Bill Text: FL S0610 | 2014 | Regular Session | Introduced


Bill Title: Florida Hurricane Catastrophe Fund

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2014-05-02 - Died in Banking and Insurance [S0610 Detail]

Download: Florida-2014-S0610-Introduced.html
       Florida Senate - 2014                                     SB 610
       
       
        
       By Senator Lee
       
       
       
       
       
       24-00564-14                                            2014610__
    1                        A bill to be entitled                      
    2         An act relating to the Florida Hurricane Catastrophe
    3         Fund; amending s. 215.555, F.S.; revising definitions;
    4         establishing an aggregate limit on insurer retention
    5         levels; revising coverage levels available under
    6         reimbursement contracts; revising the schedule and
    7         circumstances under which the State Board of
    8         Administration is required to publish certain
    9         statements and notices relating to the fund; revising
   10         requirements for reimbursement contracts; requiring
   11         the board to obtain a line of credit to reimburse
   12         insurers under certain circumstances; deleting a
   13         requirement that the formula for determining premiums
   14         to be paid to the fund include a cash build-up factor;
   15         requiring peer review of the formula; deleting
   16         provisions relating to temporary emergency options for
   17         additional coverage; deleting obsolete provisions;
   18         making technical corrections; amending s. 624.424,
   19         F.S.; conforming a cross-reference; amending s.
   20         627.062, F.S.; deleting a provision prohibiting an
   21         insurer from recouping reinsurance costs under certain
   22         conditions; amending s. 627.0629, F.S.; conforming
   23         provisions to changes made by the act; amending s.
   24         627.351, F.S.; conforming a cross-reference; providing
   25         an effective date.
   26          
   27  Be It Enacted by the Legislature of the State of Florida:
   28  
   29         Section 1. Subsection (2) of section 215.555, Florida
   30  Statutes, is reordered and amended, and paragraphs (b) through
   31  (d) of subsection (4), paragraph (b) of subsection (5),
   32  paragraph (d) of subsection (6), and subsection (16) of that
   33  section are amended, to read:
   34         215.555 Florida Hurricane Catastrophe Fund.—
   35         (2) DEFINITIONS.—As used in this section, the term:
   36         (a) “Actuarially indicated” means, with respect to premiums
   37  paid by insurers for reimbursement provided by the fund, an
   38  amount determined according to principles of actuarial science
   39  to be adequate, but not excessive, in the aggregate, to pay
   40  current and future obligations and expenses of the fund,
   41  including additional amounts, if needed, to pay debt service on
   42  revenue bonds issued under this section and to provide required
   43  debt service coverage in excess of the amounts required to pay
   44  actual debt service on revenue bonds issued under subsection
   45  (6), and determined according to principles of actuarial science
   46  to reflect each insurer’s relative exposure to hurricane losses.
   47         (e)(b) “Covered event” means a any one storm declared to be
   48  a hurricane by the National Hurricane Center, which storm causes
   49  insured losses in this state.
   50         (f)(c) “Covered policy” means an any insurance policy
   51  covering residential property in this state, including a, but
   52  not limited to, any homeowner’s, mobile home owner’s, farm
   53  owner’s, condominium association, condominium unit owner’s,
   54  tenant’s, or apartment building policy, or any other policy
   55  covering a residential structure or its contents issued by an
   56  any authorized insurer, including a commercial self-insurance
   57  fund holding a certificate of authority issued by the Office of
   58  Insurance Regulation under s. 624.462, the Citizens Property
   59  Insurance Corporation, and any joint underwriting association or
   60  similar entity created under law. The term “covered policy”
   61  includes a any collateral protection insurance policy covering
   62  personal residences which protects both the borrower’s and the
   63  lender’s financial interests, in an amount at least equal to the
   64  coverage for the dwelling in place under the lapsed homeowner’s
   65  policy, if such policy can be accurately reported as required
   66  under in subsection (5). The term also includes Additionally,
   67  covered policies include policies covering the peril of wind
   68  removed from the Florida Residential Property and Casualty Joint
   69  Underwriting Association or from the Citizens Property Insurance
   70  Corporation, created under s. 627.351(6), or from the Florida
   71  Windstorm Underwriting Association, created under s. 627.351(2),
   72  by an authorized insurer under the terms and conditions of an
   73  executed assumption agreement between the authorized insurer and
   74  such association or Citizens Property Insurance Corporation.
   75  Each assumption agreement between the association and such
   76  authorized insurer or Citizens Property Insurance Corporation
   77  must be approved by the Office of Insurance Regulation before
   78  the effective date of the assumption, and the Office of
   79  Insurance Regulation must provide written notification to the
   80  board within 15 working days after such approval. The term
   81  “Covered policy” does not include a any policy that excludes
   82  wind coverage or hurricane coverage or a any reinsurance
   83  agreement or and does not include any policy otherwise meeting
   84  this definition which is issued by a surplus lines insurer or a
   85  reinsurer. All commercial residential excess policies and all
   86  deductible buy-back policies that, based on sound actuarial
   87  principles, require individual ratemaking shall be excluded by
   88  rule if the actuarial soundness of the fund is not jeopardized.
   89  For this purpose, the term “excess policy” means a policy that
   90  provides insurance protection for large commercial property
   91  risks and that provides a layer of coverage above a primary
   92  layer insured by another insurer.
