Bill Text: FL S1668 | 2024 | Regular Session | Introduced
Bill Title: Florida Hurricane Catastrophe Fund and Reinsurance Assistance
Spectrum: Partisan Bill (Republican 1-0)
Status: (Failed) 2024-03-08 - Died in Banking and Insurance [S1668 Detail]
Download: Florida-2024-S1668-Introduced.html
Florida Senate - 2024 SB 1668 By Senator DiCeglie 18-00361F-24 20241668__ 1 A bill to be entitled 2 An act relating to the Florida Hurricane Catastrophe 3 Fund and reinsurance assistance; amending s. 215.555, 4 F.S.; specifying the retention multiple for specified 5 contracts; deleting obsolete language; providing the 6 adjusted retention multiple for insurers electing the 7 100-percent coverage level; requiring that the 8 reimbursement contract contain a promise by the State 9 Board of Administration to reimburse the insurer a 10 specified percentage of its losses and applicable loss 11 adjustment expenses; specifying the loss adjustment 12 expense for specified contracts and rates; modifying 13 the contract obligation of the board for a contract 14 year; conforming provisions to changes made by the 15 act; deleting provisions regarding reimbursements; 16 requiring that the hurricane loss portion of a 17 specified formula be determined by averaging the 18 results of certain catastrophe models; authorizing, 19 rather than requiring, a certain formula to provide 20 for a cash build-up factor; requiring the cash build 21 up factor to be frozen beginning in a specified 22 contract year and to freeze for a specified period 23 ending by a specified date; requiring that the savings 24 realized as a result of the freeze of the cash build 25 up factor be passed to the consumers; requiring the 26 board to file certain premiums with the Office of 27 Insurance Regulation; requiring the office to review 28 such premiums; prohibiting certain costs from being 29 added to the cost of the reimbursement contracts; 30 making technical changes; amending s. 215.5551, F.S.; 31 revising definitions applicable to the Reinsurance to 32 Assist Policyholders (RAP) program; defining the term 33 “eligible RAP insurer”; deleting the definition of the 34 term “RAP qualification ratio”; authorizing, rather 35 than requiring, eligible RAP insurers to purchase RAP 36 coverage under a certain program; revising 37 reimbursement under the RAP program; revising the 38 requirements of reimbursement contracts; deleting 39 calculations for specified amounts of losses to 40 determine reimbursement under the program; deleting 41 insurer eligibility requirements; deleting provisions 42 regarding deferral of coverage under the program; 43 requiring that reimbursement contracts require that 44 insurers annually pay actuarially indicated premiums; 45 deleting a provision prohibiting premiums from being 46 charged for participation in the program; revising 47 obsolete dates; prohibiting transfers from exceeding a 48 specified amount each contract year; revising 49 reporting requirements; revising the expiration date 50 of provisions governing the program; making technical 51 changes; amending s. 215.5552, F.S.; revising 52 definitions; revising the coverage layers of the 53 Florida Optional Reinsurance Assistance (FORA) 54 program; revising the coverage limits for certain 55 coverage layers; increasing the maximum aggregate 56 coverage limit for all coverage layers; revising 57 obsolete dates; revising requirements of the 58 reimbursement contract; deleting the calculation of 59 payout multiples; revising the FORA layer retention 60 calculations; revising the calculation of premiums 61 under the program; increasing the amount that certain 62 transfers cannot exceed in a contract year; requiring 63 a transfer of a specified amount from the FORA Fund 64 into the Florida Hurricane Catastrophe Fund; revising 65 the expiration date of provisions governing the 66 program; making technical changes; providing an 67 effective date. 68 69 Be It Enacted by the Legislature of the State of Florida: 70 71 Section 1. Paragraph (e) of subsection (2), paragraphs (b), 72 (c), and (d) of subsection (4), paragraph (b) of subsection (5), 73 and paragraph (a) of subsection (7) of section 215.555, Florida 74 Statutes, are amended to read: 75 215.555 Florida Hurricane Catastrophe Fund.— 76 (2) DEFINITIONS.—As used in this section: 77 (e) “Retention” means the amount of losses below which an 78 insurer is not entitled to reimbursement from the fund. An 79 insurer’s retention shall be calculated as follows: 80 1. The board shall calculate and report to each insurer the 81 retention multiples for that year. For the contract year 82 beginning June 1, 20242005, the retention multiple mustshall83 be equal to $8.5$4.5billiondivided by the total estimated84reimbursement premium for the contract year; for subsequent85years, the retention multiple shall be equal to $4.5 billion,86adjusted based upon the reported exposure for the contract year87occurring 2 years before the particular contract year to reflect88the percentage growth in exposure to the fund for covered89policies since 2004, divided by the total estimated90reimbursement premium for the contract year. Total reimbursement91premium for purposes of the calculation under this subparagraph92shall be estimated using the assumption that all insurers have93selected the 90-percent coverage level. 