senior managers and Board members are required to file such disclosures with the Office. At least quarterly, the executive director shall submit a list of the names of the senior managers and members of the Board of Governors to the Commission on Ethics.

(d) A senior manager of the Association may not represent a person or entity before the Association for a period of two years after the date of termination of employment. The Board shall implement a detailed Ethics and Conflicts of Interest Policy and a Policy for Procurement of Contracts that avoids any actual or apparent conflict of interest by any employee, vendor, or Board member of the association.

(7) Appointment of Servicing Carriers. The Office may appoint one or more participating insurance companies to service policies either for policy issuance, claims, or any combination of services. The Association shall pay the fees of such appointed servicing carrier pursuant to a contract negotiated between the carrier and the association, and subject to the approval of the Office.

(8) Form of the insurance to be written by the Association. The Association may write commercial property insurance including direct insurance, excess insurance, and reinsurance of commercial property risks.

(9) Eligibility of Risks.

(a) A risk shall be eligible for such commercial property insurance as is required by Florida law if the insurance is unavailable in the voluntary market, including the market assistance program and the surplus lines market.

(b) A commercial risk not eligible under paragraph (a) (that is, because the coverage is not required by Florida law) shall be nevertheless eligible for such commercial property insurance if:

1. The insurance is unavailable in the voluntary market, including the market assistance plan and the surplus lines market in accordance with paragraph (1)(k); and

2. Failure to secure the insurance would substantially impair the ability of the entity to conduct its affairs; and

3. The risk is not determined by the Risk Underwriting Committee to be uninsurable.

(10) Classification System. For purposes of this rule commercial property insurance is considered a class of property insurance. Other classes of insurance may not be written by the Association without an amendment to this rule.

(11) Market Assistance Plan; Activation of Coverage.

(a) If the market assistance plan receives a minimum of 100 commercial property quote requests within a 3-month period, or 200 commercial property quote requests within a 1-year period or less, for a given class of risk contained in the classification system defined in the plan of operation of the Association, and unless at least 80 percent of such applicants find coverage as a result of the market assistance program referral at or below the qualifying quoted premium, the Commercial Property Insurance class of risk shall immediately be eligible for coverage in the Joint Underwriting Association.

(b) Any market assistance plan application that is rejected because an individual risk is so hazardous as to be practically uninsurable, or because the likelihood of a loss for such a risk is substantially higher than for other risks of the same class due to individual risk characteristics, prior loss experience, unwillingness to cooperate with a prior insurer, physical characteristics and physical location, will be excluded from the minimum percentage calculation provided in paragraph (a).

(c) In the event that there is any legal or administrative challenge to a determination by the Office that the conditions of this subsection have been met for eligibility for coverage in the Association for a given classification, any eligible risk may obtain coverage during the pendency of any such challenge.

(12) Removal of Risks.

(a) The Association shall establish a procedure to identify and remove risks from the plan once such risks no longer meet the eligibility requirements for coverage by the Association. At each 6-month interval after the activation of any class of risks, the Board of Governors or its designated committee shall review the number of applications to the market assistance plan for that class. If, based on such review, it is determined that at least 90 percent of such applications have been provided a qualifying quoted premium, the Association shall cease underwriting new applications for such class within 30 days, and notification of this decision shall be sent to the Office, the major agents' associations, and the Board of Directors of the market assistance plan. All policies which were previously written for that class shall continue in force until their normal expiration date, at which time, subject to the required timely notification of nonrenewal by the Association, the insured may then elect to reapply to the Association according to the requirements of eligibility. If, upon reapplication, those previously insured Association risks meet the eligibility requirements, the Association shall provide coverage available from the Association.

(b) In addition, the Board may establish a plan for transfer of risk from the Association to other entities either through reinsurance or other risk transfer or risk financing mechanisms. The cost of such reinsurance or other risk transfer or risk financing arrangements may be included in the rates of the Association.