   93         (k)(d) “Losses” means all incurred losses under covered
   94  policies, including additional living expenses of up to not to
   95  exceed 40 percent of the insured value of a residential
   96  structure or its contents, loss adjustment expenses, and amounts
   97  paid as fees on behalf of or inuring to the benefit of a
   98  policyholder. The term does not include:
   99         1. Losses for fair rental value, loss of rent or rental
  100  income, or business interruption losses;
  101         2. Losses under liability coverages;
  102         3. Property losses that are proximately caused by any peril
  103  other than a covered event, including, but not limited to, fire,
  104  theft, flood or rising water, or windstorm that does not
  105  constitute a covered event;
  106         4. Amounts paid as the result of a voluntary expansion of
  107  coverage by the insurer, including, but not limited to, a waiver
  108  of an applicable deductible;
  109         5. Amounts paid to reimburse a policyholder for condominium
  110  association or homeowners’ association loss assessments or under
  111  similar coverages for contractual liabilities;
  112         6. Amounts paid as bad faith awards, punitive damage
  113  awards, or other court-imposed fines, sanctions, or penalties;
  114         7. Amounts in excess of the coverage limits under the
  115  covered policy; or
  116         5.8.Allocated or Unallocated loss adjustment expenses.
  117  
  118  As used in this paragraph, the term “residential structure” does
  119  not include a hotel, motel, apartment building, or commercial
  120  building, but includes a single-family home, duplex, townhouse,
  121  and residential condominium, regardless of whether owner
  122  occupied, rented, or vacant.
  123         (m)(e) “Retention” means the amount of losses below which
  124  an insurer is not entitled to reimbursement from the fund. An
  125  insurer’s retention shall be calculated as follows:
  126         1. The board shall calculate and report to each insurer the
  127  retention multiples for that year. For the contract year
  128  beginning June 1, 2005, the retention multiple shall be equal to
  129  $4.5 billion divided by the total estimated reimbursement
  130  premium for the contract year; for subsequent years, The
  131  retention multiple shall be equal to $4.5 billion, adjusted
  132  based upon the reported exposure for the contract year occurring
  133  2 years before the particular contract year to reflect the
  134  percentage growth in exposure to the fund for covered policies
  135  since 2004, divided by the total estimated reimbursement premium
  136  for the contract year. total reimbursement premium for purposes
  137  of the calculation under this subparagraph shall be estimated
  138  using the assumption that all insurers have selected the 90
  139  percent coverage level.
  140         2. The retention multiple as determined under subparagraph
  141  1. shall be adjusted to reflect the coverage level elected by
  142  the insurer. For insurers electing the 90-percent coverage
  143  level, the adjusted retention multiple is 100 percent of the
  144  amount determined under subparagraph 1. For insurers electing
  145  the 75-percent coverage level, the retention multiple is 120
  146  percent of the amount determined under subparagraph 1. For
  147  insurers electing the 45-percent coverage level, the adjusted
  148  retention multiple is 200 percent of the amount determined under
  149  subparagraph 1.
  150         3. An insurer shall determine its provisional retention by
  151  multiplying its provisional reimbursement premium by the
  152  applicable adjusted retention multiple and shall determine its
  153  actual retention by multiplying its actual reimbursement premium
  154  by the applicable adjusted retention multiple.
  155         4. For insurers who experience multiple covered events
  156  causing loss during the contract year, beginning June 1, 2005,
  157  each insurer’s full retention shall be applied to each of the
  158  covered events causing the two largest losses for that insurer.
  159  For each other covered event resulting in losses, the insurer’s
  160  retention shall be reduced to one-third of the full retention.
  161  The reimbursement contract shall provide for the reimbursement
  162  of losses for each covered event based on the full retention
  163  with adjustments made to reflect the reduced retentions on or
  164  after January 1 of the contract year provided the insurer
  165  reports its losses as specified in the reimbursement contract.
  166         (n)(f) “Workers’ compensation” includes both workers’
  167  compensation and excess workers’ compensation insurance.
  168         (b)(g) “Bond” means a any bond, debenture, note, or other
  169  evidence of financial indebtedness issued under this section.
  170         (g)(h) “Debt service” means the amount required in any
  171  fiscal year to pay the principal of, redemption premium, if any,
  172  and interest on revenue bonds and any amounts required by the
  173  terms of documents authorizing, securing, or providing liquidity
  174  for revenue bonds necessary to maintain in effect any such
  175  liquidity or security arrangements.
  176         (h)(i) “Debt service coverage” means the amount, if any,
  177  required by the documents under which revenue bonds are issued,
  178  which must amount is to be received in any fiscal year in excess
  179  of the amount required to pay debt service for such fiscal year.
  180         (j) “Local government” means a unit of general purpose
  181  local government as defined in s. 218.31 s. 218.31(2).
  182         (l)(k) “Pledged revenues” means all or any portion of
  183  revenues to be derived from reimbursement premiums under
  184  subsection (5) or from emergency assessments under paragraph
  185  (6)(b), as determined by the board.
  186         (i)(l) “Estimated claims-paying capacity” means the sum of
  187  the projected year-end balance of the fund as of December 31 of
  188  a contract year, plus any reinsurance purchased by the fund,
  189  plus the board’s estimate of the board’s borrowing capacity.
  190         (m) “Actual claims-paying capacity” means the sum of the
  191  balance of the fund as of December 31 of a contract year, plus
  192  any reinsurance purchased by the fund, plus the amount the board
  193  is able to raise through the issuance of revenue bonds under
  194  subsection (6).