94 2. The retention multiple as determined under subparagraph 95 1. shall be adjusted to reflect the coverage level elected by 96 the insurer. For insurers electing the 100-percent coverage 97 level, the adjusted retention multiple is 90 percent of the 98 amount determined under subparagraph 1. For insurers electing 99 the 90-percent coverage level, the adjusted retention multiple 100 is 100 percent of the amount determined under subparagraph 1. 101 For insurers electing the 75-percent coverage level, the 102 retention multiple is 120 percent of the amount determined under 103 subparagraph 1. For insurers electing the 45-percent coverage 104 level, the adjusted retention multiple is 200 percent of the 105 amount determined under subparagraph 1. 106 3. An insurer shall determine its provisional retention by 107 multiplying its provisional reimbursement premium by the 108 applicable adjusted retention multiple and shall determine its 109 actual retention by multiplying its actual reimbursement premium 110 by the applicable adjusted retention multiple. 111 4. For insurers who experience multiple covered events 112 causing loss during the contract year, beginning June 1, 2005, 113 each insurer’s full retention shall be applied to each of the 114 covered events causing the two largest losses for that insurer. 115 For each other covered event resulting in losses, the insurer’s 116 retention shall be reduced to one-third of the full retention. 117 The reimbursement contract mustshallprovide for the 118 reimbursement of losses for each covered event based on the full 119 retention with adjustments made to reflect the reduced 120 retentions on or after January 1 of the contract year provided 121 the insurer reports its losses as specified in the reimbursement 122 contract. 123 (4) REIMBURSEMENT CONTRACTS.— 124 (b)1. The contract mustshallcontain a promise by the 125 board to reimburse the insurer for 45 percent, 75 percent,or90 126 percent, or 100 percent of its losses and applicable loss 127 adjustment expenses from each covered event in excess of the 128 insurer’s retention, plus 5 percent of the reimbursed losses to129cover loss adjustment expenses. For contracts and rates 130 effective on or after June 1, 20242019, the loss adjustment 131 expense includedreimbursementmust be the lesser of 2510132 percent of the total subject losses before reimbursement or the 133 total subject actual loss adjustment expensesreimbursed losses. 134 2. The insurer must elect one of the percentage coverage 135 levels specified in this paragraph and may, upon renewal of a 136 reimbursement contract, elect a lower percentage coverage level 137 if no revenue bonds issued under subsection (6) after a covered 138 event are outstanding, or elect a higher percentage coverage 139 level, regardless of whetheror notrevenue bonds are 140 outstanding. All members of an insurer group must elect the same 141 percentage coverage level. Any joint underwriting association, 142 risk apportionment plan, or other entity created under s. 143 627.351 must elect the 90-percent coverage level. 144 3. The contract mustshallprovide that reimbursement 145 amounts mayshallnot be reduced by reinsurance paid or payable 146 to the insurer from other sources. 147 (c)1. The contract mustshallalso provide that the 148 obligation of the board with respect to all contracts covering a 149 particular contract year isshall not exceed the actual claims150paying capacity of the fund up to a limit of$17 billionfor151that contract year, unless the board determines that there is152sufficient estimated claims-paying capacity to provide $17153billion of capacity for the current contract year and an154additional $17 billion of capacity for subsequent contract155years. If the board makes such a determination, the estimated156claims-paying capacity for the particular contract year shall be157determined by adding to the $17 billion limit one-half of the158fund’s estimated claims-paying capacity in excess of $34159billion. However, the dollar growth in the limit may not160increase in any year by an amount greater than the dollar growth161of the balance of the fund as of December 31, less any premiums162or interest attributable to optional coverage, as defined by163rule which occurred over the prior calendar year. 164 2. In May and October of the contract year, the board shall 165 publish in the Florida Administrative Register a statement of 166 the fund’s estimated borrowing capacity, the fund’s estimated 167 claims-paying capacity, and the projected balance of the fund as 168 of December 31. After the end of each calendar year, the board 169 shall notify insurers of the estimated borrowing capacity, 170 estimated claims-paying capacity, and the balance of the fund as 171 of December 31 to provide insurers with data necessary to assist 172 them in determining their retention and projected payout from 173 the fund for loss reimbursement purposes. In conjunction with 174 the development of the premium formula, as provided for in 175 subsection (5), the board shall publish factors or multiples 176 that assist insurers in determining their retention and 177 projected payout for the next contract year. For all regulatory 178 and reinsurance purposes, an insurer may calculate its projected 179 payout from the fund as its share of the total fund premium for 180 the current contract year multiplied by the sum of the projected 181 balance of the fund as of December 31 and the estimated 182 borrowing capacity for that contract year as reported under this 183 subparagraph. 