1 | A bill to be entitled |
2 | An act relating to the Florida Hurricane Catastrophe |
3 | Fund; amending s. 215.555, F.S.; revising the |
4 | definitions of "retention" and "corporation"; |
5 | providing for calculation of an insurer's |
6 | reimbursement premium and retention under the |
7 | reimbursement contract; revising coverage levels |
8 | available under the reimbursement contract; revising |
9 | aggregate coverage limits; providing for the phase-in |
10 | of changes to coverage levels and limits; revising the |
11 | cash build-up factor included in reimbursement |
12 | premiums; providing for phase-in; reducing maximum |
13 | allowable emergency assessments; changing the name of |
14 | the Florida Hurricane Catastrophe Fund Finance |
15 | Corporation; repealing provisions related to temporary |
16 | emergency options for additional coverage; terminating |
17 | the temporary increase in coverage limits option at |
18 | the end of the 2011-2012 contract year; limiting to |
19 | the 2012-2013 contract year provisions relating to the |
20 | TICL options addendum, TICL reimbursement premiums, |
21 | and the claims-paying capacity of the fund, to |
22 | conform; amending s. 627.0629, F.S.; conforming a |
23 | cross-reference; providing an effective date. |
24 |
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25 | Be It Enacted by the Legislature of the State of Florida: |
26 |
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27 | Section 1. Paragraphs (e) and (n) of subsection (2), |
28 | paragraphs (b) and (c) of subsection (4), paragraph (b) of |
29 | subsection (5), paragraphs (b) and (d) of subsection (6), and |
30 | subsections (16), (17), and (18) of section 215.555, Florida |
31 | Statutes, are amended to read: |
32 | 215.555 Florida Hurricane Catastrophe Fund.- |
33 | (2) DEFINITIONS.-As used in this section: |
34 | (e) "Retention" means the amount of losses below which an |
35 | insurer is not entitled to reimbursement from the fund. An |
36 | insurer's retention shall be calculated as follows: |
37 | 1.a. The board shall calculate and report to each insurer |
38 | the retention multiples for that year. |
39 | (I) For the contract year beginning June 1, 2005, the |
40 | retention multiple shall be equal to $4.5 billion divided by the |
41 | total estimated reimbursement premium for the contract year; for |
42 | subsequent years, up to and including the 2012-2013 contract |
43 | year, the retention multiple shall be equal to $4.5 billion, |
44 | adjusted based upon the reported exposure for the contract year |
45 | occurring 2 years before the particular contract year to reflect |
46 | the percentage growth in exposure to the fund for covered |
47 | policies since 2004, divided by the total estimated |
48 | reimbursement premium for the contract year. |
49 | (II) For the contract year beginning June 1, 2013, the |
50 | retention multiple shall be equal to $8 billion divided by the |
51 | total estimated reimbursement premium for the contract year. For |
52 | subsequent years, the retention multiple shall be equal to $8 |
53 | billion, adjusted based upon the reported exposure for the |
54 | contract year occurring 2 years before the particular contract |
55 | year to reflect the percentage growth in exposure to the fund |
56 | for covered policies since 2011, divided by the total |
57 | reimbursement premium for the contract year. |
58 | b. For the 2012-2013 contract year, total reimbursement |
59 | premium for purposes of the calculation under this subparagraph |
60 | shall be estimated using the assumption that all insurers have |
61 | selected the 90-percent coverage level. |
62 | c. In order to implement the phase-in of reduced coverage |
63 | levels as provided in paragraph (4)(b), total reimbursement |
64 | premium for purposes of the calculation under this subparagraph |
65 | shall be estimated using the following assumptions: |
66 | (I) For the 2013-2014 contract year, the assumption is |
67 | that all insurers have selected the 85-percent coverage level. |
68 | (II) For the 2014-2015 contract year, the assumption is |
69 | that all insurers have selected the 80-percent coverage level. |
70 | (III) For the 2015-2016 contract year and subsequent |
71 | contract years, the assumption is that all insurers have |
72 | selected the 75-percent coverage level. |
73 | 2. The retention multiple as determined under subparagraph |
74 | 1. shall be adjusted to reflect the coverage level elected by |
75 | the insurer. |
76 | a. For an insurer electing the maximum coverage level |
77 | available under paragraph (4)(b) for a particular contract year |
78 | For insurers electing the 90-percent coverage level, the |
79 | adjusted retention multiple is 100 percent of the amount |
80 | determined under subparagraph 1. |
81 | b. In order to implement the phase-in of reduced coverage |
82 | levels as provided in paragraph (4)(b), for an insurer electing |
83 | a coverage level other than the maximum coverage level, the |
84 | adjusted retention multiple is as follows: |
85 | (I) With respect to the 2012-2013 contract year, for an |
86 | insurer For insurers electing the 75-percent coverage level, the |
87 | retention multiple is 90/75ths 120 percent of the amount |
88 | determined under subparagraph 1., and for an insurer For |
89 | insurers electing the 45-percent coverage level, the adjusted |
90 | retention multiple is 90/45ths 200 percent of the amount |
91 | determined under subparagraph 1. |
92 | (II) With respect to the 2013-2014 contract year, for an |
93 | insurer electing the 75-percent coverage level, the retention |
94 | multiple is 85/75ths of the amount determined under subparagraph |
95 | 1., and for an insurer electing the 45-percent coverage level, |
96 | the retention multiple is 85/45ths of the amount determined |
97 | under subparagraph 1. |
98 | (III) With respect to the 2014-2015 contract year, for an |
99 | insurer electing the 75-percent coverage level, the retention |
100 | multiple is 80/75ths of the amount determined under subparagraph |
101 | 1., and for an insurer electing the 45-percent coverage level, |
102 | the retention multiple is 80/45ths of the amount determined |
103 | under subparagraph 1. |
104 | (IV) With respect to the 2015-2016 contract year and |
105 | subsequent contract years, for an insurer electing the 75- |
106 | percent coverage level, the retention multiple is the amount |
107 | determined under subparagraph 1., and for an insurer electing |
108 | the 45-percent coverage level, the retention multiple is |
109 | 75/45ths of the amount determined under subparagraph 1. |
110 | 3. An insurer shall determine its provisional retention by |
111 | multiplying its provisional reimbursement premium by the |
112 | applicable adjusted retention multiple and shall determine its |
113 | actual retention by multiplying its actual reimbursement premium |
114 | by the applicable adjusted retention multiple. |
115 | 4. For insurers who experience multiple covered events |
116 | causing loss during the contract year, beginning June 1, 2005, |
117 | each insurer's full retention shall be applied to each of the |
118 | covered events causing the two largest losses for that insurer. |
119 | For each other covered event resulting in losses, the insurer's |
120 | retention shall be reduced to one-third of the full retention. |
121 | The reimbursement contract shall provide for the reimbursement |
122 | of losses for each covered event based on the full retention |
