STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AMERICAN INSURANCE ASSOCIATION, )

)

Petitioner, )

)

vs. ) CASE NO. 94-3475RP

) STATE OF FLORIDA, DEPARTMENT ) OF INSURANCE, )

)

Respondent. )

) FLORIDA SURPLUS LINES, )

ASSOCIATION, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-3476RP

) STATE OF FLORIDA, DEPARTMENT ) OF INSURANCE, )

)

Respondent. )

)

FINAL ORDER

Pursuant to written notice, a formal hearing was held in this case on July 26, 1994, at Tallahassee, Florida, before Errol H. Powell, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner, Thomas J. Jones, Esquire American Insurance Holland & Knight Association: Post Office Drawer 810

Tallahassee, Florida 32302

For Petitioner, Douglas A. Mang, Esquire Surplus Lines Steven M. Malono, Esquire Association, Inc.: Mang, Rett & Minnick, P.A.

660 East Jefferson Street Tallahassee, Florida 32302

For Respondent: William O'Neil, Esquire

David J. Busch, Esquire Thomas D. Valentine, Esquire Department of Insurance

645-A Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0300

STATEMENT OF THE ISSUE

The issue for determination at formal hearing was whether proposed amendments to Rule 4J-2.002, Florida Administrative Code, are an invalid exercise of delegated legislative authority.

PRELIMINARY STATEMENT

This proceeding challenges the validity of the Department of Insurance's proposed amendments to Rule 4J-2.002, which were published in the Florida Administrative Weekly on June 3, 1994. The proposed amendments seek to amend the Florida Property and Casualty Joint Underwriting Association Plan of Operation (FPCJUA) by temporarily making commercial residential risks immediately eligible for coverage by the FPCJUA, providing for specific deductibles for such coverage, and providing for the FPCJUA to conduct periodic surveys regarding premiums for such coverage.

Petitioners filed their challenge to the proposed amendments on June 24, 1994. A formal hearing was scheduled on July 26, 1994, pursuant to Notice of Hearing. Prior to the hearing, Petitioners filed a motion for protective order in essence seeking to prevent Respondent from taking the deposition of Petitioner's representative concerning the market conditions of surplus lines in Dade and Broward Counties. Following a hearing on the motion, it was granted.

At the hearing, Petitioner American Insurance Association presented no testimony and entered no exhibits into evidence, indicating that its position on the issue was that the issue was totally one of law not of facts. Petitioner Florida Surplus Lines Association, Inc., presented the testimony of one witness and entered eight exhibits into evidence. Respondent presented no witnesses and entered two exhibits into evidence.

A transcript of the formal hearing was ordered. The parties timely submitted proposed final orders, and their proposed findings of fact have been addressed in the appendix to this final order.

FINDINGS OF FACT

1. An admitted or authorized insurance company is a foreign insurance company which is licensed to do business in its home state and another state which is Florida in the case at hand, or is a domestic insurance company licensed to do business in its home state, here Florida. Examples of such insurance companies are Hartford, Travelers and USF&G.

   
   

2. A non-admitted or surplus lines insurance company writes coverage for risks which are not normally written by admitted companies. An example of such a company is Lloyd's of London.

   
   

3. A risk is eligible to be placed with a surplus lines insurer if, after diligent effort, the full amount of insurance required to cover the risk cannot be placed with admitted insurers, if the rate offered is not less than or broader than that offered by the admitted insurers, and if the policy offered is not more favorable to the insurer than those offered by admitted insurers which actually write similar coverages on similar risks. The surplus lines' premium is usually higher than the admitted insurer's premium.

   
   

4. If an insurance agent is unable to place a risk with either an admitted insurer or a surplus lines insurer, the agent can certify the inability to the

   Market Assistance Plan (MAP) and request assistance from MAP in placing the risk, which has access to all admitted and surplus lines brokers doing business in Florida. MAP was legislatively created to assist those who are unable to obtain property or casualty insurance and is comprised of all insurers licensed to do business in Florida.