184 (d)1.For purposes of determining potential liability and 185 to aid in the sound administration of the fund, the contract 186 mustshallrequire each insurer to report such insurer’s losses 187 from each covered event on an interim basis, as directed by the 188 board. The contract mustshallrequire the insurer to report to 189 the board no later than December 31 of each year, and quarterly 190 thereafter, its reimbursable losses from covered events for the 191 year. The contract mustshallrequire the board to determine and 192 pay, as soon as practicable after receiving these reports of 193 reimbursable losses, the initial amount of reimbursement due and 194 adjustments to this amount based on later loss information. The 195 adjustments to reimbursement amounts mustshallrequire the 196 board to pay, or the insurer to return, amounts reflecting the 197 most recent calculation of losses. 1982.In determining reimbursements pursuant to this199subsection, the contract shall provide that the board shall pay200to each insurer such insurer’s projected payout, which is the201amount of reimbursement it is owed, up to an amount equal to the202insurer’s share of the actual premium paid for that contract203year, multiplied by the actual claims-paying capacity available204for that contract year.2053.The board may reimburse insurers for amounts up to the206published factors or multiples for determining each207participating insurer’s retention and projected payout derived208as a result of the development of the premium formula in those209situations in which the total reimbursement of losses to such210insurers would not exceed the estimated claims-paying capacity211of the fund. Otherwise, the projected payout factors or212multiples shall be reduced uniformly among all insurers to213reflect the estimated claims-paying capacity.214 (5) REIMBURSEMENT PREMIUMS.— 215 (b) The State Board of Administration shall select an 216 independent consultant to develop a formula for determining the 217 actuarially indicated premium to be paid to the fund. The 218 hurricane loss portion of the formula must be determined by 219 averaging the results of all the catastrophe models approved by 220 the Florida Commission on Hurricane Loss Projection Methodology. 221 The formula mustshallspecify, for each zip code or other 222 limited geographical area, the amount of premium to be paid by 223 an insurer for each $1,000 of insured value under covered 224 policies in that zip code or other area. In establishing 225 premiums, the board shall consider the coverage elected under 226 paragraph (4)(b) and any factors that tend to enhance the 227 actuarial sophistication of ratemaking for the fund, including 228 deductibles, type of construction, type of coverage provided, 229 relative concentration of risks, and other such factors deemed 230 by the board to be appropriate. The formula maymustprovide for 231 a cash build-up factor.For the 2009-2010 contract year, the232factor is 5 percent. For the 2010-2011 contract year, the factor233is 10 percent. For the 2011-2012 contract year, the factor is 15234percent. For the 2012-2013 contract year, the factor is 20235percent.For the 2013-2014 contract year and thereafter, the 236 factor is 25 percent; however, the cash build-up factor must be 237 frozen beginning in the 2024-2025 contract year and must freeze 238 for a 12-month period ending no later than July 1, 2025. Any 239 savings realized as a result of the freeze of the cash build-up 240 factor must be passed directly to the consumer. The formula may 241 provide for a procedure to determine the premiums to be paid by 242 new insurers that begin writing covered policies after the 243 beginning of a contract year, taking into consideration when the 244 insurer starts writing covered policies, the potential exposure 245 of the insurer, the potential exposure of the fund, the 246 administrative costs to the insurer and to the fund, and any 247 other factors deemed appropriate by the board. The formula must 248 be approved by unanimous vote of the board. The board may, at 249 any time, revise the formula pursuant to the procedure provided 250 in this paragraph. The board shall file the premiums to be paid 251 with the Office of Insurance Regulation, and the office shall 252 review such premiums. 253 (7) ADDITIONAL POWERS AND DUTIES.— 254 (a) The board may procure reinsurance from reinsurers 255 acceptable to the Office of Insurance Regulation for the purpose 256 of maximizing the capacity of the fund and may enter into 257 capital market transactions, including, but not limited to, 258 industry loss warranties, catastrophe bonds, side-car 259 arrangements, or financial contracts permissible for the board’s 260 usage under s. 215.47(11) and (12), consistent with prudent 261 management of the fund. The cost of any reinsurance or other 262 capital market transaction other than issuing bonds secured by 263 assessments purchased by the board to maximize the claims-paying 264 capacity of the fund may not be added to the actuarially 265 determined cost of the reimbursement contracts. 266 Section 2. Present paragraphs (e) through (i) of subsection 267 (2) of section 215.5551, Florida Statutes, are redesignated as 268 paragraphs (f) through (j), respectively, a new paragraph (e) is 269 added to that subsection, and paragraph (c) and present 270 paragraphs (f), (h), (i), and (j) of that subsection, subsection 271 (3), paragraphs (a), (b), (d), and (e) of subsection (4), and 272 subsections (5), (6), (7), (12), (13), and (14) of that section 273 are amended, to read: 274 215.5551 Reinsurance to Assist Policyholders program.