123 | with adjustments made to reflect the reduced retentions on or |
124 | after January 1 of the contract year provided the insurer |
125 | reports its losses as specified in the reimbursement contract. |
126 | (n) "Corporation" means the State Board of Administration |
127 | Florida Hurricane Catastrophe Fund Finance Corporation created |
128 | in paragraph (6)(d). |
129 | (4) REIMBURSEMENT CONTRACTS.- |
130 | (b)1.a. The contract shall contain a promise by the board |
131 | to reimburse the insurer for a specified percentage 45 percent, |
132 | 75 percent, or 90 percent of its losses from each covered event |
133 | in excess of the insurer's retention, plus 5 percent of the |
134 | reimbursed losses to cover loss adjustment expenses. |
135 | b. The available coverage levels are as follows: |
136 | (I) For the 2012-2013 contract year, 90 percent, 75 |
137 | percent, and 45 percent. |
138 | (II) For the 2013-2014 contract year, 85 percent, 75 |
139 | percent, and 45 percent. |
140 | (III) For the 2014-2015 contract year, 80 percent, 75 |
141 | percent, and 45 percent. |
142 | (IV) For the 2015-2016 contract year and subsequent |
143 | contract years, 75 percent and 45 percent. |
144 | 2.a. The insurer must elect one of the percentage coverage |
145 | levels specified in this paragraph and may, upon renewal of a |
146 | reimbursement contract, elect a lower percentage coverage level |
147 | if no revenue bonds issued under subsection (6) after a covered |
148 | event are outstanding, or elect a higher percentage coverage |
149 | level, regardless of whether or not revenue bonds are |
150 | outstanding. All members of an insurer group must elect the same |
151 | percentage coverage level. Any joint underwriting association, |
152 | risk apportionment plan, or other entity created under s. |
153 | 627.351 must elect the maximum 90-percent coverage level |
154 | available under subparagraph 1. |
155 | b. In order to implement the phase-in of reduced coverage |
156 | levels as provided in subparagraph 1., and notwithstanding any |
157 | provisions of sub-subparagraph a. to the contrary, if revenue |
158 | bonds issued under subsection (6) after a covered event are |
159 | outstanding and the insurer has elected the maximum coverage |
160 | level available under subparagraph 1., the insurer must, upon |
161 | renewal of the reimbursement contract, elect the maximum |
162 | coverage level available under subparagraph 1. for the renewal |
163 | contract year. |
164 | 3. The contract shall provide that reimbursement amounts |
165 | shall not be reduced by reinsurance paid or payable to the |
166 | insurer from other sources. |
167 | 4. Notwithstanding any other provision contained in this |
168 | section, the board shall make available to insurers that |
169 | purchased coverage provided by this subparagraph in 2008, |
170 | insurers qualifying as limited apportionment companies under s. |
171 | 627.351(6)(c), and insurers that have been approved to |
172 | participate in the Insurance Capital Build-Up Incentive Program |
173 | pursuant to s. 215.5595 a contract or contract addendum that |
174 | provides an additional amount of reimbursement coverage of up to |
175 | $10 million. The premium to be charged for this additional |
176 | reimbursement coverage shall be 50 percent of the additional |
177 | reimbursement coverage provided, which shall include one prepaid |
178 | reinstatement. The minimum retention level that an eligible |
179 | participating insurer must retain associated with this |
180 | additional coverage layer is 30 percent of the insurer's surplus |
181 | as of December 31, 2008, for the 2009-2010 contract year; as of |
182 | December 31, 2009, for the 2010-2011 contract year; and as of |
183 | December 31, 2010, for the 2011-2012 contract year. This |
184 | coverage shall be in addition to all other coverage that may be |
185 | provided under this section. The coverage provided by the fund |
186 | under this subparagraph shall be in addition to the claims- |
187 | paying capacity as defined in subparagraph (c)1., but only with |
188 | respect to those insurers that select the additional coverage |
189 | option and meet the requirements of this subparagraph. The |
190 | claims-paying capacity with respect to all other participating |
191 | insurers and limited apportionment companies that do not select |
192 | the additional coverage option shall be limited to their |
193 | reimbursement premium's proportionate share of the actual |
194 | claims-paying capacity otherwise defined in subparagraph (c)1. |
195 | and as provided for under the terms of the reimbursement |
196 | contract. The optional coverage retention as specified shall be |
197 | accessed before the mandatory coverage under the reimbursement |
198 | contract, but once the limit of coverage selected under this |
199 | option is exhausted, the insurer's retention under the mandatory |
200 | coverage will apply. This coverage will apply and be paid |
201 | concurrently with mandatory coverage. This subparagraph expires |
202 | on May 31, 2012. |
203 | (c)1. The contract shall also provide that the obligation |
204 | of the board with respect to all contracts covering a particular |
205 | contract year shall not exceed the actual claims-paying capacity |
206 | of the fund up to the limit specified in this subparagraph. |
207 | a. For the 2012-2013 contract year, the limit is $17 |
208 | billion. |
209 | b. For the 2013-2014 contract year, the limit is $15.5 |
210 | billion. |
211 | c. For the 2014-2015 contract year, the limit is $14 |
212 | billion. |
213 | d. For the 2015-2016 contract year and subsequent contract |
214 | years, the limit is $12 billion. |
215 | e. For contract years after the 2015-2016 contract year, |
216 | if a limit of $17 billion for that contract year, unless the |
217 | board determines that there is sufficient estimated claims- |
218 | paying capacity to provide $12 $17 billion of capacity for the |
219 | current contract year and an additional $12 $17 billion of |
220 | capacity for subsequent contract years. If the board makes such |
221 | a determination, the estimated claims-paying capacity for the |
222 | particular contract year shall be determined by adding to the |
223 | $12 $17 billion limit one-half of the fund's estimated claims- |
224 | paying capacity in excess of $24 $34 billion. However, the |
225 | dollar growth in the limit may not increase in any year by an |
226 | amount greater than the dollar growth of the balance of the fund |
227 | as of December 31, less any premiums or interest attributable to |
228 | optional coverage, as defined by rule, which occurred over the |
229 | prior calendar year. |
230 | 2. In May and October of the contract year, the board |
231 | shall publish in the Florida Administrative Weekly a statement |
232 | of the fund's estimated borrowing capacity, the fund's estimated |
233 | claims-paying capacity, and the projected balance of the fund as |
234 | of December 31. After the end of each calendar year, the board |
235 | shall notify insurers of the estimated borrowing capacity, |
236 | estimated claims-paying capacity, and the balance of the fund as |
237 | of December 31 to provide insurers with data necessary to assist |
238 | them in determining their retention and projected payout from |
239 | the fund for loss reimbursement purposes. In conjunction with |
240 | the development of the premium formula, as provided for in |