  195         (d)(n) “Corporation” means the State Board of
  196  Administration Finance Corporation created in paragraph (6)(d).
  197         (c)(o) “Contract year” means the period beginning on June 1
  198  of a specified calendar year and ending on May 31 of the
  199  following calendar year.
  200         (4) REIMBURSEMENT CONTRACTS.—
  201         (b)1. An insurer’s retention shall be calculated as
  202  follows:
  203         a. The board shall calculate and report to each insurer the
  204  retention multiples for that year. The retention multiple for
  205  the contract year shall be $4.5 billion, adjusted based upon the
  206  reported exposure for the contract year occurring 2 years before
  207  the particular contract year to reflect the percentage growth in
  208  exposure to the fund for covered policies since 2004, divided by
  209  the total estimated reimbursement premium for the contract year.
  210  For purposes of this calculation, total reimbursement premium
  211  shall be estimated using the assumption that all insurers have
  212  selected the 90-percent coverage level. Effective June 1, 2014,
  213  the aggregate retention level may not exceed $5.2 billion.
  214         b. The retention multiple determined under sub-subparagraph
  215  a. shall be adjusted to reflect the coverage level elected by
  216  the insurer. For insurers electing:
  217         (I)The 90-percent coverage level, the adjusted retention
  218  multiple is 100 percent of the amount determined under sub
  219  subparagraph a.
  220         (II) The 75-percent coverage level, the retention multiple
  221  is 120 percent of the amount determined under sub-subparagraph
  222  a.
  223         (III) The 45-percent coverage level, the adjusted retention
  224  multiple is 200 percent of the amount determined under sub
  225  subparagraph a.
  226         c. An insurer shall determine its provisional retention by
  227  multiplying its provisional reimbursement premium by the
  228  applicable adjusted retention multiple and determine its actual
  229  retention by multiplying its actual reimbursement premium by the
  230  applicable adjusted retention multiple.
  231         d. For insurers that experience multiple covered events
  232  causing loss during the contract year, each insurer’s full
  233  retention shall be applied to each of the covered events causing
  234  the two largest losses for that insurer. For each other covered
  235  event resulting in losses, the insurer’s retention shall be
  236  reduced to one-third of the full retention. The reimbursement
  237  contract must provide for the reimbursement of losses for each
  238  covered event based on the full retention with adjustments that
  239  reflect the reduced retentions on or after January 1 of the
  240  contract year if the insurer reports its losses as specified in
  241  the reimbursement contract.
  242         2.1. The contract must shall contain a promise by the board
  243  to reimburse the insurer for 45 percent, 75 percent, or 90
  244  percent of its losses from each covered event in excess of the
  245  insurer’s retention, plus the insurer’s 5 percent of the
  246  reimbursed losses to cover loss adjustment expenses.
  247         3.2. The insurer must elect one of the percentage coverage
  248  levels specified in this paragraph and may, upon renewal of a
  249  reimbursement contract, elect a lower percentage coverage level
  250  if no revenue bonds issued under subsection (6) after a covered
  251  event are outstanding, or elect a higher percentage coverage
  252  level, regardless of whether or not revenue bonds are
  253  outstanding. All members of an insurer group must elect the same
  254  percentage coverage level. A Any joint underwriting association,
  255  risk apportionment plan, or other entity created under s.
  256  627.351 must elect the 90-percent coverage level.
  257         4.3. The contract must shall provide that reimbursement
  258  amounts are shall not be reduced by reinsurance paid or payable
  259  to the insurer from other sources.
  260         (c)1. Effective June 1, 2014, the contract must shall also
  261  provide that the obligation of the board with respect to all
  262  contracts covering a particular contract year is $15 billion.
  263  Effective June 1, 2015, the board may temporarily increase the
  264  claims capacity of the fund from $15 billion to $17 billion if
  265  it finds that an increase is necessary to stabilize the property
  266  insurance market shall not exceed the actual claims-paying
  267  capacity of the fund up to a limit of $17 billion for that
  268  contract year, unless the board determines that there is
  269  sufficient estimated claims-paying capacity to provide $17
  270  billion of capacity for the current contract year and an
  271  additional $17 billion of capacity for subsequent contract
  272  years. If the board makes such a determination, the estimated
  273  claims-paying capacity for the particular contract year shall be
  274  determined by adding to the $17 billion limit one-half of the
  275  fund’s estimated claims-paying capacity in excess of $34
  276  billion. However, the dollar growth in the limit may not
  277  increase in any year by an amount greater than the dollar growth
  278  of the balance of the fund as of December 31, less any premiums
  279  or interest attributable to optional coverage, as defined by
  280  rule which occurred over the prior calendar year.
  281         2. In January May and October of each the contract year,
  282  the board shall publish in the Florida Administrative Register a
  283  statement of the fund’s estimated borrowing capacity and, the
  284  fund’s estimated claims-paying capacity. Upon completing the
  285  estimate of the fund’s claims-paying capacity, and the projected
  286  balance of the fund as of December 31. After the end of each
  287  calendar year, the board shall notify insurers of the estimated
  288  borrowing capacity, estimated claims-paying capacity, and the
  289  balance of the fund as of December 31 to provide insurers with
  290  data necessary to assist them in determining their retention and
  291  projected payout from the fund for loss reimbursement purposes.