— 275 (2) DEFINITIONS.—As used in this section, the term: 276 (c) “Covered event” means any hurricane, tropical storm, 277 hail storm, tornado, wind event, or wildfire thatone storm278declared to be a hurricane by the National Hurricane Center,279which stormcauses insured losses in this state. 280 (e) “Eligible RAP insurer” means an insurer participating 281 in FHCF as of June 1 of a contract year. However, any joint 282 underwriting association, risk apportionment plan, or other 283 entity created under s. 627.351 is not considered a RAP insurer 284 and is prohibited from obtaining coverage under the RAP program. 285 (g)(f)“Losses and loss adjustment expenses” means the 286 amounts paid by an insurer to adjust and pay covered claimshas287the same meaning as in s. 215.555(2)(d). 288 (i)(h)“RAP insurer” means an eligible RAP insurer that 289 elects to purchaseis a participating insurer in the FHCF on290June 1, 2022, which must obtaincoverage under the RAP program 291and qualifies under subsection (5). AHowever, anyjoint 292 underwriting association, risk apportionment plan, or other 293 entity created under s. 627.351 is not considered a RAP insurer 294 and is prohibited from obtaining coverage under the RAP program. 295 (j)(i)“RAP limit” means, for the 2022-2023 contract year,296 the RAP insurer’s maximum payout, which is its share of the $2 297 billion per event and $4 billion in the aggregateRAP layer298aggregate limit. The ratio of a RAP insurer’s RAP limit to the 299 $4 billion RAP layer aggregate limit may not exceed the ratio of 300 the RAP insurer’s actual FHCF premium paid during that contract 301 year to the actual FHCF premium paid by all eligible RAP 302 insurers participating in the FHCF during that contract yearFor303the 2023-2024 contract year, for RAP insurers that are subject304to participation deferral under subsection (6) and participate305during the 2023-2024 contract year, the RAP limit means the RAP306insurer’s maximum payout, which is its share of the total amount307of the RAP program layer aggregate limit deferred from 20223082023. 309(j)“RAP qualification ratio” means:3101.For the 2022-2023 contract year, the ratio of FHCF311mandatory premium adjusted to 90 percent for RAP insurers312divided by the FHCF mandatory premium adjusted to 90 percent for313all insurers. The preliminary RAP qualification ratio shall be314based on the 2021-2022 contract year’s company premiums, as of315December 31, 2021, adjusted to 90 percent based on the 2022-2023316contract year coverage selections. The RAP qualification ratio317shall be based on the reported 2022-2023 contract year company318premiums, as of December 31, 2022, adjusted to 90 percent.3192.For the 2023-2024 contract year, the ratio of FHCF320mandatory premium adjusted to 90 percent for the qualified RAP321insurers that have deferred RAP coverage to 2023-2024 divided by322the FHCF mandatory premium adjusted to 90 percent for all323insurers. The preliminary RAP qualification ratio shall be based324on the 2022-2023 contract year’s company premiums as of December32531, 2022, adjusted to 90 percent based on the 2023-2024 contract326year coverage selections. The RAP qualification ratio shall be327based on the reported 2023-2024 contract year company premiums328as of December 31, 2023, adjusted to 90 percent.329 (3) COVERAGE.— 330 (a) An eligible RAP insurer may purchase RAP coverageAs a331condition of doing business in this state, each RAP insurer332shall obtain coverage under the RAP program. 333 (b) The board shall provide a reimbursement layer of $2 334 billion per event below the FHCF retention for losses and loss 335 adjustment expenses paid to covered policies for covered events 336prior to the third event dropdown of the FHCF retention set337forth in s. 215.555(2)(e).Subject to the mandatory notice338provisions in subsection (5),The board shall enter into a RAP 339 reimbursement contract with each eligible RAP insurer writing 340 covered policies in this state which requests RAP coverage to 341 provide to the insurer the reimbursement described in this 342 section. 343 (4) RAP REIMBURSEMENT CONTRACTS.— 344 (a)1.The board shall issue an initialaRAP reimbursement 345 contract to each eligible RAP insurer that requests RAP coverage 346 which is effective June 1, 2024. RAP contracts must be made 347 available annually thereafter until the fiscal year beginning 348 July 1, 2029:349a.June 1, 2022, for RAP insurers that participate in the350RAP program during the 2022-2023 contract year; or351b.June 1, 2023, for RAP insurers that are subject to352participation deferral under subsection (6) and participate in353the RAP program during the 2023-2024 contract year.3542.The reimbursement contract shall be executed no later355than:356a.July 15, 2022, for RAP insurers that participate in the357RAP program during the 2022-2023 contract year; or358b.March 1, 2023, for RAP insurers that are subject to359participation deferral under subsection (6) and participate in360the RAP program during the 2023-2024 contract year.3613.If a RAP insurer fails to execute the RAP reimbursement362contract by the dates required in this paragraph, the RAP363insurance contract is deemed to have been executed by the RAP364insurer. 