241 | subsection (5), the board shall publish factors or multiples |
242 | that assist insurers in determining their retention and |
243 | projected payout for the next contract year. For all regulatory |
244 | and reinsurance purposes, an insurer may calculate its projected |
245 | payout from the fund as its share of the total fund premium for |
246 | the current contract year multiplied by the sum of the projected |
247 | balance of the fund as of December 31 and the estimated |
248 | borrowing capacity for that contract year as reported under this |
249 | subparagraph. |
250 | (5) REIMBURSEMENT PREMIUMS.- |
251 | (b)1. The State Board of Administration shall select an |
252 | independent consultant to develop a formula for determining the |
253 | actuarially indicated premium to be paid to the fund. The |
254 | formula shall specify, for each zip code or other limited |
255 | geographical area, the amount of premium to be paid by an |
256 | insurer for each $1,000 of insured value under covered policies |
257 | in that zip code or other area. In establishing premiums, the |
258 | board shall consider the coverage elected under paragraph (4)(b) |
259 | and any factors that tend to enhance the actuarial |
260 | sophistication of ratemaking for the fund, including |
261 | deductibles, type of construction, type of coverage provided, |
262 | relative concentration of risks, and other such factors deemed |
263 | by the board to be appropriate. |
264 | 2. The formula must provide for a cash build-up factor as |
265 | specified in this subparagraph. For the 2009-2010 contract year, |
266 | the factor is 5 percent. For the 2010-2011 contract year, the |
267 | factor is 10 percent. |
268 | a. For the 2011-2012 contract year, the factor is 15 |
269 | percent. |
270 | b. For the 2012-2013 contract year, the factor is 20 |
271 | percent. |
272 | c. For the 2013-2014 contract year and thereafter, the |
273 | factor is 25 percent. |
274 | d For the 2014-2015 contract year, the factor is 30 |
275 | percent. |
276 | e. For the 2015-2016 contract year, the factor is 35 |
277 | percent. |
278 | f. For the 2016-2017 contract year, the factor is 40 |
279 | percent. |
280 | g. For the 2017-2018 contract year, the factor is 45 |
281 | percent. |
282 | h. For the 2018-2019 contract year and subsequent contract |
283 | years, the factor is 50 percent. |
284 | 3. The formula may provide for a procedure to determine |
285 | the premiums to be paid by new insurers that begin writing |
286 | covered policies after the beginning of a contract year, taking |
287 | into consideration when the insurer starts writing covered |
288 | policies, the potential exposure of the insurer, the potential |
289 | exposure of the fund, the administrative costs to the insurer |
290 | and to the fund, and any other factors deemed appropriate by the |
291 | board. The formula must be approved by unanimous vote of the |
292 | board. The board may, at any time, revise the formula pursuant |
293 | to the procedure provided in this paragraph. |
294 | (6) REVENUE BONDS.- |
295 | (b) Emergency assessments- |
296 | 1. If the board determines that the amount of revenue |
297 | produced under subsection (5) is insufficient to fund the |
298 | obligations, costs, and expenses of the fund and the |
299 | corporation, including repayment of revenue bonds and that |
300 | portion of the debt service coverage not met by reimbursement |
301 | premiums, the board shall direct the Office of Insurance |
302 | Regulation to levy, by order, an emergency assessment on direct |
303 | premiums for all property and casualty lines of business in this |
304 | state, including property and casualty business of surplus lines |
305 | insurers regulated under part VIII of chapter 626, but not |
306 | including any workers' compensation premiums or medical |
307 | malpractice premiums. As used in this subsection, the term |
308 | "property and casualty business" includes all lines of business |
309 | identified on Form 2, Exhibit of Premiums and Losses, in the |
310 | annual statement required of authorized insurers by s. 624.424 |
311 | and any rule adopted under this section, except for those lines |
312 | identified as accident and health insurance and except for |
313 | policies written under the National Flood Insurance Program. The |
314 | assessment shall be specified as a percentage of direct written |
315 | premium and is subject to annual adjustments by the board in |
316 | order to meet debt obligations. The same percentage shall apply |
317 | to all policies in lines of business subject to the assessment |
318 | issued or renewed during the 12-month period beginning on the |
319 | effective date of the assessment. |
320 | 2.a. A premium is not subject to an annual assessment |
321 | under this paragraph in excess of 6 percent of premium with |
322 | respect to obligations arising out of losses attributable to any |
323 | one contract year prior to the 2015-2016 contract year, and a |
324 | premium is not subject to an aggregate annual assessment under |
325 | this paragraph in excess of 10 percent of premium if all of the |
326 | losses that generated the obligations were attributable to |
327 | contract years prior to the 2015-2016 contract year. An annual |
328 | assessment under this paragraph shall continue as long as the |
329 | revenue bonds issued with respect to which the assessment was |
330 | imposed are outstanding, including any bonds the proceeds of |
331 | which were used to refund the revenue bonds, unless adequate |
332 | provision has been made for the payment of the bonds under the |
333 | documents authorizing issuance of the bonds. |
334 | b. Except as provided in sub-subparagraph a., a premium is |
335 | not subject to an annual assessment under this paragraph in |
336 | excess of 5 percent of premium with respect to obligations |
337 | arising out of losses attributable to any one contract year, and |
338 | a premium is not subject to an aggregate annual assessment under |
339 | this paragraph in excess of 8 percent of premium. An annual |
340 | assessment under this paragraph shall continue as long as the |
341 | revenue bonds issued with respect to which the assessment was |
342 | imposed are outstanding, including any bonds the proceeds of |
343 | which were used to refund the revenue bonds, unless adequate |
344 | provision has been made for the payment of the bonds under the |
345 | documents authorizing issuance of the bonds. |
346 | 3. Emergency assessments shall be collected from |
347 | policyholders. Emergency assessments shall be remitted by |
348 | insurers as a percentage of direct written premium for the |
349 | preceding calendar quarter as specified in the order from the |
350 | Office of Insurance Regulation. The office shall verify the |
351 | accurate and timely collection and remittance of emergency |
352 | assessments and shall report the information to the board in a |
353 | form and at a time specified by the board. Each insurer |
354 | collecting assessments shall provide the information with |
355 | respect to premiums and collections as may be required by the |
356 | office to enable the office to monitor and verify compliance |
357 | with this paragraph. |
358 | 4. With respect to assessments of surplus lines premiums, |
359 | each surplus lines agent shall collect the assessment at the |
360 | same time as the agent collects the surplus lines tax required |
361 | by s. 626.932, and the surplus lines agent shall remit the |