   
   

5. The Florida Legislature also created the Florida Property and Casualty Joint Underwriting Association (FPCJUA) to provide coverage for certain risks when the risk cannot be placed in the admitted market, the surplus lines market and MAP, i.e., the voluntary market. The FPCJUA is a residual market or market of last resort. It is comprised of all insurers licensed by the State of Florida to write property and casualty insurance coverage in Florida.

   
   

6. After the devastation to Florida from Hurricane Andrew in 1992, the premiums for commercial residential coverage greatly increased and became virtually unaffordable. However, coverage was possible if an applicant could afford the premiums being charged. Commercial residential coverage became a hard market which meant that it was hard to obtain insurance for such coverage.

   
   

7. Attempting to address the dilemma involving insurance coverage of commercial residential property, in the November 1993 Special Session, the Florida Legislature specifically activated temporary coverage under the Joint Underwriters Association (JUA) for commercial residential properties, i.e., condominium associations, apartment buildings, common elements of homeowners associations and other commercial coverages of residences.

   
   

8. As of May 1994, the JUA had not written any coverages for commercial residential properties.

   
   

9. Out of approximately 300 to 400 admitted insurance companies in Florida qualified to write commercial residential coverage, only two to five were writing such coverage after Hurricane Andrew.

   
   

10. In May 1994, the Department of Insurance by emergency order directed the JUA to write coverages for commercial residential properties under specified guidelines. Without the emergency order, the JUA would not have written coverages for such properties because coverage was being written even though it was being done by only two to five admitted insurance companies and even though the premiums were virtually unaffordable.

    
    

11. Finally, the Department of Insurance resorted to a more enduring remedy by seeking to amend Rule 4J-2.002, Florida Administrative Code, to address the dilemma of coverage for commercial residential properties.

    Foremost, the proposed amendments would modify the FPCJUA's Plan of Operation by temporarily making the coverage for commercial residential property automatically eligible for the FPCJUA without first seeking coverage from the voluntary market. This change would, therefore, transform the FPCJUA, as far as coverage for commercial residential property is concerned, into a market of first resort instead of last resort. Secondly, the proposed amendments would provide for specific deductibles for such coverage. And thirdly, the proposed amendments would provide for the FPCJUA to conduct periodic surveys regarding premiums for such coverage to determine if rates should be adjusted.

    
    

12. Standing is not an issue in this proceeding.

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto, pursuant to Section 120.54(4), Florida Statutes.

    
    

14. Petitioners have the burden to demonstrate that the proposed rule is an invalid exercise of delegated legislative authority. Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985), and Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1978), cert. denied, 376 So.2d 74 (1979).

    
    

15. Section 120.52(8), Florida Statutes, defines an invalid exercise of delegated legislative authority:

    
    

    "Invalid exercise of delegated legislative authority" means action which goes beyond the powers, functions, and duties delegated by the Legislature. A proposed or existing rule is an invalid exercise of delegated legislative authority if any one or more

    of the following apply:

    1. The agency has materially failed to follow the applicable rulemaking procedures set forth in s. 120.54;

    2. The agency has exceeded its grant of rulemaking authority, citation to which is required by s. 120.54(7);

    3. The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(7);

    4. The rule is vague, fails to establish adequate standards for agency decisions, or vests unbridled discretion in the agency; or

    5. The rule is arbitrary or capricious.

       
       

       Petitioners contend that Respondent has violated subsections (a), (b), (c) and

       (e) in its challenge of Respondent's proposed rule 4J-2.002, Florida Administrative Code.

       
       

16. To be successful in their challenge, Petitioners must demonstrate that the proposed rule lacks any rational basis; this standard of review is highly deferential to the agency's decision embodied in the rule's text. Florida League of Cities v. Department of Environmental Regulation, 603 So.2d 1363 (Fla. 1st DCA 1992). Generally, an agency's interpretation of statutes should be given great deference and should not be overturned unless clearly erroneous. Maclen Rehabilitation Center v. Department of Health and Rehabilitative Services, 588 So.2d 12, 13 (Fla. 1st DCA 1991); Woodley v. Department of Health and Rehabilitative Services, 505 So.2d 676, 678 (Fla. 1st DCA 1987). Moreover, an agency's interpretation needs only to be within the range of possible interpretations. Department of Professional Regulation, Board of Medicine v. Durrani, 455 So.2d 515, 517 (Fla. 1st DCA 1984).