  292  In conjunction with the development of the premium formula, as
  293  provided for in subsection (5), the board shall publish factors
  294  or multiples that assist insurers in determining their retention
  295  and projected payout for the next contract year. The statement
  296  must include an estimate for a 1-year, 2-year, and 3-year
  297  bonding capacity For all regulatory and reinsurance purposes, an
  298  insurer may calculate its projected payout from the fund as its
  299  share of the total fund premium for the current contract year
  300  multiplied by the sum of the projected balance of the fund as of
  301  December 31 and the estimated borrowing capacity for that
  302  contract year as reported under this subparagraph.
  303         (d)1. For purposes of determining potential liability and
  304  to aid in the sound administration of the fund, the contract
  305  must shall require each insurer to report its such insurer’s
  306  losses from each covered event on an interim basis, as directed
  307  by the board. The contract must shall require the insurer to
  308  report to the board by no later than December 31 of each year,
  309  and quarterly thereafter, its reimbursable losses from covered
  310  events for the year. The contract must shall require the board
  311  to determine and pay, as soon as practicable after receiving
  312  these reports of reimbursable losses, the initial amount of
  313  reimbursement due and adjustments to this amount based on later
  314  loss information. The adjustments to reimbursement amounts must
  315  shall require the board to pay, or the insurer to return,
  316  amounts reflecting the most recent calculation of losses.
  317         2. In determining reimbursements pursuant to this
  318  subsection, the contract must shall provide that the board shall
  319  pay to each insurer such insurer’s projected payout, which is
  320  the amount of reimbursement it is owed, up to an amount equal to
  321  the insurer’s share of the actual premium paid for that contract
  322  year, multiplied by the insurer’s share of the limit specified
  323  in subparagraph (c)1 actual claims-paying capacity available for
  324  that contract year.
  325         3. The board may reimburse insurers for amounts up to the
  326  published factors or multiples for determining each
  327  participating insurer’s retention and projected payout derived
  328  as a result of the development of the premium formula in those
  329  situations in which the total reimbursement of losses to such
  330  insurers does would not exceed the estimated claims-paying
  331  capacity of the fund. Otherwise, the projected payout factors or
  332  multiples shall be reduced uniformly among all insurers to
  333  reflect the estimated claims-paying capacity.
  334         4. If payments exceed available assets and bonding
  335  receipts, the board shall obtain a line of credit to reimburse
  336  insurers. The line of credit must be sufficient to cover
  337  projected receipts from a minimum of 3 years’ bonding and for
  338  second-event catastrophes. If needed for a contract year, the
  339  line of credit must be obtained before the start of the contract
  340  year and within 90 days after issuance of the bonding report.
  341         (5) REIMBURSEMENT PREMIUMS.—
  342         (b) The State Board of Administration shall select an
  343  independent consultant to develop a formula for determining the
  344  actuarially indicated premium to be paid to the fund. The
  345  formula must shall specify, for each zip code or other limited
  346  geographical area, the amount of premium to be paid by an
  347  insurer for each $1,000 of insured value under covered policies
  348  in that zip code or other area. In establishing premiums, the
  349  board shall consider the coverage elected under paragraph (4)(b)
  350  and any factors that tend to enhance the actuarial
  351  sophistication of ratemaking for the fund, including
  352  deductibles, type of construction, type of coverage provided,
  353  relative concentration of risks, and other such factors deemed
  354  by the board to be appropriate. The formula must provide for a
  355  cash build-up factor. For the 2009-2010 contract year, the
  356  factor is 5 percent. For the 2010-2011 contract year, the factor
  357  is 10 percent. For the 2011-2012 contract year, the factor is 15
  358  percent. For the 2012-2013 contract year, the factor is 20
  359  percent. For the 2013-2014 contract year and thereafter, the
  360  factor is 25 percent. The formula may provide for a procedure to
  361  determine the premiums to be paid by new insurers that begin
  362  writing covered policies after the beginning of a contract year,
  363  taking into consideration when the insurer starts writing
  364  covered policies, the potential exposure of the insurer, the
  365  potential exposure of the fund, the administrative costs to the
  366  insurer and to the fund, and any other factors deemed
  367  appropriate by the board. Before the formula is approved by the
  368  board, it must be submitted to an outside actuary for peer
  369  review. The formula must be approved by unanimous vote of the
  370  board. The board may, at any time, revise the formula pursuant
  371  to the procedure provided in this paragraph.
  372         (6) REVENUE BONDS.—
  373         (d) State Board of Administration Finance Corporation.—
  374         1. In addition to the findings and declarations in
  375  subsection (1), the Legislature also finds and declares that:
  376         a. The public benefits corporation created under this
  377  paragraph will provide a mechanism necessary for the cost
  378  effective and efficient issuance of bonds. This mechanism will
  379  eliminate unnecessary costs in the bond issuance process,
  380  thereby increasing the amounts available for to pay
  381  reimbursement for losses to property sustained as a result of
  382  hurricane damage.
  383         b. The purpose of such bonds is to fund reimbursements
  384  through the Florida Hurricane Catastrophe Fund to pay for the
  385  costs of construction, reconstruction, repair, restoration, and
  386  other costs associated with damage to properties of
  387  policyholders of covered policies due to the occurrence of a
  388  hurricane.
  389         c. The efficacy of the financing mechanism will be enhanced
  390  by the corporation’s ownership of the assessments, by the
  391  insulation of the assessments from possible bankruptcy
  392  proceedings, and by covenants of the state with the
  393  corporation’s bondholders.
