Florida Senate - 2009 SENATOR AMENDMENT
Bill No. CS for CS for SB 1950
Barcode 417826
LEGISLATIVE ACTION
Senate . House
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Floor: 12/F/2R .
04/27/2009 04:39 PM .
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Senators Fasano, Crist, Storms, and Lynn moved the following:
1 Senate Amendment (with title amendment)
2
3 Delete lines 110 - 662
4 and insert:
5 Section 1. Paragraph (e) of subsection (2), paragraphs (b),
6 (c), and (d) of subsection (4), and subsection (17) of section
7 215.555, Florida Statutes, are amended to read:
8 215.555 Florida Hurricane Catastrophe Fund.—
9 (2) DEFINITIONS.—As used in this section:
10 (e) “Retention” means the amount of losses below which an
11 insurer is not entitled to reimbursement from the fund. An
12 insurer’s retention shall be calculated as follows:
13 1. The board shall calculate and report to each insurer the
14 retention multiples for that year. For the contract year
15 beginning June 1, 2005, the retention multiple shall be equal to
16 $4.5 billion divided by the total estimated reimbursement
17 premium for the contract year; for subsequent years, the
18 retention multiple shall be equal to $4.5 billion, adjusted
19 based upon the reported exposure from the prior contract year to
20 reflect the percentage growth in exposure to the fund for
21 covered policies since 2004, divided by the total estimated
22 reimbursement premium for the contract year. Total reimbursement
23 premium for purposes of the calculation under this subparagraph
24 shall be estimated using the assumption that all insurers have
25 selected the 90-percent coverage level. In 2010, the contract
26 year begins June 1 and ends December 31, 2010. In 2011 and
27 thereafter, the contract year begins January 1 and ends December
28 31.
29 2. The retention multiple as determined under subparagraph
30 1. shall be adjusted to reflect the coverage level elected by
31 the insurer. For insurers electing the 90-percent coverage
32 level, the adjusted retention multiple is 100 percent of the
33 amount determined under subparagraph 1. For insurers electing
34 the 75-percent coverage level, the retention multiple is 120
35 percent of the amount determined under subparagraph 1. For
36 insurers electing the 45-percent coverage level, the adjusted
37 retention multiple is 200 percent of the amount determined under
38 subparagraph 1.
39 3. An insurer shall determine its provisional retention by
40 multiplying its provisional reimbursement premium by the
41 applicable adjusted retention multiple and shall determine its
42 actual retention by multiplying its actual reimbursement premium
43 by the applicable adjusted retention multiple.
44 4. For insurers who experience multiple covered events
45 causing loss during the contract year, beginning June 1, 2005,
46 each insurer’s full retention shall be applied to each of the
47 covered events causing the two largest losses for that insurer.
48 For each other covered event resulting in losses, the insurer’s
49 retention shall be reduced to one-third of the full retention.
50 The reimbursement contract shall provide for the reimbursement
51 of losses for each covered event based on the full retention
52 with adjustments made to reflect the reduced retentions on or
53 after January 1 of the contract year provided the insurer
54 reports its losses as specified in the reimbursement contract.
55 (4) REIMBURSEMENT CONTRACTS.—
56 (b)1. The contract shall contain a promise by the board to
57 reimburse the insurer for 45 percent, 75 percent, or 90 percent
58 of its losses from each covered event in excess of the insurer’s
59 retention, plus 5 percent of the reimbursed losses to cover loss
60 adjustment expenses.
61 2. The insurer must elect one of the percentage coverage
62 levels specified in this paragraph and may, upon renewal of a
63 reimbursement contract, elect a lower percentage coverage level
64 if no revenue bonds issued under subsection (6) after a covered
65 event are outstanding, or elect a higher percentage coverage
66 level, regardless of whether or not revenue bonds are
67 outstanding. All members of an insurer group must elect the same
68 percentage coverage level. Any joint underwriting association,
69 risk apportionment plan, or other entity created under s.