    
    

17. The proposed rule implements certain provisions of Section 627.351(5), Florida Statues, found in Chapter 93-410, Section 14, Laws of Florida, passed by the Florida Legislature in its November 1993 Special Session.

18. Foremost, Petitioners contend that Respondent's proposed rule enlarges, modifies or contravenes the provisions of Section 627.351(5), Florida Statutes, implemented in violation of Subsection 120.52(8)(c), Florida Statutes. They argue that the Legislature did not change the Florida Property and Casualty Joint Underwriting Association (FPCJUA) from being a residual market or a market of last resort for applicants seeking coverage and that, therefore, applicants seeking coverage for commercial residential properties must first seek coverage in the voluntary market; whereas, the proposed rule permits such applicants to immediately seek such coverage from the FPCJUA without first seeking the coverage from the voluntary market.

    
    

19. Petitioners have failed to demonstrate that the proposed rule violates Subsection 120.52(8)(c). In the November 1993 Special Session, the Legislature addressed the coverage of commercial residential properties subsequent to Hurricane Andrew and after the insurance industry had an opportunity to perform in the aftermath of the devastation. The Legislature made a specific finding in Subsection 627.351(5)(a), regarding market conditions and coverage for commercial residential properties, which provides in pertinent part:

    
    

    g.(I) The Legislature finds that the market conditions which this subsection is intended to remedy have arisen with respect to coverage for condominium associations, apartment buildings, common elements of homeowners associations and other commercial coverages

    of residences. Therefore, coverage under this subsection is hereby activated for

    condominium associations, apartment buildings, common elements of homeowners associations and other commercial coverages of residences.

    Such coverage shall continue to be provided under this subsection until coverage is deactivated pursuant to sub-sub-subparagraph

    (II) or sub-sub-subparagraph (III).

    
    

    The Legislature has specifically determined that market conditions show that coverage for commercial residential property is unavailable in the voluntary market and that, therefore, the FPCJUA must write coverage for commercial residential property. Consequently, the Legislature has eliminated the requirement that applicants for commercial residential property coverage first seek coverage through the voluntary market and has authorized the applicants to seek coverage from the FPCJUA and the FPCJUA to write the coverage.

    
    

20. Next, Petitioners contend that Respondent exceeded its grant of rulemaking authority in violation of Subsection 120.52(8)(b) and that the proposed rule is arbitrary and capricious in violation of Subsection 120.52(8)(e). Petitioners have failed to demonstrate such violations. Respondent's rulemaking authority is derived from Section 624.308, Florida Statutes, which provides in pertinent part:

    
    

    (1) The department may adopt reasonable rules necessary to effect any of the statutory duties of the department. Such rules shall not extend, modify, or conflict with any law of this state or the reasonable implications of such laws.

    The proposed rule is reasonably related to the purposes of the enabling statute. Florida League of Cities v. Department of Environmental Regulation, supra.

    
    

21. Also, Petitioner American Insurance Association (Petitioner AIA) contends that the proposed rule contravenes Section 627.351(5) in violation of Subsection 120.58(c) because it does not direct Respondent to adjust inadequate rates that are determined to be inadequate as a result of the periodic surveys of market rates provided for in the proposed rule. Petitioner AIA has failed to demonstrate such a violation. Even though the proposed rule does not specifically provide that the inadequate rates will change, Respondent has no alternative but to change inadequate rates to be in compliance with Subsection 627.031(2), Florida Statutes, which provides:

    
    

    It is the purpose of this part [Part I of Chapter 627, including Section 627.351] to protect policyholders and the public against the adverse effects of excessive, inadequate, or unfairly discriminatory insurance rates, and to authorize the department to regulate such rates. If at any time the department has reason to believe any such rate is excessive, inadequate, or unfairly discriminatory under the law, it is directed to take the necessary action to cause such rate to comply with the laws of this state.