(13) Equitable apportionment of profits, losses and expenses.

(a) In the event an underwriting deficit exists for any calendar year the plan is in effect, any surplus which has accrued from previous years and is not projected within reasonable actuarial certainty to be needed for payment for claims in the year the surplus arose shall be used to offset the deficit to the extent available.

(b) As to any remaining deficit, the Board of Governors of the Association shall levy and collect an assessment from participating insurers in an amount sufficient to offset such deficit. Such assessment shall be levied against the insurers participating in the plan during the year giving rise to the assessment. Any assessments against insurers for the lines of property insurance issued to commercial risks shall be recovered from the participating insurers in the proportion that the assessable premium of each insurer for commercial risks written during the preceding calendar year bears to the aggregate assessable premium written by all members of the plan for the lines of insurance included in the plan.

(c) The Board shall take all reasonable and prudent steps necessary to collect the amount of assessment due from each participating insurer and policyholder, including, if prudent, filing suit to collect such assessment. If the Board is unable to collect an assessment from any insurer, the uncollected assessments shall be levied as an additional assessment against the participating insurers and any participating insurer required to pay an additional assessment as a result of such failure to pay shall have a cause of action against such nonpaying insurer. In addition, the failure of an insurer to pay an assessment timely shall constitute a violation of this rule subjecting the insurer to administrative action by the Office.

(14) Recoupment of Assessments. An insurer or insurer group may recoup any assessments that have been paid to the Association as provided for in Section 627.3512, Florida Statutes.

(15) Procedure for Assessments.

(a) Annually, no later than March 31, the Board shall calculate the participation ratio of each participating insurer and issue it to the insurer. The participation ratio is the share of any assessment that would be borne by that insurer, if an assessment is determined to be necessary. An insurer that disagrees with its participation ratio calculation has 30 days from issuance of the ratio within which to appeal to the Board to change the participation ratio calculation. If an insurer fails to appeal the calculation within 30 days from the date of issuance, the calculation for each participating insurer becomes final and unappealable.

(b) To issue an assessment, the Board shall determine that the need for an assessment exists, and shall certify the need and the amount of the assessment to the Office. The Board may determine that an assessment is needed for start-up costs for the Association. The Office shall provide the Board with a list of participating insurers and the corresponding reported Assessable Premium volume. The Association may then apply any credits earned by the insurer and issue an assessment invoice to each participating insurer.

(c) The invoice must be paid within 30 days, provided, however, that if a hurricane makes landfall in Florida and the Board anticipates that the assessment will be needed to fund claim payments, the Board may require the invoice be paid within 10 days. In addition to the civil action provided by statute, the failure of an insurer to pay an invoice when due shall constitute a violation of this rule subjecting the insurer to administrative action by the Office.

(16) Credits Against Assessments. The Board shall adopt a plan, subject to the approval of the Office, to provide each participating insurer the opportunity to earn credits against any deficit assessment for commercial property risks voluntarily written through the Market Assistance Plan by such insurer. Credits may be based upon the premium or policy limits for risk taken by the insurer pursuant to contract of excess insurance coverage or a reinsurance contract between the insurer and the Association. Credits may also be established, and may be greater, for risks taken by the insurer where the insurer writes the insurance coverage through the Market Assistance Plan without any participation by the Association whether or not the risk has been insured by the Association in preceding years. The Board may file amended plans for credit against assessments as often as necessary to encourage participation by the voluntary market. The plans shall be effective when approved and shall apply prospectively to assessments levied for the plan year during which they are in effect. The credit plan may provide for no credits to be given in the event that bonds are issued and the assessment is being made for the purpose of repayment of bond debt. An insurer shall not receive credits for its participation in a policy for an insured which it had nonrenewed or cancelled within the two years preceding the inception of the policy issued to the same insured by the Association.