70 627.351 must elect the 90-percent coverage level.
71 3. The contract shall provide that reimbursement amounts
72 shall not be reduced by reinsurance paid or payable to the
73 insurer from other sources.
74 4. Notwithstanding any other provision contained in this
75 section, the board shall make available to insurers that
76 purchased coverage provided by this subparagraph in 2008 2007,
77 insurers qualifying as limited apportionment companies under s.
78 627.351(6)(c), and insurers that have been approved to
79 participate in the Insurance Capital Build-Up Incentive Program
80 pursuant to s. 215.5595 a contract or contract addendum that
81 provides an additional amount of reimbursement coverage of up to
82 $10 million. The premium to be charged for this additional
83 reimbursement coverage shall be 50 percent of the additional
84 reimbursement coverage provided, which shall include one prepaid
85 reinstatement. The minimum retention level that an eligible
86 participating insurer must retain associated with this
87 additional coverage layer is 30 percent of the insurer’s surplus
88 as of December 31, 2008 December 31, 2007. This coverage shall
89 be in addition to all other coverage that may be provided under
90 this section. The coverage provided by the fund under this
91 subparagraph shall be in addition to the claims-paying capacity
92 as defined in subparagraph (c)1., but only with respect to those
93 insurers that select the additional coverage option and meet the
94 requirements of this subparagraph. The claims-paying capacity
95 with respect to all other participating insurers and limited
96 apportionment companies that do not select the additional
97 coverage option shall be limited to their reimbursement
98 premium’s proportionate share of the actual claims-paying
99 capacity otherwise defined in subparagraph (c)1. and as provided
100 for under the terms of the reimbursement contract. The optional
101 coverage retention as specified shall be accessed before the
102 mandatory coverage under the reimbursement contract, but once
103 the limit of coverage selected under this option is exhausted,
104 the insurer’s retention under the mandatory coverage will apply.
105 This coverage will apply and be paid concurrently with mandatory
106 coverage. Coverage provided in the reimbursement contract shall
107 not be affected by the additional premiums paid by participating
108 insurers exercising the additional coverage option allowed in
109 this subparagraph. This subparagraph expires on January 1, 2012
110 May 31, 2009.
111 (c)1. The contract shall also provide that the obligation
112 of the board with respect to all contracts covering a particular
113 contract year shall not exceed the actual claims-paying capacity
114 of the fund up to a limit of $15 billion for that contract year
115 adjusted based upon the reported exposure from the prior
116 contract year to reflect the percentage growth in exposure to
117 the fund for covered policies since 2003, provided the dollar
118 growth in the limit may not increase in any year by an amount
119 greater than the dollar growth of the balance of the fund as of
120 December 31, less any premiums or interest attributable to
121 optional coverage, as defined by rule which occurred over the
122 prior calendar year.
123 2. In May before the start of the upcoming contract year
124 and in October of during the contract year, the board shall
125 publish in the Florida Administrative Weekly a statement of the
126 fund’s estimated borrowing capacity, the fund’s estimated
127 claims-paying capacity, and the projected balance of the fund as
128 of December 31. After the end of each calendar year, the board
129 shall notify insurers of the estimated borrowing capacity, the
130 fund’s estimated claims-paying capacity, and the balance of the
131 fund as of December 31 to provide insurers with data necessary
132 to assist them in determining their retention and projected
133 payout from the fund for loss reimbursement purposes. In
134 conjunction with the development of the premium formula, as
135 provided for in subsection (5), the board shall publish factors
136 or multiples that assist insurers in determining their retention
137 and projected payout for the next contract year. For all
138 regulatory and reinsurance purposes, an insurer may calculate
139 its projected payout from the fund as its share of the total
140 fund premium for the current contract year multiplied by the sum
141 of the projected balance of the fund as of December 31 and the
142 estimated borrowing capacity for that contract year as reported
143 under this subparagraph.