    
    

22. Next, Petitioner Florida Surplus Lines Association, Inc. (Petitioner FSLA), contends that Respondent has failed to follow the rulemaking procedure set forth in Subsection 120.54(2)(a), Florida Statutes, by failing to consider the impact of the proposed rule on its members who are small business entities. Petitioner FSLA has failed to demonstrate such a violation. The FPCJUA is comprised of all insurance carriers licensed by the State of Florida to write property and casualty coverage in Florida, which includes Petitioner FSLA's members. Section 627.351(5)(a)(2), Florida Statutes, provides that the joint underwriting plan must provide a "means for the equitable apportionment of profits or losses and expenses among participating insurers." The proposed rule adopts the FPCJUA's Plan of Operation as "the Plan" which contains a provision for equitable apportionment of profits or losses and expenses which applies to all its members. Consequently, "the Plan" has a self-executing provision which considers the impact on FPCJUA's small business members, i.e., FSLA's members.

    
    

23. Petitioner AIA's argument regarding Respondent's proposed rule impermissibly permitting the FPCJUA to infringe upon the sole authority of the Florida Windstorm Underwriting Association to write windstorm coverage is unpersuasive. The proposed rule implements the mandate of the Florida Legislature that coverage for commercial residential properties will be temporarily written by the FPCJUA.

CONCLUSION

Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that Petitioner American Insurance Association's Motion For Summary

Final Order is DENIED, proposed rule 4J-2.002 is VALID, and the Petitions

challenging its validity are DISMISSED.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 6th day of September 1994.

ERROL H. POWELL

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6th day of September 1994.

APPENDIX

The following rulings are made on the parties' proposed findings of fact: Petitioner American Insurance Association's Proposed Findings of Fact.

1-3 and 7. Rejected as being unnecessary, or irrelevant.

1. Partially accepted in Finding of Fact 5.

2. Partially accepted in Finding of Fact 7.

3. Partially accepted in Finding of Fact 1.

8. Partially accepted in Finding of Fact 4.

9 and 10. Partially accepted in Findings of Fact 2 and 3.

1. Partially accepted in Findings of Fact 4 and 5.

2. Partially accepted in Finding of Fact 11, and discussed in the Preliminary Statement.

3. Rejected as constituting argument, or conclusion of law.

Petitioner Florida Surplus Lines Association, Inc.'s Proposed Findings of Fact.

1, 18, 28, 29, 33, 34, 38 and 39. Rejected as being unnecessary.

2. Partially accepted in Finding of Fact 11.

3, 30 and 37. Partially accepted in Finding of Fact 5.

4. Partially accepted in Finding of Fact 12.

5-15. Rejected as recitation of testimony, or unnecessary.

16 and 17. Partially accepted in Finding of Fact 1.

19-23. Partially accepted in Findings of Fact 2 and 3. 24, 25 and 36. Partially accepted in Finding of Fact 4.

26 and 27. Partially accepted in Findings of Fact 4 and 5.

1. Partially accepted in Finding of Fact 7.

2. Rejected as contrary to the evidence.

35. Partially accepted in Finding of Fact 6.

40 and 41. Rejected as constituting argument, or conclusions of law.

Respondent's Proposed Findings of Fact.

1-3. Partially accepted in Findings of Fact 6 and 7.

1. Partially accepted in Finding of Fact 10.

2. Partially accepted in Finding of Fact 11.

3. Rejected as being unnecessary.

7-10. Rejected as being argument, or conclusion of law.

NOTE--Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary, cumulative, contrary, not supported by the greater weight of the evidence, or a conclusion of law.

COPIES FURNISHED:

Thomas J. Jones, Esquire Holland & Knight

Post Office Drawer 810 Tallahassee, Florida 32302

Douglas A. Mang, Esquire Steven M. Malono, Esquire Mang, Rett & Minnick, P.A. 660 East Jefferson Street Tallahassee, Florida 32301

William O'Neil, Esquire David J. Busch, Esquire Thomas D. Valentine, Esquire Department of Insurance

645-A Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0300

Tom Gallagher

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this final order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules Of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk Of The Division Of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court Of Appeal, First District, or with the District Court Of Appeal in the appellate district where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.