(17) Reporting Requirements. The Board may establish the format of a report to be sent each quarter to each participating insurer, with respect to its commercial property written, informing the insurer of its share of profits, losses, and expenses under the plan. The Office may also establish the format of a report to be sent each quarter to the Office by each participating insurer with respect to its commercial property written reporting the volume of net direct premium to enable the Office to calculate each insurer’s portion of any potential deficit assessment under this plan. The Office may require separate reporting for commercial residential and commercial non-residential risks for each line of insurance listed in the report. The lines of insurance anticipated to be included are lines 1, 2, 5.1, 5.2, 3, and 12 of the state page of the annual statement. The purpose of including the commercial residential premium written for property risks is solely to allow the total on the report to correlate to annual statement reporting, and is not intended to make commercial residential property premium part of the assessment base for this Association.

(18) Financing Arrangements.

(a) There are three different aspects of financing in which the Association is involved:

1. Financing for Operations – The Board may borrow money and may enter into financing agreements to fund start-up costs, operating expenses, or claim payments and associated loss adjustment expenses that occur during the existence of the Association.

2. Assessments for Underwriting Deficits – In the event an underwriting deficit exists for any calendar year the plan is in effect, any surplus which has accrued from previous years and is not projected within reasonable actuarial certainty to be needed for payment for claims in the year the surplus arose shall be used to offset the deficit to the extent available. As to any remaining deficit, the Board shall levy and collect an assessment as provided above.

3. Assessments Following Issuance of Bonds – The governing body of any unit of local government, any residents or businesses of which are insured by the Association, may issue bonds as defined in Section 125.013, Florida Statutes, or Section 166.101, Florida Statutes, from time to time to fund an assistance program, in conjunction with the Association, for the purpose of defraying deficits of the Association. Revenue bonds may not be issued until validated pursuant to Chapter 75, Florida Statutes, unless a state of emergency is declared by executive order or proclamation of the Governor pursuant to Section 252.36, Florida Statutes, making such findings as are necessary to determine that it is in the best interests of, and necessary for, the protection of the public health, safety, and general welfare of residents of this state and the protection and preservation of the economic stability of insurers operating in this state, and declaring it an essential public purpose to permit certain municipalities or counties to issue such bonds as will provide relief to claimants and policyholders of the joint underwriting association and insurers responsible for apportionment of association losses. The unit of local government shall enter into such contracts with the Association as are necessary to carry out this subsection. Any bonds issued shall be payable from and secured by moneys received by the Association from assessments under this subsection, and assigned and pledged to or on behalf of the unit of local government for the benefit of the holders of such bonds. The funds, credit, property, and taxing power of the state or of the unit of local government shall not be pledged for the payment of such bonds. If any of the bonds remain unsold 60 days after issuance, the Office shall require all insurers subject to assessment to purchase the bonds, which shall be treated as admitted assets; each insurer shall be required to purchase that percentage of the unsold portion of the bond issue that equals the insurer's relative share of assessment liability under this subsection. An insurer shall not be required to purchase the bonds to the extent that the Office determines that the purchase would endanger or impair the solvency of the insurer.

(b) Section 627.351(5)(c)6.a., Florida Statutes, states, “The Legislature finds that the potential for unlimited assessments under this paragraph may induce insurers to attempt to reduce their writings in the voluntary market, and that such actions would worsen the availability problems that the Association was created to remedy. It is the intent of the Legislature that insurers remain fully responsible for covering any deficits of the association; however, it is also the intent of the Legislature to provide a means by which assessment liabilities may be amortized over a period of years.” The total amount of deficit assessments with respect to the deficit in any year may not exceed 10 percent of the Assessable Premium for all insurers for the prior year, except that if the deficit with respect to any plan year exceeds such amount and bonds are issued to defray the deficit, the total amount of assessments with respect to such deficit may not in any year exceed 10 percent of the original deficit, or such lesser percentage as is sufficient to retire the bonds as determined by the Board, and shall continue annually until the bonds are retired.