365 (b)For the two covered events with the largest losses,The 366 RAP reimbursement contract must contain a promise by the board 367 to reimburse the RAP insurer for 10090percent of its losses 368 and loss adjustment expenses from each covered event in excess 369 of the insurer’s RAP retention up to the RAP insurer’s, plus 10370percent of the reimbursed losses to cover loss adjustment371expenses. The sum of the losses and 10 percent loss adjustment372expense allocation from the RAP layer may not exceed theRAP 373 limit. Recoveries on losses in the FHCF mandatory layer must 374shallinure to the benefit of the RAP contract layer. 375(d)The board shall calculate and report to each RAP376insurer the RAP payout multiples as the ratio of the RAP377industry limit of $2 billion for the 2022-2023 contract year, or378the deferred limit for the 2022-2023 contract year, to the379mandatory FHCF retention multiplied by the mandatory FHCF380retention multiples divided by the RAP qualification ratio. The381RAP payout multiple for an insurer is multiplied by the RAP382insurer’s FHCF premium to calculate its RAP maximum payout. RAP383payout multiples are calculated for 45 percent, 75 percent, and38490 percent FHCF mandatory coverage selections.385(e)A RAP insurer’s RAP retention is calculated as follows:3861.The board shall calculate and report to each RAP insurer387the RAP retention multiples for each FHCF coverage selection as388the FHCF retention multiple minus the RAP payout multiple. The389RAP retention multiple for an insurer is multiplied by the RAP390insurer’s FHCF premium to calculate its RAP retention. RAP391retention multiples are calculated for 45 percent, 75 percent,392and 90 percent FHCF mandatory coverage selections.3932.The RAP industry retention for the 2022-2023 contract394year is the FHCF’s industry retention minus $2 billion, prior to395allocation to qualifying RAP insurers. The RAP industry396retention for the 2023-2024 contract year is the FHCF’s industry397retention for the 2023-2024 contract year minus the total398deferred RAP limit, prior to allocation to qualifying RAP399insurers.4003.A RAP insurer determines its actual RAP retention by401multiplying its actual mandatory reimbursement FHCF premium by402the RAP retention multiple.403 (5)INSURER QUALIFICATION.—404(a)An insurer is not eligible to participate in the RAP405program if the board receives a notice from the Commissioner of406Insurance Regulation which certifies that the insurer is in an407unsound financial condition no later than:4081.June 15, 2022, for RAP insurers that participate during409the 2022-2023 contract year; or4102.February 1, 2023, for RAP insurers subject to411participation deferral under subsection (6) that participate412during the 2023-2024 contract year.413(b)The office must make this determination based on the414following factors:4151.The insurer’s compliance with the requirements to416qualify for and hold a certificate of authority under s.417624.404;4182.The insurer’s compliance with the applicable surplus419requirements of s. 624.408;4203.The insurer’s compliance with the applicable risk-based421capital requirements under s. 624.4085;4224.The insurer’s compliance with the applicable premium to423surplus requirements under s. 624.4095; and4245.An analysis of quarterly and annual statements,425including an actuarial opinion summary, and other information426submitted to the office pursuant to s. 624.424.427(c)If the board receives timely notice pursuant to428paragraph (a) regarding an insurer, such insurer is disqualified429from participating in the RAP program.430(6)PARTICIPATION DEFERRAL.—431(a)A RAP insurer that has any private reinsurance that432duplicates RAP coverage that such insurer would receive for the4332022-2023 contract year shall notify the board in writing of434such duplicative coverage no later than June 30, 2022.435Participation in the RAP program for such RAP insurers shall be436deferred until the 2023-2024 contract year.437(b)A new participating insurer that begins writing covered438policies in this state after June 1, 2022, is deemed to defer439its RAP coverage to the 2023-2024 contract year.440(7)RAP PREMIUMS.—Each RAP reimbursement contract must 441 require that the insurer annually pay to the fund an actuarially 442 indicated premium for the full annual aggregate reimbursement 443 limitPremiums may not be charged for participation in the RAP444program. 445 (10)(12)RULEMAKING.—The board may adopt rules to implement 446 this section. In addition, the board may adopt emergency rules, 447 pursuant to s. 120.54, at any time, as are necessary to 448 implement this section for the 2024-20252022-2023fiscal year. 449 The Legislature finds that such emergency rulemaking power is 450 necessary in order to address a critical need in thisthe451 state’s problematic property insurance market. The Legislature 452 further finds that the uniquely short timeframe needed to 453 effectively implement this section for the 2024-20252022-2023454 fiscal year requires that the board adopt rules as quickly as 455 practicable. Therefore, in adopting such emergency rules, the 456 board need not make the findings required by s. 120.54(4)(a). 457 Emergency rules adopted under this section are exempt from s. 458 120.54(4)(c) and shall remain in effect until replaced by rules 459 adopted under the nonemergency rulemaking procedures of chapter 460 120, which must occur no later than July 1, 2023. 461 (11)(13)APPROPRIATION.