Florida Senate - 2013                          SENATOR AMENDMENT
       Bill No. CS for SB 1770
                                Barcode 837382                          
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
               Floor: 17/AD/2R         .                                
             04/11/2013 04:23 PM       .                                

       Senator Simmons moved the following:
    1         Senate Amendment (with title amendment)
    3         Between lines 2744 and 2745
    4  insert:
    5         Section 15. Section 627.352, Florida Statutes, is created
    6  to read:
    7         627.352Catastrophe Risk Capital Access Facility.—
    8         (1) LEGISLATIVE FINDINGS AND INTENT.—The Legislature finds
    9  and declares that:
   10         (a) A growing and competitive private sector market for
   11  residential property insurance is in the public interest.
   12         (b) The global market for catastrophe risk has expanded
   13  dramatically, resulting in the availability of billions of
   14  dollars in additional risk capital for insurers and new and
   15  innovative alternative risk-transfer mechanisms.
   16         (c) Having access to additional risk capital and risk
   17  transfer mechanisms provides an opportunity for property
   18  insurers in this state to expand their capacity to write
   19  additional business and diversify their catastrophe risk, which
   20  will serve the public interest of fostering private sector
   21  market growth.
   22         (d) Despite an expansion in the amount of available global
   23  risk capital, state property insurers in general, and smaller
   24  state property insurers in particular, face challenges accessing
   25  global markets if the relatively small amount of risk finance
   26  required by any one company is not economically viable in the
   27  larger global market.
   28         (e) It is the intent of the Legislature to establish a
   29  self-regulating mechanism to facilitate the access of property
   30  insurers generally, and smaller property insurers in particular,
   31  to global risk capital markets and risk transfer mechanisms for
   32  property risks in this state.
   33         (2) FACILITY CREATED.—A nonprofit association, to be known
   34  as the Catastrophe Risk Capital Access Facility, is hereby
   35  created.
   36         (a) The facility must operate pursuant to a plan of
   37  operation adopted by the governing board, except that the
   38  initial plan of operation shall be recommended by the initial
   39  governing board and adopted by the office after consultation
   40  with potential participating insurers and other interested
   41  parties.
   42         (b) The facility is not intended to be, and may not
   43  function as, an insurer, reinsurer, or other risk-bearing
   44  entity, and is not a state agency, board, or commission.
   45         (3) MEMBERSHIP.—An insurer holding a certificate of
   46  authority to transact property insurance in this state is
   47  eligible to become a member of the facility. To become a member,
   48  an insurer must file a declaration of intent with the office by
   49  September 30, 2013.
   50         (4) INITIAL GOVERNING BOARD.—
   51         (a) Each insurer that timely files a declaration under
   52  subsection (3) is a member of the initial governing board of the
   53  facility and has a vote proportional to its share of direct
   54  premium for property insurance written in this state as of
   55  December 31, 2012. At a minimum, three insurers must file a
   56  declaration of intent to constitute an initial governing board
   57  and activate the facility.
   58         (b) The initial governing board must hold its first meeting
   59  at a time and place specified by the office. At the first
   60  meeting, the initial governing board must elect one of its
   61  members to serve as chair.
   62         (c) The initial governing board must submit a recommended
   63  plan of operation to the office by December 1, 2013. The initial
   64  governing board may retain staff or professionals to assist in
   65  the preparation of the proposed plan of operation.
   66         (d) The functions of the initial governing board terminate
   67  upon the election of a governing board as provided in the plan
   68  of operation.
   69         (5) GOVERNING BOARD.—Beginning on the effective date of the
   70  plan of operation, the facility shall operate under a seven
   71  member governing board composed of representatives of member
   72  insurers, appointed as specified in the plan of operation.
   73         (6) PLAN OF OPERATION.—The plan of operation:
   74         (a) Must specify the following functions of the facility:
   75         1. Aggregating the demand of members for risk finance for
   76  state property risks from global capital markets.
   77         2. Designing and executing risk-transfer tools such as
   78  insurance-linked securities and other appropriate instruments
   79  for state property risks for members; using special purpose
   80  vehicles or onshore or offshore protected cells, as appropriate,
   81  to increase members’ access to risk capital for state property
   82  risks; and making use of any other financial instruments or
   83  reinsurance or pooling arrangements that may develop in the
   84  market.
   85         3. Identifying and coordinating appropriate risk-transfer
   86  products and opportunities for state property risks, initially
   87  targeting layers of coverage below, alongside, and above the
   88  coverage provided by the Florida Hurricane Catastrophe Fund.
   89         4. Establishing and maintaining regular and ongoing contact
   90  with global risk capital market participants, institutions, and
   91  investors in order to identify opportunities that satisfy and
   92  coordinate with insurer demand for additional risk capital for
   93  state property risks.
   94         (b) Must provide that in conducting its affairs, the
   95  facility may not:
   96         1. Take a position in, or provide financial support for,
   97  any risk-transfer transaction.
   98         2. Be a guarantor of premium or make any other financial
   99  guarantees to a member.
  100         3. Enter into any contract on the part of the state or
  101  create any state contractual obligations.
  102         4. Impose or levy any taxes, assessments, or similar
  103  charges.
  104         (c) Must provide for funding the expenses of the facility,
  105  including an initial charge that applies to all members and
  106  subsequent charges to members on a pro rata basis.
  107         (d) Must provide additional annual enrollment periods for
  108  eligible insurers to become members of the facility.
  109         (e) Must provide for the election and terms of the
  110  governing board.
  111         (f) May provide for the appointment or retention of staff
  112  and professionals as the governing board deems appropriate.
  113         (g) Must require the facility to submit a biennial report
  114  and annual independent audits to the members of the Financial
  115  Services Commission and the presiding officers of the
  116  Legislature by December 31 of each even-numbered year beginning
  117  in 2014.
  118         (7) IMMUNITY FROM LIABILITY.—No liability on the part of,
  119  and no cause of action of any nature, may arise against the
  120  facility or its agents or employees, the governing board, or the
  121  department or office or their representatives for any action
  122  taken by them in the performance of their powers and duties
  123  under this section.
  125  ================= T I T L E  A M E N D M E N T ================
  126         And the title is amended as follows:
  127         Delete line 101
  128  and insert:
  129         program components; providing for expiration; creating
  130         s. 627.352, F.S.; creating the Catastrophe Risk
  131         Capital Access Facility to facilitate insurer access
  132         to global risk capital markets and risk-transfer
  133         mechanisms; providing legislative findings and intent;
  134         providing that the facility may not operate as an
  135         insurer, reinsurer, or other risk-bearing entity, and
  136         is not a state agency, board, or commission; providing
  137         for membership; providing for an initial governing
  138         board which must submit a proposed plan of operation
  139         to the Office of Insurance Regulation by a certain
  140         date; providing for termination of the initial board;
  141         providing for a permanent board; specifying provisions
  142         that must be addressed by the plan of operation;
  143         providing immunity from liability for the board;
  144         amending