144 (d)1. For purposes of determining potential liability and
145 to aid in the sound administration of the fund, the contract
146 shall require each insurer to report such insurer’s losses from
147 each covered event on an interim basis, as directed by the
148 board. The contract shall require the insurer to report to the
149 board no later than December 31 of each year, and quarterly
150 thereafter, its reimbursable losses from covered events for the
151 year. The contract shall require the board to determine and pay,
152 as soon as practicable after receiving these reports of
153 reimbursable losses, the initial amount of reimbursement due and
154 adjustments to this amount based on later loss information. The
155 adjustments to reimbursement amounts shall require the board to
156 pay, or the insurer to return, amounts reflecting the most
157 recent calculation of losses.
158 2. In determining reimbursements pursuant to this
159 subsection, the contract shall provide that the board shall pay
160 to each insurer such insurer’s projected payout, which is the
161 amount of reimbursement it is owed, up to an amount equal to the
162 insurer’s share of the actual premium paid for that contract
163 year, multiplied by the actual claims-paying capacity available
164 for that contract year.
165 3. The board may reimburse insurers for amounts up to the
166 published factors or multiples for determining each
167 participating insurer’s retention and projected payout derived
168 as a result of the development of the premium formula in those
169 situations in which the total reimbursement of losses to such
170 insurers would not exceed the estimated claims-paying capacity
171 of the fund. Otherwise, such factors or multiples may be reduced
172 among all insurers to reflect the estimated claims-paying
173 capacity.
174 (17) TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS.—
175 (a) Findings and intent.—
176 1. The Legislature finds that:
177 a. Because of temporary disruptions in the market for
178 catastrophic reinsurance, many property insurers were unable to
179 procure sufficient amounts of reinsurance for the 2006 hurricane
180 season or were able to procure such reinsurance only by
181 incurring substantially higher costs than in prior years.
182 b. The reinsurance market problems were responsible, at
183 least in part, for substantial premium increases to many
184 consumers and increases in the number of policies issued by
185 Citizens Property Insurance Corporation.
186 c. It is likely that the reinsurance market disruptions
187 will not significantly abate prior to the 2007 hurricane season.
188 2. It is the intent of the Legislature to create options
189 for insurers to purchase a temporary increased coverage limit
190 above the statutorily determined limit in subparagraph (4)(c)1.,
191 applicable for the 2007, 2008, and 2009, 2010, 2011, 2012, and
192 2013 hurricane seasons, to address market disruptions and enable
193 insurers, at their option, to procure additional coverage from
194 the Florida Hurricane Catastrophe Fund.
195 (b) Applicability of other provisions of this section.—All
196 provisions of this section and the rules adopted under this
197 section apply to the coverage created by this subsection unless
198 specifically superseded by provisions in this subsection.
199 (c) Optional coverage.—For the contract year commencing
200 June 1, 2007, and ending May 31, 2008, the contract year
201 commencing June 1, 2008, and ending May 31, 2009, and the
202 contract year commencing June 1, 2009, and ending May 31, 2010,
203 the contract year commencing June 1, 2010, and ending December
204 31, 2010, the contract year commencing January 1, 2011, and
205 ending December 31, 2011, the contract year commencing January
206 1, 2012, and ending December 31, 2012, and the contract year
207 commencing January 1, 2013, and ending December 31, 2013, the
208 board shall offer, for each of such years, the optional coverage
209 as provided in this subsection.
210 (d) Additional definitions.—As used in this subsection, the
211 term:
212 1. “FHCF” means Florida Hurricane Catastrophe Fund.
213 2. “FHCF reimbursement premium” means the premium paid by
214 an insurer for its coverage as a mandatory participant in the
215 FHCF, but does not include additional premiums for optional
216 coverages.
217 3. “Payout multiple” means the number or multiple created
218 by dividing the statutorily defined claims-paying capacity as
219 determined in subparagraph (4)(c)1. by the aggregate
220 reimbursement premiums paid by all insurers estimated or
221 projected as of calendar year-end.
222 4. “TICL” means the temporary increase in coverage limit.