  394         2.a.The State Board of Administration Finance Corporation,
  395  There is created a public benefits corporation, which is an
  396  instrumentality of the state, is created to be known as the
  397  State Board of Administration Finance Corporation.
  398         a.b. The corporation shall operate under a five-member
  399  board of directors consisting of the Governor or a designee, the
  400  Chief Financial Officer or a designee, the Attorney General or a
  401  designee, the director of the Division of Bond Finance of the
  402  State Board of Administration, and the Chief Operating Officer
  403  of the Florida Hurricane Catastrophe Fund.
  404         b.c. The corporation has all of the powers of corporations
  405  under chapter 607 and under chapter 617, subject only to the
  406  provisions of this subsection.
  407         c.d. The corporation may issue bonds and engage in such
  408  other financial transactions as are necessary to provide
  409  sufficient funds to achieve the purposes of this section.
  410         d.e. The corporation may invest as in any of the
  411  investments authorized under s. 215.47.
  412         e.f. There is shall be no liability on the part of, and no
  413  cause of action shall arise against, any board members or
  414  employees of the corporation for any actions taken by them in
  415  the performance of their duties under this paragraph.
  416         3.a. In actions under chapter 75 to validate any bonds
  417  issued by the corporation, the notice required by s. 75.06 must
  418  shall be published in two newspapers of general circulation in
  419  the state, and the complaint and order of the court shall be
  420  served only on the State Attorney of the Second Judicial
  421  Circuit.
  422         b. The state hereby covenants with holders of bonds of the
  423  corporation that the state will not repeal or abrogate the power
  424  of the board to direct the Office of Insurance Regulation to
  425  levy the assessments and to collect the proceeds of the revenues
  426  pledged to the payment of such bonds as long as any such bonds
  427  remain outstanding unless adequate provision has been made for
  428  the payment of such bonds pursuant to the documents authorizing
  429  the issuance of the such bonds.
  430         c.4. The bonds of the corporation are not a debt of the
  431  state or of any political subdivision, and neither the state nor
  432  any political subdivision is liable for on such bonds. The
  433  corporation may not does not have the power to pledge the
  434  credit, the revenues, or the taxing power of the state or of any
  435  political subdivision and such. The credit, revenues, or taxing
  436  power of the state or of any political subdivision may shall not
  437  be deemed to be pledged to the payment of any bonds of the
  438  corporation.
  439         d.5.a. The property, revenues, and other assets of the
  440  corporation; the transactions and operations of the corporation
  441  and the income from such transactions and operations; and all
  442  bonds issued under this paragraph and interest on such bonds are
  443  exempt from taxation by the state and any political subdivision,
  444  including the intangibles tax under chapter 199 and the income
  445  tax under chapter 220. This exemption does not apply to any tax
  446  imposed by chapter 220 on interest, income, or profits on debt
  447  obligations owned by corporations other than the State Board of
  448  Administration Finance Corporation.
  449         e.b. All bonds of the corporation are shall be and
  450  constitute legal investments without limitation for all public
  451  bodies of this state; for all banks, trust companies, savings
  452  banks, savings associations, savings and loan associations, and
  453  investment companies; for all administrators, executors,
  454  trustees, and other fiduciaries; for all insurance companies and
  455  associations and other persons carrying on an insurance
  456  business; and for all other persons who are now or may hereafter
  457  be authorized to invest in bonds or other obligations of the
  458  state and are shall be and constitute eligible securities to be
  459  deposited as collateral for the security of any state, county,
  460  municipal, or other public funds. This sub-subparagraph is shall
  461  be considered as additional and supplemental authority and may
  462  shall not be limited without specific reference to this sub
  463  subparagraph.
  464         4.6. The corporation and its corporate existence shall
  465  continue until terminated by law; however, no such law shall
  466  take effect as long as the corporation has bonds outstanding
  467  unless adequate provision has been made for the payment of such
  468  bonds pursuant to the documents authorizing the issuance of such
  469  bonds. Upon termination of the existence of the corporation, all
  470  of its rights and properties in excess of its obligations shall
  471  pass to and be vested in the state.
  472         5.7. The State Board of Administration Finance Corporation
  473  is for all purposes the successor to the Florida Hurricane
  474  Catastrophe Fund Finance Corporation.
  475         (16) TEMPORARY INCREASE IN COVERAGE LIMIT OPTIONS.—
  476         (a) Findings and intent.
  477         1. The Legislature finds that:
  478         a. Because of temporary disruptions in the market for
  479  catastrophic reinsurance, many property insurers were unable to
  480  procure sufficient amounts of reinsurance for the 2006 hurricane
  481  season or were able to procure such reinsurance only by
  482  incurring substantially higher costs than in prior years.
  483         b. The reinsurance market problems were responsible, at
  484  least in part, for substantial premium increases to many
  485  consumers and increases in the number of policies issued by
  486  Citizens Property Insurance Corporation.
  487         c. It is likely that the reinsurance market disruptions
  488  will not significantly abate prior to the 2007 hurricane season.
  489         2. It is the intent of the Legislature to create options
  490  for insurers to purchase a temporary increased coverage limit
  491  above the statutorily determined limit in subparagraph (4)(c)1.,
  492  applicable for the 2007, 2008, 2009, 2010, 2011, 2012, and 2013
  493  hurricane seasons, to address market disruptions and enable
  494  insurers, at their option, to procure additional coverage from
  495  the Florida Hurricane Catastrophe Fund.
