Florida Senate - 2018                          SENATOR AMENDMENT
       Bill No. CS for CS for SB 784
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                 Floor: WD/2R          .                                
             03/08/2018 03:51 PM       .                                

       Senator Steube moved the following:
    1         Senate Amendment (with title amendment)
    3         Before line 78
    4  insert:
    5         Section 1. Paragraph (e) of subsection (2), paragraphs (b)
    6  and (c) of subsection (4), and paragraph (b) of subsection (5)
    7  of section 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 for the contract year occurring
   20  2 years before the particular contract year to reflect the
   21  percentage growth in exposure to the fund for covered policies
   22  since 2004, divided by the total estimated reimbursement premium
   23  for the contract year. Total reimbursement premium for purposes
   24  of the calculation under this subparagraph shall be estimated
   25  using the assumption that all insurers have selected the 90
   26  percent coverage level.
   27         2. The retention multiple as determined under subparagraph
   28  1. must shall be adjusted to reflect the coverage level elected
   29  by the insurer.
   30         a. For insurers electing the 90-percent coverage level, the
   31  adjusted retention multiple is 100 percent of the amount
   32  determined under subparagraph 1.
   33         b. For insurers electing the 75-percent coverage level, the
   34  retention multiple is 120 percent of the amount determined under
   35  subparagraph 1.
   36         c. For insurers electing the 60-percent coverage level, the
   37  retention multiple is 150 percent of the amount determined under
   38  subparagraph 1.
   39         d. For insurers electing the 45-percent coverage level, the
   40  adjusted retention multiple is 200 percent of the amount
   41  determined under subparagraph 1.
   42         e. For insurers electing the 25-percent coverage level, the
   43  retention multiple is 360 percent of the amount determined under
   44  subparagraph 1.
   45         3. An insurer shall determine its provisional retention by
   46  multiplying its provisional reimbursement premium by the
   47  applicable adjusted retention multiple and shall determine its
   48  actual retention by multiplying its actual reimbursement premium
   49  by the applicable adjusted retention multiple.
   50         4. For insurers who experience multiple covered events
   51  causing loss during the contract year, beginning June 1, 2005,
   52  each insurer’s full retention shall be applied to each of the
   53  covered events causing the two largest losses for that insurer.
   54  For each other covered event resulting in losses, the insurer’s
   55  retention shall be reduced to one-third of the full retention.
   56  The reimbursement contract shall provide for the reimbursement
   57  of losses for each covered event based on the full retention
   58  with adjustments made to reflect the reduced retentions on or
   59  after January 1 of the contract year provided the insurer
   60  reports its losses as specified in the reimbursement contract.
   62         (b)1. The contract shall contain a promise by the board to
   63  reimburse the insurer for 25 percent, 45 percent, 60 percent, 75
   64  percent, or 90 percent of its losses from each covered event in
   65  excess of the insurer’s retention, plus up to 12 5 percent of
   66  the reimbursed losses to cover loss adjustment expenses.
   67         2. The insurer must elect one of the percentage coverage
   68  levels specified in this paragraph and may, upon renewal of a
   69  reimbursement contract, elect a lower percentage coverage level
   70  if no revenue bonds issued under subsection (6) after a covered
   71  event are outstanding, or elect a higher percentage coverage
   72  level, regardless of whether or not revenue bonds are
   73  outstanding. All members of an insurer group must elect the same
   74  percentage coverage level. Any joint underwriting association,
   75  risk apportionment plan, or other entity created under s.
   76  627.351 must elect the 90-percent coverage level.
   77         3. The contract shall provide that reimbursement amounts
   78  shall not be reduced by reinsurance paid or payable to the
   79  insurer from other sources.
   80         (c)1. Effective July 1, 2018, the contract must shall also
   81  provide that the obligation of the board with respect to all
   82  contracts covering a particular contract year shall be up to $17
   83  billion, as determined by the aggregate reimbursement coverage
   84  purchased by all participating insurers shall not exceed the
   85  actual claims-paying capacity of the fund up to a limit of $17
   86  billion for that contract year, unless the board determines that
   87  there is sufficient estimated claims-paying capacity to provide
   88  $17 billion of capacity for the current contract year and an
   89  additional $17 billion of capacity for subsequent contract
   90  years. If the board makes such a determination, the estimated
   91  claims-paying capacity for the particular contract year shall be
   92  determined by adding to the $17 billion limit one-half of the
   93  fund’s estimated claims-paying capacity in excess of $34
   94  billion. However, the dollar growth in the limit may not
   95  increase in any year by an amount greater than the dollar growth
   96  of the balance of the fund as of December 31, less any premiums
   97  or interest attributable to optional coverage, as defined by
   98  rule which occurred over the prior calendar year.
