Florida Senate - 2014                                     SB 482
       By Senator Hays
       11-00682-14                                            2014482__
    1                        A bill to be entitled                      
    2         An act relating to the Florida Hurricane Catastrophe
    3         Fund; amending s. 215.555, F.S.; providing and phasing
    4         in a reduction in the fund’s coverage limits for
    5         reimbursement contracts; amending s. 627.062, F.S.;
    6         authorizing an insurer to recoup certain reinsurance
    7         payments paid to cover a potential gap in the fund’s
    8         claims-paying capacity; deleting a provision
    9         prohibiting the recoupment of certain other
   10         reinsurance costs; providing an effective date.
   12  Be It Enacted by the Legislature of the State of Florida:
   14         Section 1. Paragraph (c) of subsection (4) of section
   15  215.555, Florida Statutes, is amended to read:
   16         215.555 Florida Hurricane Catastrophe Fund.—
   18         (c)1. The contract must shall also provide that the
   19  obligation of the board with respect to all contracts covering a
   20  particular contract year shall not exceed the actual claims
   21  paying capacity of the fund up to the following fund limit:
   22         a. For the 2014-2015 contract year, $17 billion.
   23         b. For the 2015-2016 contract year, $16 billion.
   24         c. For the 2016-2017 contract year, $15 billion.
   25         d. For the 2017-2018 contract year, $14 billion.
   26         e. For contract years after the 2017-2018 contract year,
   27  $14 billion. However, if a limit of $17 billion for that
   28  contract year, unless the board determines that there is
   29  sufficient estimated claims-paying capacity to provide $14 $17
   30  billion of capacity for the current contract year and an
   31  additional $14 $17 billion of capacity for subsequent contract
   32  years. If the board makes such a determination, the estimated
   33  claims-paying capacity for the particular contract year shall be
   34  determined by adding to the $14 $17 billion limit one-half of
   35  the fund’s estimated claims-paying capacity in excess of $28 $34
   36  billion. However, the dollar growth in the limit may not
   37  increase in any year by an amount greater than the dollar growth
   38  of the balance of the fund as of December 31, less any premiums
   39  or interest attributable to optional coverage, as defined by
   40  rule, which occurred over the prior calendar year.
   41         2. In May and October of the contract year, the board shall
   42  publish in the Florida Administrative Register a statement of
   43  the fund’s estimated borrowing capacity, the fund’s estimated
   44  claims-paying capacity, and the projected balance of the fund as
   45  of December 31. After the end of each calendar year, the board
   46  shall notify insurers of the estimated borrowing capacity,
   47  estimated claims-paying capacity, and the balance of the fund as
   48  of December 31 to provide insurers with data necessary to assist
   49  them in determining their retention and projected payout from
   50  the fund for loss reimbursement purposes. In conjunction with
   51  the development of the premium formula, as provided for in
   52  subsection (5), the board shall publish factors or multiples
   53  that assist insurers in determining their retention and
   54  projected payout for the next contract year. For all regulatory
   55  and reinsurance purposes, an insurer may calculate its projected
   56  payout from the fund as its share of the total fund premium for
   57  the current contract year multiplied by the sum of the projected
   58  balance of the fund as of December 31 and the estimated
   59  borrowing capacity for that contract year as reported under this
   60  subparagraph.
   61         Section 2. Subsection (5) of section 627.062, Florida
   62  Statutes, is amended to read:
   63         627.062 Rate standards.—
   64         (5) With respect to a rate filing involving coverage of the
   65  type for which the insurer is required to pay a reimbursement
   66  premium to the Florida Hurricane Catastrophe Fund, the insurer
   67  may fully recoup in its property insurance premiums any
   68  reimbursement premiums paid to the fund, together with
   69  reasonable costs of other reinsurance, including reinsurance
   70  purchased solely to cover a potential gap between the maximum
   71  statutory obligation of the fund as specified in s.
   72  215.555(4)(c) and the fund’s claims-paying capacity estimate as
   73  published in the Florida Administrative Register in May and
   74  October of the prior contract year; however, except as otherwise
   75  provided in this section, the insurer may not recoup reinsurance
   76  costs that duplicate coverage provided by the fund. An insurer
   77  may not recoup more than 1 year of reimbursement premium at a
   78  time. Any under-recoupment from the prior year may be added to
   79  the following year’s reimbursement premium, and any over
   80  recoupment must be subtracted from the following year’s
   81  reimbursement premium.
   82         Section 3. This act shall take effect July 1, 2014.