HB 1495

1
A bill to be entitled
2An act relating to insurance; amending s. 215.555, F.S.;
3extending application of provisions relating to temporary
4increase in coverage limit operations for the Florida
5Hurricane Catastrophe Fund; providing additional
6reimbursement requirements for temporary increase in
7coverage addenda for additional contract years; amending
8s. 627.351, F.S.; defining the term "actuarially sound
9rates" for purposes of coverage by Citizens Property
10Insurance Corporation; requiring the corporation to
11implement certain rate increases each year; providing for
12termination of such rate increase implementation under
13certain circumstances; requiring the corporation to
14transfer certain moneys to the General Revenue Fund;
15providing for termination of such transfers under certain
16circumstances; providing for appropriation of certain
17transferred funds to the Insurance Regulatory Trust Fund
18for certain purposes; requiring the My Safe Florida Home
19Program to use certain funds for certain mitigation
20grants; authorizing the department to establish a separate
21account in the trust fund for accounting purposes;
22providing an effective date.
23
24Be It Enacted by the Legislature of the State of Florida:
25
26     Section 1.  Paragraphs (a), (c), (d), (e), and (g) of
27subsection (17) of section 215.555, Florida Statutes, are
28amended to read:
29     215.555  Florida Hurricane Catastrophe Fund.--
30     (17)  TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS.--
31     (a)  Findings and intent.--
32     1.  The Legislature finds that:
33     a.  Because of temporary disruptions in the market for
34catastrophic reinsurance, many property insurers were unable to
35procure sufficient amounts of reinsurance for the 2006 hurricane
36season or were able to procure such reinsurance only by
37incurring substantially higher costs than in prior years.
38     b.  The reinsurance market problems were responsible, at
39least in part, for substantial premium increases to many
40consumers and increases in the number of policies issued by
41Citizens Property Insurance Corporation.
42     c.  It is likely that the reinsurance market disruptions
43will not significantly abate prior to the 2007 hurricane season.
44     2.  It is the intent of the Legislature to create options
45for insurers to purchase a temporary increased coverage limit
46above the statutorily determined limit in subparagraph (4)(c)1.,
47applicable for the 2007, 2008, and 2009, 2010, 2011, 2012, 2013,
482014, and 2015 hurricane seasons, to address market disruptions
49and enable insurers, at their option, to procure additional
50coverage from the Florida Hurricane Catastrophe Fund.
51     (c)  Optional coverage.--For the contract year commencing
52June 1, 2007, and ending May 31, 2008, the contract year
53commencing June 1, 2008, and ending May 31, 2009, and the
54contract year commencing June 1, 2009, and ending May 31, 2010,
55the contract year commencing June 1, 2010, and ending May 31,
562011, the contract year commencing June 1, 2011, and ending May
5731, 2012, the contract year commencing June 1, 2012, and ending
58May 31, 2013, the contract year commencing June 1, 2013, and
59ending May 31, 2014, the contract year commencing June 1, 2014,
60and ending May 31, 2015, and the contract year commencing June
611, 2015, and ending May 31, 2016, the board shall offer, for
62each of such years, the optional coverage as provided in this
63subsection.
64     (d)  Additional definitions.--As used in this subsection,
65the term:
66     1.  "FHCF" means Florida Hurricane Catastrophe Fund.
67     2.  "FHCF reimbursement premium" means the premium paid by
68an insurer for its coverage as a mandatory participant in the
69FHCF, but does not include additional premiums for optional
70coverages.
71     3.  "Payout multiple" means the number or multiple created
72by dividing the statutorily defined claims-paying capacity as
73determined in subparagraph (4)(c)1. by the aggregate
74reimbursement premiums paid by all insurers estimated or
75projected as of calendar year-end.
76     4.  "TICL" means the temporary increase in coverage limit.
77     5.  "TICL options" means the temporary increase in coverage
78options created under this subsection.
79     6.  "TICL insurer" means an insurer that has opted to
80obtain coverage under the TICL options addendum in addition to
81the coverage provided to the insurer under its FHCF
82reimbursement contract.
83     7.  "TICL reimbursement premium" means the premium charged
84by the fund for coverage provided under the TICL option.
85     8.  "TICL coverage multiple" means the coverage multiple
86when multiplied by an insurer's reimbursement premium that
87defines the temporary increase in coverage limit.