362 | assessment to the Florida Surplus Lines Service Office created |
363 | by s. 626.921 at the same time as the agent remits the surplus |
364 | lines tax to the Florida Surplus Lines Service Office. The |
365 | emergency assessment on each insured procuring coverage and |
366 | filing under s. 626.938 shall be remitted by the insured to the |
367 | Florida Surplus Lines Service Office at the time the insured |
368 | pays the surplus lines tax to the Florida Surplus Lines Service |
369 | Office. The Florida Surplus Lines Service Office shall remit the |
370 | collected assessments to the fund or corporation as provided in |
371 | the order levied by the Office of Insurance Regulation. The |
372 | Florida Surplus Lines Service Office shall verify the proper |
373 | application of such emergency assessments and shall assist the |
374 | board in ensuring the accurate and timely collection and |
375 | remittance of assessments as required by the board. The Florida |
376 | Surplus Lines Service Office shall annually calculate the |
377 | aggregate written premium on property and casualty business, |
378 | other than workers' compensation and medical malpractice, |
379 | procured through surplus lines agents and insureds procuring |
380 | coverage and filing under s. 626.938 and shall report the |
381 | information to the board in a form and at a time specified by |
382 | the board. |
383 | 5.a. Any assessment authority not used for a particular |
384 | contract year may be used for a subsequent contract year. If, |
385 | for a subsequent contract year, the board determines that the |
386 | amount of revenue produced under subsection (5) is insufficient |
387 | to fund the obligations, costs, and expenses of the fund and the |
388 | corporation, including repayment of revenue bonds and that |
389 | portion of the debt service coverage not met by reimbursement |
390 | premiums, the board shall direct the Office of Insurance |
391 | Regulation to levy an emergency assessment up to an amount not |
392 | exceeding the amount of unused assessment authority from a |
393 | previous contract year or years, plus an additional 4 percent, |
394 | if provided that the assessments in the aggregate do not exceed |
395 | the limits specified in subparagraph 2. and all of the losses |
396 | that generated the obligations were attributable to contract |
397 | years prior to the 2015-2016 contract year. |
398 | b. Except as provided in sub-subparagraph a., any |
399 | assessment authority not used for a particular contract year may |
400 | be used for a subsequent contract year. If, for a subsequent |
401 | contract year, the board determines that the amount of revenue |
402 | produced under subsection (5) is insufficient to fund the |
403 | obligations, costs, and expenses of the fund and the |
404 | corporation, including repayment of revenue bonds and that |
405 | portion of the debt service coverage not met by reimbursement |
406 | premiums, the board shall direct the Office of Insurance |
407 | Regulation to levy an emergency assessment up to an amount not |
408 | exceeding the amount of unused assessment authority from a |
409 | previous contract year or years, plus an additional 3 percent, |
410 | if the assessments in the aggregate do not exceed the limits |
411 | specified in subparagraph 2. |
412 | 6. The assessments otherwise payable to the corporation |
413 | under this paragraph shall be paid to the fund unless and until |
414 | the Office of Insurance Regulation and the Florida Surplus Lines |
415 | Service Office have received from the corporation and the fund a |
416 | notice, which shall be conclusive and upon which they may rely |
417 | without further inquiry, that the corporation has issued bonds |
418 | and the fund has no agreements in effect with local governments |
419 | under paragraph (c). On or after the date of the notice and |
420 | until the date the corporation has no bonds outstanding, the |
421 | fund shall have no right, title, or interest in or to the |
422 | assessments, except as provided in the fund's agreement with the |
423 | corporation. |
424 | 7. Emergency assessments are not premium and are not |
425 | subject to the premium tax, to the surplus lines tax, to any |
426 | fees, or to any commissions. An insurer is liable for all |
427 | assessments that it collects and must treat the failure of an |
428 | insured to pay an assessment as a failure to pay the premium. An |
429 | insurer is not liable for uncollectible assessments. |
430 | 8. When an insurer is required to return an unearned |
431 | premium, it shall also return any collected assessment |
432 | attributable to the unearned premium. A credit adjustment to the |
433 | collected assessment may be made by the insurer with regard to |
434 | future remittances that are payable to the fund or corporation, |
435 | but the insurer is not entitled to a refund. |
436 | 9. When a surplus lines insured or an insured who has |
437 | procured coverage and filed under s. 626.938 is entitled to the |
438 | return of an unearned premium, the Florida Surplus Lines Service |
439 | Office shall provide a credit or refund to the agent or such |
440 | insured for the collected assessment attributable to the |
441 | unearned premium prior to remitting the emergency assessment |
442 | collected to the fund or corporation. |
443 | 10. The exemption of medical malpractice insurance |
444 | premiums from emergency assessments under this paragraph is |
445 | repealed May 31, 2013, and medical malpractice insurance |
446 | premiums shall be subject to emergency assessments attributable |
447 | to loss events occurring in the contract years commencing on |
448 | June 1, 2013. |
449 | (d) State Board of Administration Florida Hurricane |
450 | Catastrophe Fund Finance Corporation.- |
451 | 1. In addition to the findings and declarations in |
452 | subsection (1), the Legislature also finds and declares that: |
453 | a. The public benefits corporation created under this |
454 | paragraph will provide a mechanism necessary for the cost- |
455 | effective and efficient issuance of bonds. This mechanism will |
456 | eliminate unnecessary costs in the bond issuance process, |
457 | thereby increasing the amounts available to pay reimbursement |
458 | for losses to property sustained as a result of hurricane |
459 | damage. |
460 | b. The purpose of such bonds is to fund reimbursements |
461 | through the Florida Hurricane Catastrophe Fund to pay for the |
462 | costs of construction, reconstruction, repair, restoration, and |
463 | other costs associated with damage to properties of |
464 | policyholders of covered policies due to the occurrence of a |
465 | hurricane. |
466 | c. The efficacy of the financing mechanism will be |
467 | enhanced by the corporation's ownership of the assessments, by |
468 | the insulation of the assessments from possible bankruptcy |
469 | proceedings, and by covenants of the state with the |
470 | corporation's bondholders. |
471 | 2.a. There is created a public benefits corporation, which |
472 | is an instrumentality of the state, to be known as the State |
473 | Board of Administration Florida Hurricane Catastrophe Fund |
474 | Finance Corporation. |
475 | b. The corporation shall operate under a five-member board |
476 | of directors consisting of the Governor or a designee, the Chief |
477 | Financial Officer or a designee, the Attorney General or a |
478 | designee, the director of the Division of Bond Finance of the |