(19) Deferment of Assessments. An assessment of an insurer may be deferred, in whole or in part, if the Office finds that payment of the assessment would endanger or impair the solvency of the insurer. In the event an assessment against an insurer is deferred in whole or in part, the amount by which such assessment is deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments.

(20) Risk Underwriting Committee.

(a) A Risk Underwriting Committee of the Joint Underwriting Association composed of three members experienced in evaluating insurance risks is created to review risks rejected by the voluntary market for which application is made for insurance through the joint underwriting plan. The committee shall consist of a representative of the market assistance plan created under Section 627.3515, Florida Statutes, a member selected by the participating insurers, and a member named by the Chief Financial Officer. The Risk Underwriting Committee shall appoint such advisory committees as are provided for in the plan and are necessary to conduct its functions. The Association may pay or reimburse the salaries and expenses of the members of the Risk Underwriting Committee and its advisory committees for the time spent on behalf of the Risk Underwriting Committee. The Risk Underwriting Committee shall recommend a plan, subject to approval by the Office, to establish criteria and procedures for use by the Risk Underwriting Committee for determining whether an individual risk is so hazardous as to be uninsurable. In making this determination and in establishing the criteria and procedures, the following shall be considered in addition to criteria commonly used in the market for determining the insurability of the risk:

1. Whether the likelihood of a loss for the individual risk is substantially higher than for other risks of the same class; and

2. Whether the uncertainty associated with the individual risk is such that an appropriate premium cannot be determined.

(b) The Risk Underwriting Committee shall not be required to review a risk for insurability if an authorized insurer agrees to accept some portion of the risk under an excess of loss contract or reinsurance contract between the insurer and the Association. In accordance with the statute, the acceptance or rejection of a risk by the Underwriting Committee is final and is the private placement of insurance, and is not subject to the provisions of the Administrative Procedure Act, Chapter 120, Florida Statutes.

(21) Policy Forms and Applications.

(a) No policy or policy form shall be used unless it has been approved by the Office. The Association may offer coverage that is more restrictive than the coverage offered by the voluntary market, and may limit its property coverage for a particular risk to cover only a specified structure or structures. It may limit coverage for contents or business interruption and may provide coverage limited to the value of the insured structure. It may offer direct insurance, excess insurance or reinsurance if approved by the Board and the Office.

(b) The application form to be required of insureds shall also be filed and must be approved by the Office prior to its use by the Association. The application form must include, as a minimum, the following:

1. Underwriting information on each building that is to be insured.

2. The name of the prior insurer of the account, if any, along with a copy of the policy or declarations page showing the coverage written for the year prior to application.

3. A copy of any non-renewal or cancellation notice issued by the prior insurer.

4. A certification from the agent that a good-faith effort has been made to find coverage and that the coverage is unavailable in the voluntary market, including a list of the three carriers, plus the surplus lines carrier to which the risk was submitted.

(22) Underwriting Rules. Underwriting Rules shall be filed and shall not be used until approved by the Office of Insurance Regulation. The Underwriting Rules shall include a requirement that the application for coverage be submitted to the Market Assistance Plan prior to coverage by the Association. A waiting period of a minimum of ten days shall be required as an underwriting requirement to afford the voluntary market a reasonable opportunity to underwrite and take the risk. In an emergency, the waiting period may be waived upon terms and conditions established in the underwriting rules of the Association. Inspections may be required.

(23) Rates. The Association shall establish a rating plan to be filed with and approved by the Office in advance of implementation. Rates shall be actuarially sound and consistent with the applicable standards of Sections 627.062 and 627.351(5), Florida Statutes. The Association may have multiple programs for direct insurance, excess insurance, and reinsurance business, and may establish a separate rating plan for each program. The rating plan shall include the following:

(a) An appropriate rate level or levels for risks with loss experience equal to or better than that contemplated by the expected loss ratio in the filing.

(b) An appropriate rate level or levels for risks with loss experience worse than that contemplated by the expected loss ratio in the filing.