88     9.  "TICL coverage" means the coverage for an insurer's
89losses above the insurer's statutorily determined claims-paying
90capacity based on the claims-paying limit in subparagraph
91(4)(c)1., which an insurer selects as its temporary increase in
92coverage from the fund under the TICL options selected. A TICL
93insurer's increased coverage limit options shall be calculated
94as follows:
95     a.  The board shall calculate and report to each TICL
96insurer the TICL coverage multiples based on 12 options for
97increasing the insurer's FHCF coverage limit. Each TICL coverage
98multiple shall be calculated by dividing $1 billion, $2 billion,
99$3 billion, $4 billion, $5 billion, $6 billion, $7 billion, $8
100billion, $9 billion, $10 billion, $11 billion, or $12 billion by
101the total estimated aggregate FHCF reimbursement premiums for
102the 2007-2008 contract year, the 2008-2009 contract year, and
103the 2009-2010 contract year, the 2010-2011 contract year, the
1042011-2012 contract year, the 2012-2013 contract year, the 2013-
1052014 contract year, the 2014-2015 contract year, and the 2015-
1062016 contract year.
107     b.  The TICL insurer's increased coverage shall be the FHCF
108reimbursement premium multiplied by the TICL coverage multiple.
109In order to determine an insurer's total limit of coverage, an
110insurer shall add its TICL coverage multiple to its payout
111multiple. The total shall represent a number that, when
112multiplied by an insurer's FHCF reimbursement premium for a
113given reimbursement contract year, defines an insurer's total
114limit of FHCF reimbursement coverage for that reimbursement
115contract year.
116     10.  "TICL options addendum" means an addendum to the
117reimbursement contract reflecting the obligations of the fund
118and insurers selecting an option to increase an insurer's FHCF
119coverage limit.
120     (e)  TICL options addendum.--
121     1.  The TICL options addendum shall provide for
122reimbursement of TICL insurers for covered events occurring
123between June 1, 2007, and May 31, 2008, and between June 1,
1242008, and May 31, 2009, or between June 1, 2009, and May 31,
1252010, between June 1, 2010, and May 31, 2011, between June 1,
1262011, and May 31, 2012, between June 1, 2012, and May 31, 2013,
127between June 1, 2013, and May 31, 2014, between June 1, 2014,
128and May 31, 2015, or between June 1, 2015, and May 31, 2016, in
129exchange for the TICL reimbursement premium paid into the fund
130under paragraph (f). Any insurer writing covered policies has
131the option of selecting an increased limit of coverage under the
132TICL options addendum and shall select such coverage at the time
133that it executes the FHCF reimbursement contract.
134     2.a.  The TICL addendum for the contract year commencing
135June 1, 2007, and ending May 31, 2008, the contract year
136commencing June 1, 2008, and ending May 31, 2009, or the
137contract year commencing June 1, 2009, and ending May 31, 2010,
138shall contain a promise by the board to reimburse the TICL
139insurer for 45 percent, 75 percent, or 90 percent of its losses
140from each covered event in excess of the insurer's retention,
141plus 5 percent of the reimbursed losses to cover loss adjustment
142expenses. The percentage shall be the same as the coverage level
143selected by the insurer under paragraph (4)(b).
144     b.  The TICL addendum for the contract year commencing June
1451, 2010, and ending May 31, 2011, shall contain a promise by the
146board to reimburse the TICL insurer for 45 percent or 75 percent
147of its losses from each covered event in excess of the insurer's
148retention, plus 5 percent of the reimbursed losses to cover loss
149adjustment expenses.
150     c.  The TICL addendum for the contract year commencing June
1511, 2011, and ending May 31, 2012, shall contain a promise by the
152board to reimburse the TICL insurer for 45 percent or 65 percent
153of its losses from each covered event in excess of the insurer's
154retention, plus 5 percent of the reimbursed losses to cover loss
155adjustment expenses.
156     d  The TICL addendum for the contract year commencing June
1571, 2012, and ending May 31, 2013, shall contain a promise by the
158board to reimburse the TICL insurer for 45 percent or 55 percent
159of its losses from each covered event in excess of the insurer's
160retention, plus 5 percent of the reimbursed losses to cover loss
161adjustment expenses.
162     e.  The TICL addendum for the contract year commencing June
1631, 2013, and ending May 31, 2014, shall contain a promise by the
164board to reimburse the TICL insurer for 45 percent of its losses
165from each covered event in excess of the insurer's retention,
166plus 5 percent of the reimbursed losses to cover loss adjustment
167expenses.
168     f.  The TICL addendum for the contract year commencing June
1691, 2014, and ending May 31, 2015, shall contain a promise by the
170board to reimburse the TICL insurer for 30 percent of its losses
171from each covered event in excess of the insurer's retention,
172plus 5 percent of the reimbursed losses to cover loss adjustment
173expenses.
174     g.  The TICL addendum for the contract year commencing June
1751, 2015, and ending May 31, 2016, shall contain a promise by the
176board to reimburse the TICL insurer for 15 percent of its losses
177from each covered event in excess of the insurer's retention,
178plus 5 percent of the reimbursed losses to cover loss adjustment
179expenses.
180     3.  The TICL addendum shall provide that reimbursement
181amounts shall not be reduced by reinsurance paid or payable to
182the insurer from other sources.
183     4.  The priorities, schedule, and method of reimbursements
184under the TICL addendum shall be the same as provided under
185subsection (4).