479 | State Board of Administration, and the Chief Operating Officer |
480 | senior employee of the State Board of Administration responsible |
481 | for operations of the Florida Hurricane Catastrophe Fund. |
482 | c. The corporation has all of the powers of corporations |
483 | under chapter 607 and under chapter 617, subject only to the |
484 | provisions of this subsection. |
485 | d. The corporation may issue bonds and engage in such |
486 | other financial transactions as are necessary to provide |
487 | sufficient funds to achieve the purposes of this section. |
488 | e. The corporation may invest in any of the investments |
489 | authorized under s. 215.47. |
490 | f. There shall be no liability on the part of, and no |
491 | cause of action shall arise against, any board members or |
492 | employees of the corporation for any actions taken by them in |
493 | the performance of their duties under this paragraph. |
494 | 3.a. In actions under chapter 75 to validate any bonds |
495 | issued by the corporation, the notice required by s. 75.06 shall |
496 | be published only in Leon County and in two newspapers of |
497 | general circulation in the state, and the complaint and order of |
498 | the court shall be served only on the State Attorney of the |
499 | Second Judicial Circuit. |
500 | b. The state hereby covenants with holders of bonds of the |
501 | corporation that the state will not repeal or abrogate the power |
502 | of the board to direct the Office of Insurance Regulation to |
503 | levy the assessments and to collect the proceeds of the revenues |
504 | pledged to the payment of such bonds as long as any such bonds |
505 | remain outstanding unless adequate provision has been made for |
506 | the payment of such bonds pursuant to the documents authorizing |
507 | the issuance of such bonds. |
508 | 4. The bonds of the corporation are not a debt of the |
509 | state or of any political subdivision, and neither the state nor |
510 | any political subdivision is liable on such bonds. The |
511 | corporation does not have the power to pledge the credit, the |
512 | revenues, or the taxing power of the state or of any political |
513 | subdivision. The credit, revenues, or taxing power of the state |
514 | or of any political subdivision shall not be deemed to be |
515 | pledged to the payment of any bonds of the corporation. |
516 | 5.a. The property, revenues, and other assets of the |
517 | corporation; the transactions and operations of the corporation |
518 | and the income from such transactions and operations; and all |
519 | bonds issued under this paragraph and interest on such bonds are |
520 | exempt from taxation by the state and any political subdivision, |
521 | including the intangibles tax under chapter 199 and the income |
522 | tax under chapter 220. This exemption does not apply to any tax |
523 | imposed by chapter 220 on interest, income, or profits on debt |
524 | obligations owned by corporations other than the State Board of |
525 | Administration Florida Hurricane Catastrophe Fund Finance |
526 | Corporation. |
527 | b. All bonds of the corporation shall be and constitute |
528 | legal investments without limitation for all public bodies of |
529 | this state; for all banks, trust companies, savings banks, |
530 | savings associations, savings and loan associations, and |
531 | investment companies; for all administrators, executors, |
532 | trustees, and other fiduciaries; for all insurance companies and |
533 | associations and other persons carrying on an insurance |
534 | business; and for all other persons who are now or may hereafter |
535 | be authorized to invest in bonds or other obligations of the |
536 | state and shall be and constitute eligible securities to be |
537 | deposited as collateral for the security of any state, county, |
538 | municipal, or other public funds. This sub-subparagraph shall be |
539 | considered as additional and supplemental authority and shall |
540 | not be limited without specific reference to this sub- |
541 | subparagraph. |
542 | 6. The corporation and its corporate existence shall |
543 | continue until terminated by law; however, no such law shall |
544 | take effect as long as the corporation has bonds outstanding |
545 | unless adequate provision has been made for the payment of such |
546 | bonds pursuant to the documents authorizing the issuance of such |
547 | bonds. Upon termination of the existence of the corporation, all |
548 | of its rights and properties in excess of its obligations shall |
549 | pass to and be vested in the state. |
550 | 7. The State Board of Administration Finance Corporation |
551 | is for all purposes the successor to the Florida Hurricane |
552 | Catastrophe Fund Finance Corporation. |
553 | (16) TEMPORARY EMERGENCY OPTIONS FOR ADDITIONAL COVERAGE.- |
554 | (a) Findings and intent.- |
555 | 1. The Legislature finds that: |
556 | a. Because of temporary disruptions in the market for |
557 | catastrophic reinsurance, many property insurers were unable to |
558 | procure reinsurance for the 2006 hurricane season with an |
559 | attachment point below the insurers' respective Florida |
560 | Hurricane Catastrophe Fund attachment points, were unable to |
561 | procure sufficient amounts of such reinsurance, or were able to |
562 | procure such reinsurance only by incurring substantially higher |
563 | costs than in prior years. |
564 | b. The reinsurance market problems were responsible, at |
565 | least in part, for substantial premium increases to many |
566 | consumers and increases in the number of policies issued by the |
567 | Citizens Property Insurance Corporation. |
568 | c. It is likely that the reinsurance market disruptions |
569 | will not significantly abate prior to the 2007 hurricane season. |
570 | 2. It is the intent of the Legislature to create a |
571 | temporary emergency program, applicable to the 2007, 2008, and |
572 | 2009 hurricane seasons, to address these market disruptions and |
573 | enable insurers, at their option, to procure additional coverage |
574 | from the Florida Hurricane Catastrophe Fund. |
575 | (b) Applicability of other provisions of this section.-All |
576 | provisions of this section and the rules adopted under this |
577 | section apply to the program created by this subsection unless |
578 | specifically superseded by this subsection. |
579 | (c) Optional coverage.-For the contract year commencing |
580 | June 1, 2007, and ending May 31, 2008, the contract year |
581 | commencing June 1, 2008, and ending May 31, 2009, and the |
582 | contract year commencing June 1, 2009, and ending May 31, 2010, |
583 | the board shall offer for each of such years the optional |
584 | coverage as provided in this subsection. |
585 | (d) Additional definitions.-As used in this subsection, |
586 | the term: |
587 | 1. "TEACO options" means the temporary emergency |
588 | additional coverage options created under this subsection. |
589 | 2. "TEACO insurer" means an insurer that has opted to |
590 | obtain coverage under the TEACO options in addition to the |
591 | coverage provided to the insurer under its reimbursement |
592 | contract. |
593 | 3. "TEACO reimbursement premium" means the premium charged |
594 | by the fund for coverage provided under the TEACO options. |
595 | 4. "TEACO retention" means the amount of losses below |
596 | which a TEACO insurer is not entitled to reimbursement from the |