(24) Deductibles. The Association may establish in its rating plan(s) applicable deductibles as may be necessary to meet the needs of the insureds and to protect the interests of the Association. A deductible of five percent shall apply for the initial policies written by the Association. If the Board determines that a higher or lower deductible amount is needed, the Board may approve different deductibles for each of its programs, file an amended rating plan with the Office, and upon Office approval, offer policies with the new approved deductible amount.

(25) Policy Limits. The Board may establish reasonable limits on available amounts of insurance. Initial policies issued by the Association shall have limits not exceeding one million dollars. If the Board determines that higher or lower limits are needed, the Board may adopt different limits, and file an amended rating plan and policy form with the Office. Upon Office approval, the Association may offer policies with the new approved limits.

(26) Commissions. The commissions payable to producers shall be determined by the Board and set forth in the Association’s rating plan, but shall be less than the typical commissions earned for the sale or placement of risk with a private insurance company, and shall not reward an agent for placing a higher volume of risk with the Association.

(27) Policy Cancellations and Renewals.

(a) Unless otherwise required by law, the Board may establish procedures for the cancellation of policies for nonpayment of premium, misrepresentation of material fact, or failure to comply with risk management programs or other underwriting criteria. Policies may also be cancelled or nonrenewed if there has been a substantial and material change in the nature of the risk that renders it uninsurable or otherwise ineligible for coverage by the Association. Return premiums shall be on a pro rata basis unless determined otherwise by the Board and included in the rating plan.

(b) Renewals may be offered, but each risk shall apply for renewal prior to the expiration of the policy period and shall include with its application for renewal such information as the Association may reasonably require to confirm that the risk remains eligible for coverage.

(28) Risk Management Programs. The Board may establish Risk Management Programs and require compliance with such programs as a condition of coverage at policy inception and as a condition of renewal. The Risk Management Programs may require reasonable efforts to mitigate against the risk of loss from hurricanes, including the installation of shutters, tied-down roofing materials, and other devices designed to prevent unnecessary losses from the peril of wind. The Risk Management Programs shall be included in the Association’s underwriting rules subject to approval by the Office.

(29) Amendments to this Plan of Operation of the Association. The Board of Governors may adopt amendments to this plan of operation to be submitted for review to the Office. The Office will review the amendments and may place the proposed plan amendments on the calendar for a meeting of the Financial Services Commission for approval. Plan amendments shall not be effective until approved by the Financial Services Commission.

(30) Deactivation of the Joint Underwriting Association.

(a) If, at any time, the Financial Services Commission determines that the purposes of the Association have been served or that the Association is no longer necessary or advisable, the Financial Services Commission may deactivate the Association. Such deactivation plan shall provide that upon deactivation, the assets of the Association shall be applied first to pay all debts, claims, liabilities, expenses and obligation of the Association including the establishment of reasonable reserves for any contingent liabilities or obligations. Any remaining assets shall be paid to the state of Florida and deposited into or for the benefit of the Florida Comprehensive Hurricane Damage Mitigation Program, the Florida Hurricane Catastrophe Fund or such other fund as may be designated by the Financial Services Commission. However, no deactivation shall take effect as long as the Association has bonds or other financial obligations outstanding unless adequate provision has been made for the payment of the bonds or other financial obligations pursuant to the documents authorizing the issuance of the bonds or other financial obligations.

(b) Deactivation by the Financial Services Commission is the only method for termination of the business of the Association. The Association shall not be subject to the appointment of a receiver pursuant to Chapter 631, Florida Statutes, and no employee, Board member, insured, participating insurer or other person is authorized to file for bankruptcy protection of the Association on a voluntary or involuntary basis.

Specific Authority 624.308(1), 627.351(5) FS. Law Implemented 624.307(1), 627.351(5) FS. History–New 8-13-89, Formerly 4-87.001, 4J-2.001, Amended ___________.