186     (g)  Effect on claims-paying capacity of the fund.--For the
187contract terms commencing June 1, 2007, June 1, 2008, and June
1881, 2009, June 1, 2010, June 1, 2011, June 1, 2012, June 1, 2013,
189June 1, 2014, and June 1, 2015, the program created by this
190subsection shall increase the claims-paying capacity of the fund
191as provided in subparagraph (4)(c)1. by an amount not to exceed
192$12 billion and shall depend on the TICL coverage options
193selected and the number of insurers that select the TICL
194optional coverage. The additional capacity shall apply only to
195the additional coverage provided under the TICL options and
196shall not otherwise affect any insurer's reimbursement from the
197fund if the insurer chooses not to select the temporary option
198to increase its limit of coverage under the FHCF.
199     Section 2.  Paragraph (m) of subsection (6) of section
200627.351, Florida Statutes, is amended to read:
201     627.351  Insurance risk apportionment plans.--
202     (6)  CITIZENS PROPERTY INSURANCE CORPORATION.--
203     (m)1.  Rates for coverage provided by the corporation shall
204be actuarially sound and subject to the requirements of s.
205627.062, except as otherwise provided in this paragraph. For the
206purposes of this paragraph, the term "actuarially sound rate"
207means a rate at least sufficient for a certain classification of
208risk in a certain rating area to generate sufficient revenue to
209cover all expected losses and expected expenses, plus a rate
210factor of 15 percent representing a capital charge. The
211corporation shall file its recommended rates with the office at
212least annually. The corporation shall provide any additional
213information regarding the rates which the office requires. The
214office shall consider the recommendations of the board and issue
215a final order establishing the rates for the corporation within
21645 days after the recommended rates are filed. The corporation
217may not pursue an administrative challenge or judicial review of
218the final order of the office.
219     2.  In addition to the rates otherwise determined pursuant
220to this paragraph, the corporation shall impose and collect an
221amount equal to the premium tax provided for in s. 624.509 to
222augment the financial resources of the corporation.
223     3.  After the public hurricane loss-projection model under
224s. 627.06281 has been found to be accurate and reliable by the
225Florida Commission on Hurricane Loss Projection Methodology,
226that model shall serve as the minimum benchmark for determining
227the windstorm portion of the corporation's rates. This
228subparagraph does not require or allow the corporation to adopt
229rates lower than the rates otherwise required or allowed by this
230paragraph.
231     4.  The rate filings for the corporation which were
232approved by the office and which took effect January 1, 2007,
233are rescinded, except for those rates that were lowered. As soon
234as possible, the corporation shall begin using the lower rates
235that were in effect on December 31, 2006, and shall provide
236refunds to policyholders who have paid higher rates as a result
237of that rate filing. The rates in effect on December 31, 2006,
238shall remain in effect for the 2007 and 2008 calendar years
239except for any rate change that results in a lower rate. The
240next rate change that may increase rates shall take effect
241pursuant to a new rate filing recommended by the corporation and
242established by the office, subject to the requirements of this
243paragraph.
244     5.  Beginning on July 15, 2009, and each year thereafter,
245the corporation must make a recommended actuarially sound rate
246filing for each personal and commercial line of business it
247writes, to be effective no earlier than January 1, 2010.
248     6.  Notwithstanding the board's recommended rates and the
249office's final order regarding the corporation's filed rates
250under subparagraph 1., the corporation shall implement a rate
251increase each year which does not exceed a statewide average of
25210 percent, exceed 15 percent for any rating territory by line
253used by the corporation, or exceed 20 percent for any single
254policy issued by the corporation adjusted for exposure change.
255     7.  The corporation's implementation of rates as prescribed
256in subparagraph 6. shall cease upon the corporation's
257implementation of actuarially sound rates as prescribed in
258subparagraph 1.
259     8.  Beginning January 1, 2011, and each year thereafter,
260the corporation shall transfer 50 percent of the funds received
261from the rate increase prescribed by subparagraph 6. to the
262General Revenue Fund. The corporation's transfer of such funds
263shall cease upon the corporation's implementation of actuarially
264sound rates as prescribed in subparagraph 1.
265     Section 3.  Upon receipt of funds transferred to the
266General Revenue Fund pursuant to s. 627.351(6)(m)8., Florida
267Statutes, the funds transferred are appropriated on a
268nonrecurring basis from the General Revenue Fund to the
269Insurance Regulatory Trust Fund in the Department of Financial
270Services for purposes of the My Safe Florida Home Program
271specified in s. 215.5586, Florida Statutes. The My Safe Florida
272Home Program shall use the funds solely for the provision of
273mitigation grants in accordance with s. 215.5586(2), Florida
274Statutes. The department shall establish a separate account
275within the trust fund for accounting purposes.
276     Section 4.  This act shall take effect July 1, 2009.


CODING: Words stricken are deletions; words underlined are additions.