597 | fund under the TEACO option selected. A TEACO insurer's |
598 | retention options shall be calculated as follows: |
599 | a. The board shall calculate and report to each TEACO |
600 | insurer the TEACO retention multiples. There shall be three |
601 | TEACO retention multiples for defining coverage. Each multiple |
602 | shall be calculated by dividing $3 billion, $4 billion, or $5 |
603 | billion by the total estimated mandatory FHCF reimbursement |
604 | premium assuming all insurers selected the 90-percent coverage |
605 | level. |
606 | b. The TEACO retention multiples as determined under sub- |
607 | subparagraph a. shall be adjusted to reflect the coverage level |
608 | elected by the insurer. For insurers electing the 90-percent |
609 | coverage level, the adjusted retention multiple is 100 percent |
610 | of the amount determined under sub-subparagraph a. For insurers |
611 | electing the 75-percent coverage level, the retention multiple |
612 | is 120 percent of the amount determined under sub-subparagraph |
613 | a. For insurers electing the 45-percent coverage level, the |
614 | adjusted retention multiple is 200 percent of the amount |
615 | determined under sub-subparagraph a. |
616 | c. An insurer shall determine its provisional TEACO |
617 | retention by multiplying its estimated mandatory FHCF |
618 | reimbursement premium by the applicable adjusted TEACO retention |
619 | multiple and shall determine its actual TEACO retention by |
620 | multiplying its actual mandatory FHCF reimbursement premium by |
621 | the applicable adjusted TEACO retention multiple. |
622 | d. For TEACO insurers who experience multiple covered |
623 | events causing loss during the contract year, the insurer's full |
624 | TEACO retention shall be applied to each of the covered events |
625 | causing the two largest losses for that insurer. For other |
626 | covered events resulting in losses, the TEACO option does not |
627 | apply and the insurer's retention shall be one-third of the full |
628 | retention as calculated under paragraph (2)(e). |
629 | 5. "TEACO addendum" means an addendum to the reimbursement |
630 | contract reflecting the obligations of the fund and TEACO |
631 | insurers under the program created by this subsection. |
632 | 6. "FHCF" means the Florida Hurricane Catastrophe Fund. |
633 | (e) TEACO addendum.- |
634 | 1. The TEACO addendum shall provide for reimbursement of |
635 | TEACO insurers for covered events occurring during the contract |
636 | year, in exchange for the TEACO reimbursement premium paid into |
637 | the fund under paragraph (f). Any insurer writing covered |
638 | policies has the option of choosing to accept the TEACO addendum |
639 | for any of the 3 contract years that the coverage is offered. |
640 | 2. The TEACO addendum shall contain a promise by the board |
641 | to reimburse the TEACO insurer for 45 percent, 75 percent, or 90 |
642 | percent of its losses from each covered event in excess of the |
643 | insurer's TEACO retention, plus 5 percent of the reimbursed |
644 | losses to cover loss adjustment expenses. The percentage shall |
645 | be the same as the coverage level selected by the insurer under |
646 | paragraph (4)(b). |
647 | 3. The TEACO addendum shall provide that reimbursement |
648 | amounts shall not be reduced by reinsurance paid or payable to |
649 | the insurer from other sources. |
650 | 4. The TEACO addendum shall also provide that the |
651 | obligation of the board with respect to all TEACO addenda shall |
652 | not exceed an amount equal to two times the difference between |
653 | the industry retention level calculated under paragraph (2)(e) |
654 | and the $3 billion, $4 billion, or $5 billion industry TEACO |
655 | retention level options actually selected, but in no event may |
656 | the board's obligation exceed the actual claims-paying capacity |
657 | of the fund plus the additional capacity created in paragraph |
658 | (g). If the actual claims-paying capacity and the additional |
659 | capacity created under paragraph (g) fall short of the board's |
660 | obligations under the reimbursement contract, each insurer's |
661 | share of the fund's capacity shall be prorated based on the |
662 | premium an insurer pays for its mandatory reimbursement coverage |
663 | and the premium paid for its optional TEACO coverage as each |
664 | such premium bears to the total premiums paid to the fund times |
665 | the available capacity. |
666 | 5. The priorities, schedule, and method of reimbursements |
667 | under the TEACO addendum shall be the same as provided under |
668 | subsection (4). |
669 | 6. A TEACO insurer's maximum reimbursement for a single |
670 | event shall be equal to the product of multiplying its mandatory |
671 | FHCF premium by the difference between its FHCF retention |
672 | multiple and its TEACO retention multiple under the TEACO option |
673 | selected and by the coverage selected under paragraph (4)(b), |
674 | plus an additional 5 percent for loss adjustment expenses. A |
675 | TEACO insurer's maximum reimbursement under the TEACO option |
676 | selected for a TEACO insurer's two largest events shall be twice |
677 | its maximum reimbursement for a single event. |
678 | (f) TEACO reimbursement premiums.- |
679 | 1. Each TEACO insurer shall pay to the fund, in the manner |
680 | and at the time provided in the reimbursement contract for |
681 | payment of reimbursement premiums, a TEACO reimbursement premium |
682 | calculated as specified in this paragraph. |
683 | 2. The insurer's TEACO reimbursement premium associated |
684 | with the $3 billion retention option shall be equal to 85 |
685 | percent of a TEACO insurer's maximum reimbursement for a single |
686 | event as calculated under subparagraph (e)6. The TEACO |
687 | reimbursement premium associated with the $4 billion retention |
688 | option shall be equal to 80 percent of a TEACO insurer's maximum |
689 | reimbursement for a single event as calculated under |
690 | subparagraph (e)6. The TEACO premium associated with the $5 |
691 | billion retention option shall be equal to 75 percent of a TEACO |
692 | insurer's maximum reimbursement for a single event as calculated |
693 | under subparagraph (e)6. |
694 | (g) Effect on claims-paying capacity of the fund.-For the |
695 | contract term commencing June 1, 2007, the contract year |
696 | commencing June 1, 2008, and the contract term beginning June 1, |
697 | 2009, the program created by this subsection shall increase the |
698 | claims-paying capacity of the fund as provided in subparagraph |
699 | (4)(c)1. by an amount equal to two times the difference between |
700 | the industry retention level calculated under paragraph (2)(e) |
701 | and the $3 billion industry TEACO retention level specified in |
702 | sub-subparagraph (d)4.a. The additional capacity shall apply |
703 | only to the additional coverage provided by the TEACO option and |
704 | shall not otherwise affect any insurer's reimbursement from the |
705 | fund. |
706 | (16)(17) TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS.- |
707 | (a) Findings and intent.- |
708 | 1. The Legislature finds that: |
709 | a. Because of temporary disruptions in the market for |
710 | catastrophic reinsurance, many property insurers were unable to |
711 | procure sufficient amounts of reinsurance for the 2006 hurricane |
712 | season or were able to procure such reinsurance only by |
713 | incurring substantially higher costs than in prior years. |