=================================================================

DISTRICT COURT OPINION

=================================================================

IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA

AMERICAN INSURANCE NOT FINAL UNTIL TIME EXPIRES TO

ASSOCIATION, et al., FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

Appellants,

CASE NOS. 94-1927; 94-1934;

v. 94-2959; 94-3244

DOAH CASE NOS. 94-3475RP

FLORIDA DEPARTMENT OF 94-3476RP INSURANCE, et al.,

Appellees.

/ Opinion filed July 17, 1995

Appeals from an Order of the Department of Insurance and an Order of the Division of Administrative Hearings.

Caleb L. Fowler of Holland & Knight, Washington, and Thomas J. Jones and Susan

L. Turner of Holland & Knight, Tallahassee, for Appellant American Insurance Association; Vincent J. Rio and Mark K. Delegal of Taylor, Day & Rio, Tallahassee, for Appellant National Association of Independent Insurers; Douglas

A. Mang and Steven M. Malono of Mang, Rett & Minnick, P.A., Tallahassee, for Appellant Florida Surplus Lines Association, Inc.; Christine R. Milton of Mahoney, Adams & Criser, P.A., Jacksonville, and Daniel C. Brown of Katz, Kutter, Haigler, Alderman, Marks & Bryant, Tallahassee, for Amicus Curiae Florida Windstorm Underwriting Association.

Thomas D. Valentine of Office of Legal Affairs, Tallahassee, for Appellee Florida Department of Insurance.

PER CURIAM.

We have for review consolidated appeals from an immediate final order (IFO) of the Florida Department of Insurance (the department), and from a final order of the Division of Administrative Hearings holding valid the department's amendment to Florida Administrative Code Rule 4J-2.002. Because the IFO and the rule amendment improperly require the Florida Property and Casualty Joint Underwriting Association (FPCJUA) to provide windstorm coverage in geographic areas eligible for such coverage through the Florida Windstorm Underwriting Association (FWUA), and because the IFO and rule amendment improperly construe section 627.351(5)(a)1.g. (I), Florida Statutes (Supp. 1994), to authorize blanket coverage through the FPCJUA for all risks within the risk classifications specified therein, we reverse both orders.

The department promulgated a post-Hurricane Andrew amendment to rule 4J-

1. The rule codifies the department's IFO. The amended rule provides in pertinent part as follows:

   
   

   Adoption of Property and Casualty Risk Apportionment Plan.

   1. 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.

   2. The Florida Property and Casualty Joint Underwriting Association (FPCJUA) Plan of Operation, as amended in April 1991, and as previously adopted by rule of the Department effective 8-13-89, shall be further modified as set out below in this rule.

   3. Special Temporary Eligibility of Commercial Residential Risks.

      1. Subsection 627.351(5)(a)1.a., F.S., provides that as to insurance coverages required by law, a risk shall be deemed eligible for FPCJUA coverage if the insurance "is unavailable in the voluntary market. . .

      2. Insurance is required by law (s. 718.111(11), F.S.), to be acquired and maintained by condominium associations regarding common elements of the association.

      3. The Legislature, in the 1993 Special Session "C" (November 1993), in section 14 of Chapter 93-410, Laws of Florida, found:

         That the market conditions which this subsection [FPCJUA, 627.351(5)] is intended to remedy have arisen with respect to coverage for condominium associations, apartment buildings, common elements of homeowners associations and other commercial coverages of residences. Therefore, coverage under this subsection is hereby activated for condominium associations, apartment buildings, common elements of homeowners associations and other commercial coverages of residences.

      4. The "market conditions" referred to by the Legislature in the above quotation from Chapter 93-410, Laws of Florida, and which the Legislature found to exist, is the condition specified in 627.351(5), that is, a condition wherein "persons with risks . . . who are in good faith entitled to, but are unable to, obtain such property or casualty insurance coverage, including excess coverage, through the voluntary market."