  496         (b) Applicability of other provisions of this section.—All
  497  provisions of this section and the rules adopted under this
  498  section apply to the coverage created by this subsection unless
  499  specifically superseded by provisions in this subsection.
  500         (c) Optional coverage.—For the 2009-2010, 2010-2011, 2011
  501  2012, 2012-2013, and 2013-2014 contract years, the board shall
  502  offer, for each of such years, the optional coverage as provided
  503  in this subsection.
  504         (d) Additional definitions.—As used in this subsection, the
  505  term:
  506         1. “FHCF” means Florida Hurricane Catastrophe Fund.
  507         2. “FHCF reimbursement premium” means the premium paid by
  508  an insurer for its coverage as a mandatory participant in the
  509  FHCF, but does not include additional premiums for optional
  510  coverages.
  511         3. “Payout multiple” means the number or multiple created
  512  by dividing the statutorily defined claims-paying capacity as
  513  determined in subparagraph (4)(c)1. by the aggregate
  514  reimbursement premiums paid by all insurers estimated or
  515  projected as of calendar year-end.
  516         4. “TICL” means the temporary increase in coverage limit.
  517         5. “TICL options” means the temporary increase in coverage
  518  options created under this subsection.
  519         6. “TICL insurer” means an insurer that has opted to obtain
  520  coverage under the TICL options addendum in addition to the
  521  coverage provided to the insurer under its FHCF reimbursement
  522  contract.
  523         7. “TICL reimbursement premium” means the premium charged
  524  by the fund for coverage provided under the TICL option.
  525         8. “TICL coverage multiple” means the coverage multiple
  526  when multiplied by an insurer’s reimbursement premium that
  527  defines the temporary increase in coverage limit.
  528         9. “TICL coverage” means the coverage for an insurer’s
  529  losses above the insurer’s statutorily determined claims-paying
  530  capacity based on the claims-paying limit in subparagraph
  531  (4)(c)1., which an insurer selects as its temporary increase in
  532  coverage from the fund under the TICL options selected. A TICL
  533  insurer’s increased coverage limit options shall be calculated
  534  as follows:
  535         a. The board shall calculate and report to each TICL
  536  insurer the TICL coverage multiples based on 12 options for
  537  increasing the insurer’s FHCF coverage limit. Each TICL coverage
  538  multiple shall be calculated by dividing $1 billion, $2 billion,
  539  $3 billion, $4 billion, $5 billion, $6 billion, $7 billion, $8
  540  billion, $9 billion, $10 billion, $11 billion, or $12 billion by
  541  the total estimated aggregate FHCF reimbursement premiums for
  542  the 2007-2008 contract year, and the 2008-2009 contract year.
  543         b. For the 2009-2010 contract year, the board shall
  544  calculate and report to each TICL insurer the TICL coverage
  545  multiples based on 10 options for increasing the insurer’s FHCF
  546  coverage limit. Each TICL coverage multiple shall be calculated
  547  by dividing $1 billion, $2 billion, $3 billion, $4 billion, $5
  548  billion, $6 billion, $7 billion, $8 billion, $9 billion, and $10
  549  billion by the total estimated aggregate FHCF reimbursement
  550  premiums for the 2009-2010 contract year.
  551         c. For the 2010-2011 contract year, the board shall
  552  calculate and report to each TICL insurer the TICL coverage
  553  multiples based on eight options for increasing the insurer’s
  554  FHCF coverage limit. Each TICL coverage multiple shall be
  555  calculated by dividing $1 billion, $2 billion, $3 billion, $4
  556  billion, $5 billion, $6 billion, $7 billion, and $8 billion by
  557  the total estimated aggregate FHCF reimbursement premiums for
  558  the contract year.
  559         d. For the 2011-2012 contract year, the board shall
  560  calculate and report to each TICL insurer the TICL coverage
  561  multiples based on six options for increasing the insurer’s FHCF
  562  coverage limit. Each TICL coverage multiple shall be calculated
  563  by dividing $1 billion, $2 billion, $3 billion, $4 billion, $5
  564  billion, and $6 billion by the total estimated aggregate FHCF
  565  reimbursement premiums for the 2011-2012 contract year.
  566         e. For the 2012-2013 contract year, the board shall
  567  calculate and report to each TICL insurer the TICL coverage
  568  multiples based on four options for increasing the insurer’s
  569  FHCF coverage limit. Each TICL coverage multiple shall be
  570  calculated by dividing $1 billion, $2 billion, $3 billion, and
  571  $4 billion by the total estimated aggregate FHCF reimbursement
  572  premiums for the 2012-2013 contract year.
  573         f. For the 2013-2014 contract year, the board shall
  574  calculate and report to each TICL insurer the TICL coverage
  575  multiples based on two options for increasing the insurer’s FHCF
  576  coverage limit. Each TICL coverage multiple shall be calculated
  577  by dividing $1 billion and $2 billion by the total estimated
  578  aggregate FHCF reimbursement premiums for the 2013-2014 contract
  579  year.
  580         g. The TICL insurer’s increased coverage shall be the FHCF
  581  reimbursement premium multiplied by the TICL coverage multiple.