714 | b. The reinsurance market problems were responsible, at |
715 | least in part, for substantial premium increases to many |
716 | consumers and increases in the number of policies issued by |
717 | Citizens Property Insurance Corporation. |
718 | c. It is likely that the reinsurance market disruptions |
719 | will not significantly abate prior to the 2007 hurricane season. |
720 | 2. It is the intent of the Legislature to create options |
721 | for insurers to purchase a temporary increased coverage limit |
722 | above the statutorily determined limit in subparagraph (4)(c)1., |
723 | applicable for the 2007, 2008, 2009, 2010, 2011, 2012, and 2013 |
724 | hurricane season seasons, to address market disruptions and |
725 | enable insurers, at their option, to procure additional coverage |
726 | from the Florida Hurricane Catastrophe Fund. |
727 | (b) Applicability of other provisions of this section.-All |
728 | provisions of this section and the rules adopted under this |
729 | section apply to the coverage created by this subsection unless |
730 | specifically superseded by provisions in this subsection. |
731 | (c) Optional coverage.-For the 2009-2010, 2010-2011, 2011- |
732 | 2012, 2012-2013, and 2013-2014 contract year years, the board |
733 | shall offer, for each of such years, the optional coverage as |
734 | provided in this subsection. |
735 | (d) Additional definitions.-As used in this subsection, |
736 | the term: |
737 | 1. "FHCF" means Florida Hurricane Catastrophe Fund. |
738 | 2. "FHCF reimbursement premium" means the premium paid by |
739 | an insurer for its coverage as a mandatory participant in the |
740 | FHCF, but does not include additional premiums for optional |
741 | coverages. |
742 | 3. "Payout multiple" means the number or multiple created |
743 | by dividing the statutorily defined claims-paying capacity as |
744 | determined in subparagraph (4)(c)1. by the aggregate |
745 | reimbursement premiums paid by all insurers estimated or |
746 | projected as of calendar year-end. |
747 | 4. "TICL" means the temporary increase in coverage limit. |
748 | 5. "TICL options" means the temporary increase in coverage |
749 | options created under this subsection. |
750 | 6. "TICL insurer" means an insurer that has opted to |
751 | obtain coverage under the TICL options addendum in addition to |
752 | the coverage provided to the insurer under its FHCF |
753 | reimbursement contract. |
754 | 7. "TICL reimbursement premium" means the premium charged |
755 | by the fund for coverage provided under the TICL option. |
756 | 8. "TICL coverage multiple" means the coverage multiple |
757 | when multiplied by an insurer's reimbursement premium that |
758 | defines the temporary increase in coverage limit. |
759 | 9. "TICL coverage" means the coverage for an insurer's |
760 | losses above the insurer's statutorily determined claims-paying |
761 | capacity based on the claims-paying limit in subparagraph |
762 | (4)(c)1., which an insurer selects as its temporary increase in |
763 | coverage from the fund under the TICL options selected. A TICL |
764 | insurer's increased coverage limit options shall be calculated |
765 | as follows: |
766 | a. The board shall calculate and report to each TICL |
767 | insurer the TICL coverage multiples based on 12 options for |
768 | increasing the insurer's FHCF coverage limit. Each TICL coverage |
769 | multiple shall be calculated by dividing $1 billion, $2 billion, |
770 | $3 billion, $4 billion, $5 billion, $6 billion, $7 billion, $8 |
771 | billion, $9 billion, $10 billion, $11 billion, or $12 billion by |
772 | the total estimated aggregate FHCF reimbursement premiums for |
773 | the 2007-2008 contract year, and the 2008-2009 contract year. |
774 | b. For the 2009-2010 contract year, the board shall |
775 | calculate and report to each TICL insurer the TICL coverage |
776 | multiples based on 10 options for increasing the insurer's FHCF |
777 | coverage limit. Each TICL coverage multiple shall be calculated |
778 | by dividing $1 billion, $2 billion, $3 billion, $4 billion, $5 |
779 | billion, $6 billion, $7 billion, $8 billion, $9 billion, and $10 |
780 | billion by the total estimated aggregate FHCF reimbursement |
781 | premiums for the 2009-2010 contract year. |
782 | c. For the 2010-2011 contract year, the board shall |
783 | calculate and report to each TICL insurer the TICL coverage |
784 | multiples based on eight options for increasing the insurer's |
785 | FHCF coverage limit. Each TICL coverage multiple shall be |
786 | calculated by dividing $1 billion, $2 billion, $3 billion, $4 |
787 | billion, $5 billion, $6 billion, $7 billion, and $8 billion by |
788 | the total estimated aggregate FHCF reimbursement premiums for |
789 | the contract year. |
790 | d. For the 2011-2012 contract year, the board shall |
791 | calculate and report to each TICL insurer the TICL coverage |
792 | multiples based on six options for increasing the insurer's FHCF |
793 | coverage limit. Each TICL coverage multiple shall be calculated |
794 | by dividing $1 billion, $2 billion, $3 billion, $4 billion, $5 |
795 | billion, and $6 billion by the total estimated aggregate FHCF |
796 | reimbursement premiums for the 2011-2012 contract year. |
797 | a.e. For the 2012-2013 contract year, the board shall |
798 | calculate and report to each TICL insurer the TICL coverage |
799 | multiples based on four options for increasing the insurer's |
800 | FHCF coverage limit. Each TICL coverage multiple shall be |
801 | calculated by dividing $1 billion, $2 billion, $3 billion, and |
802 | $4 billion by the total estimated aggregate FHCF reimbursement |
803 | premiums for the 2012-2013 contract year. |
804 | f. For the 2013-2014 contract year, the board shall |
805 | calculate and report to each TICL insurer the TICL coverage |
806 | multiples based on two options for increasing the insurer's FHCF |
807 | coverage limit. Each TICL coverage multiple shall be calculated |
808 | by dividing $1 billion and $2 billion by the total estimated |
809 | aggregate FHCF reimbursement premiums for the 2013-2014 contract |
810 | year. |
811 | b.g. The TICL insurer's increased coverage shall be the |
812 | FHCF reimbursement premium multiplied by the TICL coverage |
813 | multiple. In order to determine an insurer's total limit of |
814 | coverage, an insurer shall add its TICL coverage multiple to its |
815 | payout multiple. The total shall represent a number that, when |
816 | multiplied by an insurer's FHCF reimbursement premium for a |
817 | given reimbursement contract year, defines an insurer's total |
818 | limit of FHCF reimbursement coverage for that reimbursement |
819 | contract year. |
820 | 10. "TICL options addendum" means an addendum to the |
821 | reimbursement contract reflecting the obligations of the fund |
822 | and insurers selecting an option to increase an insurer's FHCF |
823 | coverage limit. |
824 | (e) TICL options addendum.- |
825 | 1. The TICL options addendum shall provide for |
826 | reimbursement of TICL insurers for covered events occurring |
827 | during the 2009-2010, 2010-2011, 2011-2012, 2012-2013, and 2013- |
828 | 2014 contract year years in exchange for the TICL reimbursement |
829 | premium paid into the fund under paragraph (f) based on the TICL |
830 | coverage available and selected for each respective contract |
831 | year. Any insurer writing covered policies has the option of |
832 | selecting an increased limit of coverage under the TICL options |