— 462 (a) Within 60 days after a covered event, the board must 463shallsubmit written notice to the Executive Office of the 464 Governor if the board determines that funds from the RAP program 465 coverage established by this section will be necessary to 466 reimburse RAP insurers for losses associated with the covered 467 event. The initial notice, and any subsequent requests, must 468 specify the amount necessary to provide RAP reimbursements. Upon 469 receiving such notice, the Executive Office of the Governor 470 shall instruct the Chief Financial Officer to draw a warrant 471 from the General Revenue Fund for a transfer to the board for 472 the RAP program in the amount requested. The Executive Office of 473 the Governor shall provide written notification to the chair and 474 vice chair of the Legislative Budget Commission at least 3 days 475 before the effective date of the warrant.CumulativeTransfers 476 authorized under this paragraph may not exceed $4$2billion, 477 less reimbursement premium paid, for each contract year. 478 (b) If general revenue funds are transferred to the board 479 for the RAP program under paragraph (a), the board mustshall480 submit written notice to the Executive Office of the Governor 481 that funds will be necessary for the administration of the RAP 482 program and post-event examinations for covered events that 483 require RAP coverage. The initial notice, and any subsequent 484 requests, must specify the amount necessary for administration 485 of the RAP program and post-event examinations. Upon receiving 486 such notice, the Executive Office of the Governor shall instruct 487 the Chief Financial Officer to draw a warrant from the General 488 Revenue Fund for a transfer to the board for the RAP program in 489 the amount requested. The Executive Office of the Governor shall 490 provide written notification to the chair and vice chair of the 491 Legislative Budget Commission at least 3 days before the 492 effective date of the warrant.Cumulativetransfers authorized 493 under this paragraph may not exceed $5 million. 494 (c) No later than January 31, 20252023, and quarterly 495 thereafter, the board shall submit a report to the Executive 496 Office of the Governor, the President of the Senate, and the 497 Speaker of the House of Representatives detailing any 498 reimbursements of the RAP program, all loss development 499 projections,the amount of RAP reimbursement coverage deferred500until the 2023-2024 contract year,and detailed information 501 about administrative and post-event examination expenditures. 502 (12)(14)EXPIRATION DATE.—If no general revenue funds have 503 been transferred to the board for the RAP program under 504 subsection (11)(13)by June 30, 20292025, this section expires 505 on July 1, 20292025. If general revenue funds have been 506 transferred to the board for the RAP program under subsection 507 (11)(13)by June 30, 20292025, this section expires on July 1, 508 20342029, and all unencumbered RAP program funds shall be 509 transferred by the board back to the General Revenue Fund 510 unallocated. 511 Section 3. Paragraphs (c), (f), (h), (o), and (q) of 512 subsection (2), subsections (3), (4), (5), and (10), paragraphs 513 (a) and (c) of subsection (11), and subsection (12) of section 514 215.5552, Florida Statutes, are amended, and paragraph (d) is 515 added to subsection (11) of that section, to read: 516 215.5552 Florida Optional Reinsurance Assistance program.— 517 (2) DEFINITIONS.—As used in this section, the term: 518 (c) “Covered event” means any event in which a catastrophe 519 serial number is assigned by Insurance Services Office’s 520 Property Claim Serviceshas the same meaning as in s.521215.555(2)(b). 522 (f) “Final FORA premium” means the premium due no later 523 than March 1, 2024, paid by a FORA insurerafter the actual2023524 FHCF premiums for that contract year are calculated. 525 (h) “FORA eligible insurer” means a FHCF participating 526 insureras of November 30, 2022. New FHCF participants after527that date are ineligible for FORA coverage. In addition, any 528 joint underwriting association, risk apportionment plan, or 529 other entity created under s. 627.351 is not considered a FORA 530 insurer and may not obtain coverage under FORA. 531 (o) “Initial FORA premium” means the premium paid by a FORA 532 insurer in the same installment plan as the FHCF premiumby July5331, 2023, for coverage under the FORA program. 534 (q) “RAP insurer” has the same meaning as in s. 535 215.5551(2)(i)s. 215.5551(2)(h). 536 (3) COVERAGE.— 537 (a) Each FORA eligible insurer may purchase coverage under 538 FORA. The board shall provide threefouroptional layers above a 539 $500 million FHCF industry retentionbelow the FHCFretention540prior to the third event dropdown of the FHCF retention set541forth in s. 215.555(2)(e)4. Only RAP insurers required to542participate in the 2022-2023 contract year may select FORA543layers 1 through 3. All FORA eligible insurers may purchase FORA544layer 4. If a RAP insurer required to participate in the 20225452023 contract year chooses to purchase layer 2, 3, or 4, such546layers must be purchased inclusive of the prior layer and cannot547be purchased separately. 548 (b) FORA industry limits beforeprior toFORA insurer 549 selections are as follows: 550 1. FORA industry layer 1 limit is $1 billion. 551 2. FORA industry layer 2 limit is $1 billion. 552 3.FORA industry layer 3 limit is $2 billion divided by the553RAP Qualification ratio minus $2 billion.5544.FORA industry layer 34limit is $1 billionminus the555total FORA industry limit selected for FORA layers 1, 2, and 3,556plus the total FORA premium collected for FORA layers 1, 2, and5573. 558 (c) The maximum aggregate coverage for all selected FORA 559 layers is $3$1billion as provided under paragraph (11)(a)plus560premiums needed to fulfill the obligations of this section. 