223 5. “TICL options” means the temporary increase in coverage
224 options created under this subsection.
225 6. “TICL insurer” means an insurer that has opted to obtain
226 coverage under the TICL options addendum in addition to the
227 coverage provided to the insurer under its FHCF reimbursement
228 contract.
229 7. “TICL reimbursement premium” means the premium charged
230 by the fund for coverage provided under the TICL option.
231 8. “TICL coverage multiple” means the coverage multiple
232 when multiplied by an insurer’s reimbursement premium that
233 defines the temporary increase in coverage limit.
234 9. “TICL coverage” means the coverage for an insurer’s
235 losses above the insurer’s statutorily determined claims-paying
236 capacity based on the claims-paying limit in subparagraph
237 (4)(c)1., which an insurer selects as its temporary increase in
238 coverage from the fund under the TICL options selected. A TICL
239 insurer’s increased coverage limit options shall be calculated
240 as follows:
241 a. The board shall calculate and report to each TICL
242 insurer the TICL coverage multiples based on 12 options for
243 increasing the insurer’s FHCF coverage limit. Each TICL coverage
244 multiple shall be calculated by dividing $1 billion, $2 billion,
245 $3 billion, $4 billion, $5 billion, $6 billion, $7 billion, $8
246 billion, $9 billion, $10 billion, $11 billion, or $12 billion by
247 the total estimated aggregate FHCF reimbursement premiums for
248 the 2007-2008 contract year, and the 2008-2009 contract year,
249 and the 2009-2010 contract year.
250 b. For the 2009-2010 contract year, the board shall
251 calculate and report to each TICL insurer the TICL coverage
252 multiples based on 10 options for increasing the insurer’s FHCF
253 coverage limit. Each TICL coverage multiple shall be calculated
254 by dividing $1 billion, $2 billion, $3 billion, $4 billion, $5
255 billion, $6 billion, $7 billion, $8 billion, $9 billion, and $10
256 billion by the total estimated aggregate FHCF reimbursement
257 premiums for the 2009-2010 contract year.
258 c. For the contract year beginning June 1, 2010, and ending
259 December 31, 2010, the board shall calculate and report to each
260 TICL insurer the TICL coverage multiples based on eight options
261 for increasing the insurer’s FHCF coverage limit. Each TICL
262 coverage multiple shall be calculated by dividing $1 billion, $2
263 billion, $3 billion, $4 billion, $5 billion, $6 billion, $7
264 billion, and $8 billion by the total estimated aggregate FHCF
265 reimbursement premiums for the contract year.
266 d. For the 2011 contract year, the board shall calculate
267 and report to each TICL insurer the TICL coverage multiples
268 based on six options for increasing the insurer’s FHCF coverage
269 limit. Each TICL coverage multiple shall be calculated by
270 dividing $1 billion, $2 billion, $3 billion, $4 billion, $5
271 billion, and $6 billion by the total estimated aggregate FHCF
272 reimbursement premiums for the 2011 contract year.
273 e. For the 2012 contract year, the board shall calculate
274 and report to each TICL insurer the TICL coverage multiples
275 based on four options for increasing the insurer’s FHCF coverage
276 limit. Each TICL coverage multiple shall be calculated by
277 dividing $1 billion, $2 billion, $3 billion, and $4 billion by
278 the total estimated aggregate FHCF reimbursement premiums for
279 the 2012 contract year.
280 f. For the 2013 contract year, the board shall calculate
281 and report to each TICL insurer the TICL coverage multiples
282 based on two options for increasing the insurer’s FHCF coverage
283 limit. Each TICL coverage multiple shall be calculated by
284 dividing $1 billion and $2 billion by the total estimated
285 aggregate FHCF reimbursement premiums for the 2013 contract
286 year.