   99         2. In May and October of the contract year, the board shall
  100  publish in the Florida Administrative Register a statement of
  101  the fund’s estimated borrowing capacity, the fund’s estimated
  102  claims-paying capacity, and the projected balance of the fund as
  103  of December 31. After the end of each calendar year, the board
  104  shall notify insurers of the estimated borrowing capacity,
  105  estimated claims-paying capacity, and the balance of the fund as
  106  of December 31 to provide insurers with data necessary to assist
  107  them in determining their retention and projected payout from
  108  the fund for loss reimbursement purposes. In conjunction with
  109  the development of the premium formula, as provided for in
  110  subsection (5), the board shall publish factors or multiples
  111  that assist insurers in determining their retention and
  112  projected payout for the next contract year. For all regulatory
  113  and reinsurance purposes, an insurer may calculate its projected
  114  payout from the fund as its share of the total fund premium for
  115  the current contract year multiplied by the sum of the projected
  116  balance of the fund as of December 31 and the estimated
  117  borrowing capacity for that contract year as reported under this
  118  subparagraph.
  119         (5) REIMBURSEMENT PREMIUMS.—
  120         (b) The State Board of Administration shall select an
  121  independent consultant to develop a formula for determining the
  122  actuarially indicated premium to be paid to the fund. The rate
  123  formula must shall specify, for each zip code or other limited
  124  geographical area, the amount of premium to be paid by an
  125  insurer for each $1,000 of insured value under covered policies
  126  in that zip code or other area. In establishing premiums, the
  127  board shall consider the coverage elected under paragraph (4)(b)
  128  and any factors that tend to enhance the actuarial
  129  sophistication of ratemaking for the fund, including
  130  deductibles, type of construction, type of coverage provided,
  131  relative concentration of risks, and other such factors deemed
  132  by the board to be appropriate. Beginning in the 2018-2019
  133  contract year, the fund’s formula may provide for a rapid cash
  134  build-up factor of up to 25 percent only when the available cash
  135  balance as of December 31 of the previous year is less than 80
  136  percent of the statutory capacity. For the purpose of
  137  calculating the rapid cash build-up factor trigger, the
  138  available cash balance may not be reduced by reserves for
  139  projected participating insurer’s reimbursements The formula
  140  must provide for a cash build-up factor. For the 2009-2010
  141  contract year, the factor is 5 percent. For the 2010-2011
  142  contract year, the factor is 10 percent. For the 2011-2012
  143  contract year, the factor is 15 percent. For the 2012-2013
  144  contract year, the factor is 20 percent. For the 2013-2014
  145  contract year and thereafter, the factor is 25 percent. The rate
  146  formula may provide for a procedure to determine the premiums to
  147  be paid by new insurers that begin writing covered policies
  148  after the beginning of a contract year, taking into
  149  consideration when the insurer starts writing covered policies,
  150  the potential exposure of the insurer, the potential exposure of
  151  the fund, the administrative costs to the insurer and to the
  152  fund, and any other factors deemed appropriate by the board. The
  153  formula must be approved by unanimous vote of the board. The
  154  board may, at any time, revise the formula pursuant to the
  155  procedure provided in this paragraph.
  157  ================= T I T L E  A M E N D M E N T ================
  158  And the title is amended as follows:
  159         Delete line 2
  160  and insert:
  161         An act relating to insurance; amending s. 215.555,
  162         F.S.; revising the definition of the term “retention”;
  163         adding specified coverage levels to a list of coverage
  164         level options that insurers may select from in
  165         reimbursement contracts under the Florida Hurricane
  166         Catastrophe Fund; revising a requirement for loss
  167         adjustment expense reimbursements in such contracts;
  168         revising, as of a specified date, the determination of
  169         the State Board of Administration’s obligation with
  170         respect to all contracts covering a particular
  171         contract year; providing that the rapid cash build-up
  172         factor used in the rate formula for determining
  173         premiums to be paid to the fund may be applied only
  174         under certain circumstances; amending s. 625.151,