561 (4) FORA REIMBURSEMENT CONTRACTS.— 562 (a) FORA eligible insurers selecting coverage must execute 563 a FORA reimbursement contract with the board. 564 (b) The board must enter into a FORA reimbursement contract 565 effective June 1, 20242023, with each FORA eligible insurer 566 electing to purchase coverage. Such contract must provide 567 coverage pursuant to this section in exchange for premium paid. 568 (c) The FORA reimbursement contract must be executed by the 569 FORA insurer no later than May 30 of the contract yearApril 15,5702023,for layers 1 through 3, and May 30, 2023, for layer 4. 571 (d) Forthe twocovered events withthe largestlosses for 572 the FORA insurer, the FORA reimbursement contract must contain a 573 promise by the board to reimburse the FORA insurer for 100 574 percent of its losses from each covered event in excess of the 575 lowest selected FORA layer’s retention. The sum of the FORA 576 insurer’s covered losses fromthe twocovered events withthe577largestlosses from each FORA layer may not exceed the FORA 578 insurer’s combined selected FORA layer limit or limits. 579 (e) The FORA reimbursement contract must provide that 580 reimbursement amounts are not reduced by reinsurance paid or 581 payable to the insurer fromothersources other than the 582 mandatory FHCF layer. 583 (f)The board shall calculate and report to each FORA584insurer the initial and final FORA payout multiples for each585FORA layer using the source data described in paragraph (5)(a).5861.For FORA layer 1, the FORA payout multiple is the587quotient of $1 billion divided by the FHCF industry aggregate588retention multiplied by the FHCF retention multiple for the FHCF589coverage selected.5902.For FORA layer 2, the FORA payout multiple is the591quotient of $1 billion divided by the FHCF industry aggregate592retention multiplied by the FHCF retention multiple for the FHCF593coverage selected.5943.For FORA layer 3, the FORA payout multiple is calculated595as follows: the numerator is the quotient of $2 billion divided596by the RAP qualification ratio as defined in s. 215.5551(2)(j)597minus $2 billion. The denominator is the FHCF industry aggregate598retention. The FORA multiple is the FHCF retention multiple599multiplied by the numerator divided by the denominator.6004.The FORA layer 4 payout multiple is the total FORA601industry layer 4 limit divided by the FHCF industry aggregate602retention multiplied by the FHCF retention multiple for the FHCF603coverage selected. For FORA layer 4, the total FORA industry604layer limit is $1 billion minus the total FORA industry limit605selected for FORA layers 1, 2, and 3, plus the total FORA606premium collected for FORA layers 1, 2, and 3.607(g)For each FORA layer, the FORA payout multiple is608multiplied by the FORA insurer’s FHCF premium to calculate its609FORA maximum payout. FORA payout multiples are calculated for 45610percent, 75 percent, and 90 percent FHCF mandatory coverage611selections.612(h)For a FORA insurer that selects more than one layer, 613 the FORA layer limits mustshallbe combined to a single 614 aggregate limit forthe twocovered events withthe largest615 losses for the FORA insurer. 616 (g)(i)FORA layer retentions are calculated as follows: 617 1. For each FORA layer, the board shall calculate and 618 report to each FORA insurer the initial and final FORA retention 619 multiples for each FHCF coverage selection as the FORA layer 620 retention divided by the total estimated reimbursement FHCF 621 premium for the contract yearFHCF retention multiple minus the622FORA payout multipleusing the source data described in 623 paragraph (5)(a). Total reimbursement premium for purposes of 624 the calculation under this subparagraph must be estimated using 625 the assumption that all insurers have selected the 90 percent 626 coverage level. The FORA retention multiple is multiplied by the 627 FORA insurer’s FHCF premium to calculate its FORA retention. 628 FORA retention multiples are calculated for 45 percent, 75 629 percent, and 90 percent FHCF mandatory coverage selections. 630 2. The retention multiple as determined under subparagraph 631 1. must be adjusted to reflect the coverage level elected by the 632 insurer. For insurers electing the 90 percent coverage level, 633 the adjusted retention multiple is 100 percent of the amount 634 determined under subparagraph 1. For insurers electing the 75 635 percent coverage level, the retention multiple is 120 percent of 636 the amount determined under subparagraph 1. For insurers 637 electing the 45 percent coverage level, the adjusted retention 638 multiple is 200 percent of the amount determined under 639 subparagraph 1The FORA industry retention for the 2023-2024640contract year for FORA layer 1 is the FHCF’s industry retention641minus $1 billion. The FORA layer 2 industry retention is the642FHCF industry retention minus $2 billion. The FORA layer 3643industry retention is the FHCF’s industry retention minus the644quotient of $2 billion divided by the RAP qualification ratio.645The FORA layer 4 industry retention is the FORA layer 3646retention minus the FORA layer 4 limit. 647 3. A FORA insurer’s initial and final FORA retentions are 648 determined by multiplying its FHCF reimbursement premium by the 649 FORA retention multiple for each FHCF coverage selection using 650 the source data in paragraph (5)(a). 