Florida Senate - 2026 SB 1448
By Senator DiCeglie
18-00809-26 20261448__
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 definition of the term “retention”; requiring
5 reimbursement contracts to contain a promise by the
6 State Board of Administration to reimburse the insurer
7 for applicable loss adjustment expenses; requiring
8 that, for contracts and rates effective on or after a
9 specified date, the loss adjustment expense included
10 be a specified amount; requiring that the hurricane
11 loss portion of the formula for determining the
12 actuarially indicated premium to be paid to the fund
13 be determined in a specified manner; authorizing,
14 rather than requiring, such formula to provide for a
15 cash build-up factor; deleting obsolete provisions;
16 requiring the cash build-up factor to be zero in a
17 specified contract year; providing an effective date.
18
19 Be It Enacted by the Legislature of the State of Florida:
20
21 Section 1. Paragraph (e) of subsection (2), paragraph (b)
22 of subsection (4), and paragraph (b) of subsection (5) of
23 section 215.555, Florida Statutes, are amended to read:
24 215.555 Florida Hurricane Catastrophe Fund.—
25 (2) DEFINITIONS.—As used in this section:
26 (e) “Retention” means the amount of losses below which an
27 insurer is not entitled to reimbursement from the fund. An
28 insurer’s retention shall be calculated as follows:
29 1. The board shall calculate and report to each insurer the
30 retention multiples for that year. For the contract year
31 beginning June 1, 2026 2005, the retention multiple must shall
32 be equal to $4.5 billion divided by the total estimated
33 reimbursement premium for the contract year; for subsequent
34 years, the retention multiple shall be equal to $4.5 billion,
35 adjusted based upon the reported exposure for the contract year
36 occurring 2 years before the particular contract year to reflect
37 the percentage growth in exposure to the fund for covered
38 policies since 2004, divided by the total estimated
39 reimbursement premium for the contract year. Total reimbursement
40 premium for purposes of the calculation under this subparagraph
41 shall be estimated using the assumption that all insurers have
42 selected the 90-percent coverage level.
43 2. The retention multiple as determined under subparagraph
44 1. shall be adjusted to reflect the coverage level elected by
45 the insurer. For insurers electing the 90-percent coverage
46 level, the adjusted retention multiple is 100 percent of the
47 amount determined under subparagraph 1. For insurers electing
48 the 75-percent coverage level, the retention multiple is 120
49 percent of the amount determined under subparagraph 1. For
50 insurers electing the 45-percent coverage level, the adjusted
51 retention multiple is 200 percent of the amount determined under
52 subparagraph 1.
53 3. An insurer shall determine its provisional retention by
54 multiplying its provisional reimbursement premium by the
55 applicable adjusted retention multiple and shall determine its
56 actual retention by multiplying its actual reimbursement premium
57 by the applicable adjusted retention multiple.
58 4. For insurers who experience multiple covered events
59 causing loss during the contract year, beginning June 1, 2005,
60 each insurer’s full retention shall be applied to each of the
61 covered events causing the two largest losses for that insurer.
62 For each other covered event resulting in losses, the insurer’s
63 retention shall be reduced to one-third of the full retention.
64 The reimbursement contract shall provide for the reimbursement
65 of losses for each covered event based on the full retention
66 with adjustments made to reflect the reduced retentions on or
67 after January 1 of the contract year provided the insurer
68 reports its losses as specified in the reimbursement contract.
69 (4) REIMBURSEMENT CONTRACTS.—
70 (b)1. The contract shall contain a promise by the board to
71 reimburse the insurer for 45 percent, 75 percent, or 90 percent
72 of its losses and applicable loss adjustment expenses from each
73 covered event in excess of the insurer’s retention, plus 5
74 percent of the reimbursed losses to cover loss adjustment
75 expenses. For contracts and rates effective on or after June 1,
76 2026 2019, the loss adjustment expense included reimbursement
77 must be the lesser of 15 10 percent of the total subject losses
78 before reimbursement or the total subject actual loss adjustment
79 expenses the reimbursed losses.
80 2. The insurer must elect one of the percentage coverage
81 levels specified in this paragraph and may, upon renewal of a
82 reimbursement contract, elect a lower percentage coverage level
83 if no revenue bonds issued under subsection (6) after a covered
84 event are outstanding, or elect a higher percentage coverage
85 level, regardless of whether or not revenue bonds are
86 outstanding. All members of an insurer group must elect the same
87 percentage coverage level. Any joint underwriting association,
88 risk apportionment plan, or other entity created under s.
89 627.351 must elect the 90-percent coverage level.
90 3. The contract shall provide that reimbursement amounts
91 shall not be reduced by reinsurance paid or payable to the
92 insurer from other sources.
93 (5) REIMBURSEMENT PREMIUMS.—
94 (b) The State Board of Administration shall select an
95 independent consultant to develop a formula for determining the
96 actuarially indicated premium to be paid to the fund. The
97 hurricane loss portion of the formula must be determined by
98 averaging the results of all the catastrophe models accepted by
99 the Florida Commission on Hurricane Loss Projection Methodology.
100 The formula must shall specify, for each zip code or other
101 limited geographical area, the amount of premium to be paid by
102 an insurer for each $1,000 of insured value under covered
103 policies in that zip code or other area. In establishing
104 premiums, the board shall consider the coverage elected under
105 paragraph (4)(b) and any factors that tend to enhance the
106 actuarial sophistication of ratemaking for the fund, including
107 deductibles, type of construction, type of coverage provided,
108 relative concentration of risks, and other such factors deemed
109 by the board to be appropriate. The formula may must provide for
110 a cash build-up factor. For the 2009-2010 contract year, the
111 factor is 5 percent. For the 2010-2011 contract year, the factor
112 is 10 percent. For the 2011-2012 contract year, the factor is 15
113 percent. For the 2012-2013 contract year, the factor is 20
114 percent. For the 2013-2014 contract year and thereafter, the
115 factor is 25 percent; however, the cash build-up factor must be
116 zero in the 2026-2027 contract year. The formula may provide for
117 a procedure to determine the premiums to be paid by new insurers
118 that begin writing covered policies after the beginning of a
119 contract year, taking into consideration when the insurer starts
120 writing covered policies, the potential exposure of the insurer,
121 the potential exposure of the fund, the administrative costs to
122 the insurer and to the fund, and any other factors deemed
123 appropriate by the board. The formula must be approved by
124 unanimous vote of the board. The board may, at any time, revise
125 the formula pursuant to the procedure provided in this
126 paragraph.
127 Section 2. This act shall take effect July 1, 2026.