833 | addendum and shall select such coverage at the time that it |
834 | executes the FHCF reimbursement contract. |
835 | 2. The TICL addendum shall contain a promise by the board |
836 | to reimburse the TICL insurer for 45 percent, 75 percent, or 90 |
837 | percent of its losses from each covered event in excess of the |
838 | insurer's retention, plus 5 percent of the reimbursed losses to |
839 | cover loss adjustment expenses. The percentage shall be the same |
840 | as the coverage level selected by the insurer under paragraph |
841 | (4)(b). |
842 | 3. The TICL addendum shall provide that reimbursement |
843 | amounts shall not be reduced by reinsurance paid or payable to |
844 | the insurer from other sources. |
845 | 4. The priorities, schedule, and method of reimbursements |
846 | under the TICL addendum shall be the same as provided under |
847 | subsection (4). |
848 | (f) TICL reimbursement premiums.-Each TICL insurer shall |
849 | pay to the fund, in the manner and at the time provided in the |
850 | reimbursement contract for payment of reimbursement premiums, a |
851 | TICL reimbursement premium determined as specified in subsection |
852 | (5), except that a cash build-up factor does not apply to the |
853 | TICL reimbursement premiums. However, the TICL reimbursement |
854 | premium shall be increased in the 2009-2010 contract year by a |
855 | factor of two, in the 2010-2011 contract year by a factor of |
856 | three, in the 2011-2012 contract year by a factor of four, in |
857 | the 2012-2013 contract year by a factor of five, and in the |
858 | 2013-2014 contract year by a factor of six. |
859 | (g) Effect on claims-paying capacity of the fund.-For the |
860 | 2009-2010, 2010-2011, 2011-2012, 2012-2013, and 2013-2014 |
861 | contract year years, the program created by this subsection |
862 | shall increase the claims-paying capacity of the fund as |
863 | provided in subparagraph (4)(c)1. by an amount not to exceed $4 |
864 | $12 billion and shall depend on the TICL coverage options |
865 | available and selected for the specified contract year and the |
866 | number of insurers that select the TICL optional coverage. The |
867 | additional capacity shall apply only to the additional coverage |
868 | provided under the TICL options and shall not otherwise affect |
869 | any insurer's reimbursement from the fund if the insurer chooses |
870 | not to select the temporary option to increase its limit of |
871 | coverage under the FHCF. |
872 | (17)(18) FACILITATION OF INSURERS' PRIVATE CONTRACT |
873 | NEGOTIATIONS BEFORE THE START OF THE HURRICANE SEASON.- |
874 | (a) In addition to the legislative findings and intent |
875 | provided elsewhere in this section, the Legislature finds that: |
876 | 1.a. Because a regular session of the Legislature begins |
877 | approximately 3 months before the start of a contract year and |
878 | ends approximately 1 month before the start of a contract year, |
879 | participants in the fund always face the possibility that |
880 | legislative actions will change the coverage provided or offered |
881 | by the fund with only a few days or weeks of advance notice. |
882 | b. The timing issues described in sub-subparagraph a. can |
883 | create uncertainties and disadvantages for the residential |
884 | property insurers that are required to participate in the fund |
885 | when such insurers negotiate for the procurement of private |
886 | reinsurance or other sources of capital. |
887 | c. Providing participating insurers with a greater degree |
888 | of certainty regarding the coverage provided or offered by the |
889 | fund and more time to negotiate for the procurement of private |
890 | reinsurance or other sources of capital will enable the |
891 | residential property insurance market to operate with greater |
892 | stability. |
893 | d. Increased stability in the residential property |
894 | insurance market serves a primary purpose of the fund and |
895 | benefits Florida consumers by enabling insurers to operate more |
896 | economically. In years when reinsurance and capital markets are |
897 | experiencing a capital shortage, the last-minute rush by |
898 | insurers only weeks before the start of the hurricane season to |
899 | procure adequate coverage in order to meet their capital |
900 | requirements can result in higher costs that are passed on to |
901 | Florida consumers. However, if more time is available, |
902 | residential property insurers should experience greater |
903 | competition for their business with a corresponding beneficial |
904 | effect for Florida consumers. |
905 | 2. It is the intent of the Legislature to provide insurers |
906 | with the terms and conditions of the reimbursement contract well |
907 | in advance of the insurers' need to finalize their procurement |
908 | of private reinsurance or other sources of capital, and thereby |
909 | improve insurers' negotiating position with reinsurers and other |
910 | sources of capital. |
911 | 3. It is also the intent of the Legislature that the board |
912 | publish the fund's maximum statutory limit of coverage and the |
913 | fund's total retention early enough that residential property |
914 | insurers can have the opportunity to better estimate their |
915 | coverage from the fund. |
916 | (b) The board shall adopt the reimbursement contract for a |
917 | particular contract year by February 1 of the immediately |
918 | preceding contract year. However, the reimbursement contract |
919 | shall be adopted as soon as possible in advance of the 2010-2011 |
920 | contract year. |
921 | (c) Insurers writing covered policies shall execute the |
922 | reimbursement contract by March 1 of the immediately preceding |
923 | contract year, and the contract shall have an effective date as |
924 | defined in paragraph (2)(o). |
925 | (d) The board shall publish in the Florida Administrative |
926 | Weekly the maximum statutory adjusted capacity for the mandatory |
927 | coverage for a particular contract year, the maximum statutory |
928 | coverage for any optional coverage for the particular contract |
929 | year, and the aggregate fund retention used to calculate |
930 | individual insurer's retention multiples for the particular |
931 | contract year no later than January 1 of the immediately |
932 | preceding contract year. |
933 | Section 2. Subsection (5) of section 627.0629, Florida |
934 | Statutes, is amended to read: |
935 | 627.0629 Residential property insurance; rate filings.- |
936 | (5) In order to provide an appropriate transition period, |
937 | an insurer may implement an approved rate filing for residential |
938 | property insurance over a period of years. Such insurer must |
939 | provide an informational notice to the office setting out its |
940 | schedule for implementation of the phased-in rate filing. The |
941 | insurer may include in its rate the actual cost of private |
942 | market reinsurance that corresponds to available coverage of the |
943 | Temporary Increase in Coverage Limits, TICL, from the Florida |
944 | Hurricane Catastrophe Fund. The insurer may also include the |
945 | cost of reinsurance to replace the TICL reduction implemented |
946 | pursuant to s. 215.555(16)(d)9 s. 215.555(17)(d)9. However, this |
947 | cost for reinsurance may not include any expense or profit load |
948 | or result in a total annual base rate increase in excess of 10 |
949 | percent. |
950 | Section 3. This act shall take effect upon becoming a law. |