      5. The finding of the Legislature in activating

the FPCJUA for commercial residential coverages because such coverages are not available through the voluntary market, does likewise thereby on a blanket basis establish satisfaction of the eligibility requirement for such commercial residential coverages.

(Emphasis added.)

The FPCJUA is composed of property and casualty insurers who sell property and casualty insurance in Florida. The amended rule and IFO require the FPCJUA, by force of the above-emphasized language, to provide insurance for all condominiums regardless of "eligibility"- -exhaustion of the voluntary insurance market. Section 627.351(5), upon which the amended rule and IFO are purportedly based, provides in pertinent part as follows:

PROPERTY AND CASUALTY INSURANCE RISK APPORTIONMENT. - -The

department shall adopt by rule a joint underwriting plan to equitably apportion among insurers authorized in this state to write property insurance as defined in s.

624.604 or casualty insurance as defined in s. 624.605, the underwriting of one or more classes of property insurance or casualty insurance, except for the types of insurance that are included within property insurance or casualty insurance for which an equitable apportionment plan, assigned risk plan, or joint underwriting plan is authorized under s. 627.311 or subsection (1), subsection (2), subsection (3), or subsection (4) of this section and except for risks eligible for flood insurance written through the federal flood insurance program to persons with risks eligible under subparagraph (a)1. and who are in good faith entitled to, but are unable to, obtain such property or casualty insurance coverage, including excess coverage, through the voluntary market. For purposes of this subsection, an adequate level of coverage means that coverage which is required by state law or by responsible or prudent business practices. The Joint Underwriting Association shall not be required to provide coverage for any type of risk for which there are no insurers providing similar coverage in this state. The department may designate one or more participating insurers who agree to provide policyholder and claims service, including the issuance of policies, on behalf of the participating insurers.

(a) The plan shall provide:

1. A means of establishing eligibility of a risk for obtaining insurance through the plan, which provides

   that:

   1. A risk shall be eligible for such property insurance or casualty 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.

   2. A commercial risk not eligible under sub-sub- paragraph a. shall be eligible for property or casualty insurance if:

1. The insurance is unavailable in the voluntary market, including the market assistance plan and the surplus lines market;

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.

d. (1) In the event a risk is eligible under this paragraph and in the event the market assistance plan receives a minimum of 100 applications for coverage within a 3-month period, or 200 applications for coverage 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 Joint Underwriting Association, and unless the market assistance plan provides a quotation for at least 80 percent of such applicants, such classification shall immediately be eligible for coverage in the Joint Underwriting Association.

g. (I) The Legislature finds that the market conditions which this subsection is intended to remedy have arisen with respect to coverage for condominium associations, apartment buildings common elements of homeowners associations and other commercial coverages of residences. Therefore, coverage under this subsection is hereby activated for condominium associations, apartment buildings common elements of homeowners associations, and other commercial coverages of residences. Such coverage shall continue to be provided under this subsection until coverage is deactivated pursuant to sub-sub-subparagraph

(II) or sub-sub-subparagraph (III). (Emphasis added.)

These cases present two legal questions: The first question is whether the department acted in accordance with delegated legislative authority in requiring the FPCJUA to provide windstorm coverage in FWUA-eligible areas. We answered this question in the negative in American Insurance Ass'n v. Florida Department of Insurance, 646 So.2d 784 (Fla. 1st DCA 1994), cert. denied, So.2d (Fla. 1995). There we held that the express language of section 627.351 prohibits the department from ordering the FPCJUA to provide windstorm insurance in areas that are eligible for windstorm insurance through the FWUA.

The second question is whether section 627.351(5)(a)1.g.(I) was intended to authorize automatic, blanket coverage for all risks included within the risk classifications listed therein. The appellants argue that the amended rule and IFO conflict with the statutory language requiring establishment of eligibility for each risk through exhaustion of the voluntary insurance market, and therefore the rule and IFO are invalid. But the department argues that sub-sub- sub-paragraph (I) expresses a legislative intent to abandon this eligibility requirement.