  582  In order to determine an insurer’s total limit of coverage, an
  583  insurer shall add its TICL coverage multiple to its payout
  584  multiple. The total shall represent a number that, when
  585  multiplied by an insurer’s FHCF reimbursement premium for a
  586  given reimbursement contract year, defines an insurer’s total
  587  limit of FHCF reimbursement coverage for that reimbursement
  588  contract year.
  589         10. “TICL options addendum” means an addendum to the
  590  reimbursement contract reflecting the obligations of the fund
  591  and insurers selecting an option to increase an insurer’s FHCF
  592  coverage limit.
  593         (e) TICL options addendum.
  594         1. The TICL options addendum shall provide for
  595  reimbursement of TICL insurers for covered events occurring
  596  during the 2009-2010, 2010-2011, 2011-2012, 2012-2013, and 2013
  597  2014 contract years in exchange for the TICL reimbursement
  598  premium paid into the fund under paragraph (f) based on the TICL
  599  coverage available and selected for each respective contract
  600  year. Any insurer writing covered policies has the option of
  601  selecting an increased limit of coverage under the TICL options
  602  addendum and shall select such coverage at the time that it
  603  executes the FHCF reimbursement contract.
  604         2. The TICL addendum shall contain a promise by the board
  605  to reimburse the TICL insurer for 45 percent, 75 percent, or 90
  606  percent of its losses from each covered event in excess of the
  607  insurer’s retention, plus 5 percent of the reimbursed losses to
  608  cover loss adjustment expenses. The percentage shall be the same
  609  as the coverage level selected by the insurer under paragraph
  610  (4)(b).
  611         3. The TICL addendum shall provide that reimbursement
  612  amounts shall not be reduced by reinsurance paid or payable to
  613  the insurer from other sources.
  614         4. The priorities, schedule, and method of reimbursements
  615  under the TICL addendum shall be the same as provided under
  616  subsection (4).
  617         (f) TICL reimbursement premiums.—Each TICL insurer shall
  618  pay to the fund, in the manner and at the time provided in the
  619  reimbursement contract for payment of reimbursement premiums, a
  620  TICL reimbursement premium determined as specified in subsection
  621  (5), except that a cash build-up factor does not apply to the
  622  TICL reimbursement premiums. However, the TICL reimbursement
  623  premium shall be increased in the 2009-2010 contract year by a
  624  factor of two, in the 2010-2011 contract year by a factor of
  625  three, in the 2011-2012 contract year by a factor of four, in
  626  the 2012-2013 contract year by a factor of five, and in the
  627  2013-2014 contract year by a factor of six.
  628         (g) Effect on claims-paying capacity of the fund.—For the
  629  2009-2010, 2010-2011, 2011-2012, 2012-2013, and 2013-2014
  630  contract years, the program created by this subsection shall
  631  increase the claims-paying capacity of the fund as provided in
  632  subparagraph (4)(c)1. by an amount not to exceed $12 billion and
  633  shall depend on the TICL coverage options available and selected
  634  for the specified contract year and the number of insurers that
  635  select the TICL optional coverage. The additional capacity shall
  636  apply only to the additional coverage provided under the TICL
  637  options and shall not otherwise affect any insurer’s
  638  reimbursement from the fund if the insurer chooses not to select
  639  the temporary option to increase its limit of coverage under the
  640  FHCF.
  641         Section 2. Subsection (10) of section 624.424, Florida
  642  Statutes, is amended to read:
  643         624.424 Annual statement and other information.—
  644         (10) Each insurer or insurer group doing business in this
  645  state shall file, on a quarterly basis, in conjunction with
  646  financial reports required by paragraph (1)(a), a supplemental
  647  report on an individual and group basis on a form prescribed by
  648  the commission with information on personal lines and commercial
  649  lines residential property insurance policies in this state. The
  650  supplemental report must shall include separate information for
  651  personal lines property policies and for commercial lines
  652  property policies and totals for each item specified, including
  653  premiums written for each of the property lines of business as
  654  described in ss. 215.555 ss. 215.555(2)(c) and 627.351(6)(a).
  655  The report must shall include the following information for each
  656  county on a monthly basis:
  657         (a) Total number of policies in force at the end of each
  658  month.
  659         (b) Total number of policies canceled.
  660         (c) Total number of policies nonrenewed.
  661         (d) Number of policies canceled due to hurricane risk.
  662         (e) Number of policies nonrenewed due to hurricane risk.
  663         (f) Number of new policies written.
  664         (g) Total dollar value of structure exposure under policies
  665  that include wind coverage.
  666         (h) Number of policies that exclude wind coverage.
  667         Section 3. Subsection (5) of section 627.062, Florida
  668  Statutes, is amended to read:
  669         627.062 Rate standards.—
  670         (5) With respect to a rate filing involving coverage of the
  671  type for which the insurer is required to pay a reimbursement
  672  premium to the Florida Hurricane Catastrophe Fund, the insurer
  673  may fully recoup in its property insurance premiums any
  674  reimbursement premiums paid to the fund, together with
  675  reasonable costs of other reinsurance; however, except as
  676  otherwise provided in this section, the insurer may not recoup
  677  reinsurance costs that duplicate coverage provided by the fund.
  678  An insurer may not recoup more than 1 year of reimbursement
  679  premium at a time. Any under-recoupment from the prior year may
  680  be added to the following year’s reimbursement premium, and any
  681  over-recoupment must be subtracted from the following year’s
  682  reimbursement premium.