651 4. For a FORA insurer that selects more than one layer, the 652 FORA combined layer retention isshall bethe lowest selected 653 layer retention for each of thetwo coveredevents withthe654largestlosses for the FORA insurer. 655 (h)(j)To ensure that insurers have properly reported the 656 losses for which FORA reimbursements have been made, the board 657 may inspect, examine, and verify the records of each FORA 658 participating insurer’s covered policies at such times as the 659 board deems appropriate for the specific purpose of validating 660 the accuracy of losses required to be reported under the terms 661 and conditions of the FORA reimbursement contract. 662 (5) FORA PREMIUMS.— 663 (a) Each FORA reimbursement contract must require that the 664 insurer annually pay to the fund an actuarially indicated 665 premium for the annual aggregate limitPremiums shall be charged666as follows:6671.Fifty percent Rate on Line multiplied by the FORA668insurer’s FORA layer 1 limit.6692.Fifty-five percent Rate on Line multiplied by the FORA670insurer’s FORA layer 2 limit.6713.Sixty percent Rate on Line multiplied by the FORA672insurer’s FORA layer 3 limit.6734.Sixty-five percent Rate on Line multiplied by the FORA674insurer’s FORA layer 4 limit. 675 (b) Initial FORA premiums mustshallbe based on the 676 contract year2023FHCF projected industry retention, FHCF 677 retention multiples,2022 RAP qualification ratio,and insurers’ 678 prior contract year2022FHCF premiums. Final FORA premiums will 679 be adjusted after December 31 of the contract year, 2023, based 680 on FHCF premiums on December 31 of the contract year, 2023, FHCF681premiums, FHCF industry retention, the 2023 RAP qualification682ratio, and insurers’2023FHCF premiums for the contract year. 683 (c) Failure to pay the initial FORA premium in full by 684 December 1 of the contract year willJuly 1, 2023, shallresult 685 in disqualification as a FORA insurer. The final FORA premium 686 will be due no later than March 1 following the contract year,6872024. 688 (10) RULEMAKING.—The board may adopt rules to implement 689 this section. In addition, the board may adopt emergency rules 690 pursuant to s. 120.54(4) at any time as are necessary to 691 implement this section for the 2024-20252023-2024fiscal year. 692 The Legislature finds that such emergency rulemaking power is 693 necessary in order to address a critical need in the state’s 694 problematic property insurance market. The Legislature further 695 finds that the uniquely short timeframe needed to effectively 696 implement this section for the 2024-20252023-2024fiscal year 697 requires that the board adopt rules as quickly as practicable. 698 Therefore, in adopting such emergency rules, the board need not 699 make the findings required by s. 120.54(4)(a). Emergency rules 700 adopted under this section are exempt from s. 120.54(4)(c) and 701 shall remain in effect until replaced by rules adopted under the 702 nonemergency rulemaking procedures of chapter 120, which must 703 occur no later than December 31 of the contract year, 2023. 704 (11) APPROPRIATION.— 705 (a) Within 60 days after a covered event, the board must 706shallsubmit written notice to the Executive Office of the 707 Governor if the board determines that funds from FORA coverage 708 established by this section will be necessary to reimburse FORA 709 insurers for losses associated with the covered event. The 710 initial notice, and any subsequent requests, must specify the 711 amount necessary to provide FORA reimbursements. Upon receiving 712 such notice, the Executive Office of the Governor shall instruct 713 the Chief Financial Officer to draw a warrant from the General 714 Revenue Fund for a transfer to the board for FORA in the amount 715 requested. The Executive Office of the Governor shall provide 716 written notification to the chair and vice chair of the 717 Legislative Budget Commission at least 3 days before the 718 effective date of the warrant.Cumulativetransfers authorized 719 under this paragraph may not exceed $3$1billion, less 720 reimbursement premium paid, per contract year. 721 (c) If a covered event occurs that triggers reimbursements 722 under FORA, no later than January 31 following the covered 723 event, 2024,and quarterly thereafter, the board mustshall724 submit a report to the Executive Office of the Governor, the 725 President of the Senate, and the Speaker of the House of 726 Representatives detailing any reimbursements of FORA, all 727 premiums collected, all loss development projections, and 728 detailed information about administrative and post-event 729 examination activities and expenditures. 730 (d) On July 1, 2024, or as soon as reasonably practicable 731 thereafter, the Executive Office of the Governor shall instruct 732 the Chief Financial Officer to draw a warrant from the FORA Fund 733 and transfer $580 million into FHCF to offset losses that occur 734 as result of the freeze of the cash build-up as set forth in s. 735 215.555(5)(b). 736 (12) EXPIRATION DATE.—If no general revenue funds have been 737 transferred to the board for FORA under subsection (11) by June 738 30, 20292026, this section expires on July 1, 20292026. If 739 general revenue funds have been transferred to the board for 740 FORA under subsection (11) by June 30, 20292026, this section 741 expires on July 1, 20342030, and all unencumbered funds 742 collected under this section shall be transferred by the board 743 back to the General Revenue Fund unallocated. 744 Section 4. This act shall take effect upon becoming a law.