287 g. b. The TICL insurer’s increased coverage shall be the
288 FHCF reimbursement premium multiplied by the TICL coverage
289 multiple. In order to determine an insurer’s total limit of
290 coverage, an insurer shall add its TICL coverage multiple to its
291 payout multiple. The total shall represent a number that, when
292 multiplied by an insurer’s FHCF reimbursement premium for a
293 given reimbursement contract year, defines an insurer’s total
294 limit of FHCF reimbursement coverage for that reimbursement
295 contract year.
296 10. “TICL options addendum” means an addendum to the
297 reimbursement contract reflecting the obligations of the fund
298 and insurers selecting an option to increase an insurer’s FHCF
299 coverage limit.
300 (e) TICL options addendum.—
301 1. The TICL options addendum shall provide for
302 reimbursement of TICL insurers for covered events occurring
303 between June 1, 2007, and May 31, 2008, and between June 1,
304 2008, and May 31, 2009, or between June 1, 2009, and May 31,
305 2010, between June 1, 2010, and December 31, 2010, between
306 January 1, 2011, and December 31, 2011, between January 1, 2012,
307 and December 31, 2012, or between January 1, 2013, and December
308 31, 2013, in exchange for the TICL reimbursement premium paid
309 into the fund under paragraph (f). Any insurer writing covered
310 policies has the option of selecting an increased limit of
311 coverage under the TICL options addendum and shall select such
312 coverage at the time that it executes the FHCF reimbursement
313 contract.
314 2. The TICL addendum shall contain a promise by the board
315 to reimburse the TICL insurer for 45 percent, 75 percent, or 90
316 percent of its losses from each covered event in excess of the
317 insurer’s retention, plus 5 percent of the reimbursed losses to
318 cover loss adjustment expenses. The percentage shall be the same
319 as the coverage level selected by the insurer under paragraph
320 (4)(b).
321 3. The TICL addendum shall provide that reimbursement
322 amounts shall not be reduced by reinsurance paid or payable to
323 the insurer from other sources.
324 4. The priorities, schedule, and method of reimbursements
325 under the TICL addendum shall be the same as provided under
326 subsection (4).
327 (f) TICL reimbursement premiums.—Each TICL insurer shall
328 pay to the fund, in the manner and at the time provided in the
329 reimbursement contract for payment of reimbursement premiums, a
330 TICL reimbursement premium determined as specified in subsection
331 (5).
332 (g) Effect on claims-paying capacity of the fund.—For the
333 contract terms commencing June 1, 2007, June 1, 2008, and June
334 1, 2009, June 1, 2010, January 1, 2011, January 1, 2012, and
335 January 1, 2013, the program created by this subsection shall
336 increase the claims-paying capacity of the fund as provided in
337 subparagraph (4)(c)1. by an amount not to exceed $12 billion and
338 shall depend on the TICL coverage options selected and the
339 number of insurers that select the TICL optional coverage. The
340 additional capacity shall apply only to the additional coverage
341 provided under the TICL options and shall not otherwise affect
342 any insurer’s reimbursement from the fund if the insurer chooses
343 not to select the temporary option to increase its limit of
344 coverage under the FHCF.
345 (h) Increasing the claims-paying capacity of the fund.—For
346 the contract years commencing June 1, 2007, June 1, 2008, and
347 June 1, 2009, the board may increase the claims-paying capacity
348 of the fund as provided in paragraph (g) by an amount not to
349 exceed $4 billion in four $1 billion options and shall depend on
350 the TICL coverage options selected and the number of insurers
351 that select the TICL optional coverage. Each insurer’s TICL
352 premium shall be calculated based upon the additional limit of
353 increased coverage that the insurer selects. Such limit is
354 determined by multiplying the TICL multiple associated with one
355 of the four options times the insurer’s FHCF reimbursement
356 premium. The reimbursement premium associated with the
357 additional coverage provided in this paragraph shall be
358 determined as specified in subsection (5).
359
360 ================= T I T L E A M E N D M E N T ================
361 And the title is amended as follows:
362 Delete lines 22 - 24
363 and insert:
364
365 Hurricane Catastrophe Fund; authorizing the State