  683         Section 4. Subsection (5) of section 627.0629, Florida
  684  Statutes, is amended to read:
  685         627.0629 Residential property insurance; rate filings.—
  686         (5) In order to provide an appropriate transition period,
  687  an insurer may implement an approved rate filing for residential
  688  property insurance over a period of years. Such insurer must
  689  provide an informational notice to the office setting out its
  690  schedule for implementing implementation of the phased-in rate
  691  filing. The insurer may include in its rate the actual cost of
  692  private market reinsurance that corresponds to available
  693  coverage of the Temporary Increase in Coverage Limits, TICL,
  694  from the Florida Hurricane Catastrophe Fund. The insurer may
  695  also include the cost of reinsurance to replace the TICL
  696  reduction implemented pursuant to s. 215.555(16)(d)9. However,
  697  this cost for reinsurance may not include any expense or profit
  698  load or result in a total annual base rate increase in excess of
  699  10 percent.
  700         Section 5. Paragraph (v) of subsection (6) of section
  701  627.351, Florida Statutes, is amended to read:
  702         627.351 Insurance risk apportionment plans.—
  703         (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
  704         (v)1. Effective July 1, 2002, policies of the Residential
  705  Property and Casualty Joint Underwriting Association become
  706  policies of the corporation. All obligations, rights, assets and
  707  liabilities of the association, including bonds, note and debt
  708  obligations, and the financing documents pertaining to them
  709  become those of the corporation as of July 1, 2002. The
  710  corporation is not required to issue endorsements or
  711  certificates of assumption to insureds during the remaining term
  712  of in-force transferred policies.
  713         2. Effective July 1, 2002, policies of the Florida
  714  Windstorm Underwriting Association are transferred to the
  715  corporation and become policies of the corporation. All
  716  obligations, rights, assets, and liabilities of the association,
  717  including bonds, note and debt obligations, and the financing
  718  documents pertaining to them are transferred to and assumed by
  719  the corporation on July 1, 2002. The corporation is not required
  720  to issue endorsements or certificates of assumption to insureds
  721  during the remaining term of in-force transferred policies.
  722         3. The Florida Windstorm Underwriting Association and the
  723  Residential Property and Casualty Joint Underwriting Association
  724  shall take all actions necessary to further evidence the
  725  transfers and provide the documents and instruments of further
  726  assurance as may reasonably be requested by the corporation for
  727  that purpose. The corporation shall execute assumptions and
  728  instruments as the trustees or other parties to the financing
  729  documents of the associations Florida Windstorm Underwriting
  730  Association or the Residential Property and Casualty Joint
  731  Underwriting Association may reasonably request to further
  732  evidence the transfers and assumptions, which transfers and
  733  assumptions, however, are effective on the date provided under
  734  this paragraph whether or not, and regardless of the date on
  735  which, the assumptions or instruments are executed by the
  736  corporation. Subject to the relevant financing documents
  737  pertaining to their outstanding bonds, notes, indebtedness, or
  738  other financing obligations, the moneys, investments,
  739  receivables, choses in action, and other intangibles of the
  740  Florida Windstorm Underwriting Association shall be credited to
  741  the coastal account of the corporation, and those of the
  742  personal lines residential coverage account and the commercial
  743  lines residential coverage account of the Residential Property
  744  and Casualty Joint Underwriting Association shall be credited to
  745  the personal lines account and the commercial lines account,
  746  respectively, of the corporation.
  747         4. Effective July 1, 2002, a new applicant for property
  748  insurance coverage who would otherwise have been eligible for
  749  coverage in the Florida Windstorm Underwriting Association is
  750  eligible for coverage from the corporation as provided in this
  751  subsection.
  752         5. The transfer of all policies, obligations, rights,
  753  assets, and liabilities from the Florida Windstorm Underwriting
  754  Association to the corporation and the renaming of the
  755  Residential Property and Casualty Joint Underwriting Association
  756  as the corporation does not affect the coverage with respect to
  757  a covered policy policies as defined in s. 215.555(2) s.
  758  215.555(2)(c) provided to these entities by the Florida
  759  Hurricane Catastrophe Fund. The coverage provided by the fund to
  760  the Florida Windstorm Underwriting Association based on its
  761  exposures as of June 30, 2002, and each June 30 thereafter shall
  762  be redesignated as coverage for the coastal account of the
  763  corporation. Notwithstanding any other provision of law, the
  764  coverage provided by the fund to the Residential Property and
  765  Casualty Joint Underwriting Association based on its exposures
  766  as of June 30, 2002, and each June 30 thereafter shall be
  767  transferred to the personal lines account and the commercial
  768  lines account of the corporation. Notwithstanding any other
  769  provision of law, the coastal account shall be treated, for all
  770  Florida Hurricane Catastrophe Fund purposes, as if it were a
  771  separate participating insurer with its own exposures,
  772  reimbursement premium, and loss reimbursement. Likewise, the
  773  personal lines and commercial lines accounts shall be viewed
  774  together, for all fund purposes, be viewed together as if the
  775  two accounts were one and represent a single, separate
  776  participating insurer with its own exposures, reimbursement
  777  premium, and loss reimbursement. The coverage provided by the
  778  fund to the corporation shall constitute and operate as a full
  779  transfer of coverage from the Florida Windstorm Underwriting
  780  Association and Residential Property and Casualty Joint
  781  Underwriting Association to the corporation.
  782         Section 6. This act shall take effect upon becoming a law.

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