A clear statute must be given its plain meaning. Lamont v. State, 610 So.2d 435, 437 (Fla. 1992). Section 627.351(5) is clear and unambiguous. An individual risk can be insured by the FPCJUA under the statutory scheme when two requisites are satisfied: First, the eligibility of the particular risk must be established pursuant to 627.351(a)l. a. or b., and secondly, it must be established under 627.35l(a)1.d. or g. that the risk is included within an eligible risk classification. Section 627.351(5)(a)1.a. and b. speak only in terms of "a risk" or "the risk," whereas 627.351(5)(a)1.d. speaks in terms of a "given class of risk" or "classification," and 627.351(5)(a)l.g. (I) refers only to risk classifications. Section 627.351(5)(a)l.d. specifies the method whereby a "class of risk" may become "eligible for coverage," but that sub-sub-paragraph begins with the additional requirement that there also be "a risk" that is eligible under paragraph 627.351(5)(a). The statement in 627.351(5)(a)1.g. (I) that coverage is "activated for condominium associations, apartment buildings,

common elements of homeowners associations, and other commercial coverages of residences" means that those classes of risk are eligible for coverage, leaving for determination the question of whether individual risks within those classifications satisfy the requirements of 627.351(5)(a)1.a. or b.

Although unnecessary to our analysis, we note that the legislative history of Chapter 93-410, Laws of Florida, provides support for our reading of the statute. The final House bill analysis and economic impact statement reveals that the section 627.351(5)(a)1.g. (I) clause "coverage under this subsection is hereby activated" was intended to authorize FPCJUA coverage as to the "particular class[es] of risk" specified therein, as an alternative to the "trigger for activation" specified in 627.351(5)(a)1.d. The analysis does not express an intent to excuse the additional requirement that each risk within the specified classes of risk must satisfy section 627.351(5)(a)1.a. or b.

Both of the orders are therefore reversed.

BARFIELD and ALLEN, JJ., and SMITH, SENIOR JUDGE, CONCUR.

MANDATE

From

DISTRICT COURT OF APPEAL OF FLORIDA FIRST DISTRICT

To the Honorable, Errol H. Powell

Hearing Officer, Division of Administrative Hearings WHEREAS, in that certain cause filed in this Court styled:

AMERICAN INSURANCE ASSOCIATION

vs.

Case No. 94-3244

STATE OF FLORIDA, DEPARTMENT OF Your Case No. 94-3475RP INSURANCE

FLORIDA SURPLUS LINES, ASSOCIATION, INC.

vs.

STATE OF FLORIDA, DEPARTMENT OF INSURANCE

The attached opinion was rendered on July 17, 1995,

YOU ARE HEREBY COMMANDED that further proceedings be had in accordance with said opinion, the rules of this Court and the laws of the State of Florida.

WITNESS the Honorable E. Earle Zehmer

Chief Judge of the District Court of Appeal of Florida, First District and the Seal of said court at Tallahassee, the Capitol, on this 2nd day of August, 1995

Jon S. Wheeler

Clerk, District Court of Appeal of Florida, First District

MANDATE

From

DISTRICT COURT OF APPEAL OF FLORIDA FIRST DISTRICT

To the Honorable, Errol H. Powell

Hearing Officer, Division of Administrative Hearings WHEREAS, in that certain cause filed in this Court styled:

AMERICAN INSURANCE ASSOCIATION

vs.

STATE OF FLORIDA, DEPARTMENT OF Case No. 94-2959 INSURANCE Your Case No. 94-3475RP

FLORIDA SURPLUS LINES, ASSOCIATION, INC.

vs.

STATE OF FLORIDA, DEPARTMENT OF INSURANCE

The attached opinion was rendered on July 17, 1995,

YOU ARE HEREBY COMMANDED that further proceedings be had in accordance with said opinion, the rules of this Court and the laws of the State of Florida.

WITNESS the Honorable E. Earle Zehmer

Chief Judge of the District Court of Appeal of Florida, First District and the Seal of said court at Tallahassee, the Capitol, on this 2nd day of August, 1995

Jon S. Wheeler

Clerk, District Court of Appeal of Florida, First District

Docket for Case No: 94-003475RP

Orders for Case No: 94-003475RP