Florida Senate - 2018                                    SB 1454
       By Senator Brandes
       24-00833C-18                                          20181454__
    1                        A bill to be entitled                      
    2         An act relating to the Florida Hurricane Catastrophe
    3         Fund; amending s. 215.555, F.S.; deleting the cash
    4         build-up factor in the formula used for determining
    5         insurer reimbursement premiums paid to the fund;
    6         amending ss. 627.062 and 627.351, F.S.; conforming
    7         provisions to changes made by the act; providing an
    8         effective date.
   10  Be It Enacted by the Legislature of the State of Florida:
   12         Section 1. Paragraph (b) of subsection (5) of section
   13  215.555, Florida Statutes, is amended to read:
   14         215.555 Florida Hurricane Catastrophe Fund.—
   15         (5) REIMBURSEMENT PREMIUMS.—
   16         (b) The State Board of Administration shall select an
   17  independent consultant to develop a formula for determining the
   18  actuarially indicated premium to be paid to the fund. The
   19  formula must shall specify, for each zip code or other limited
   20  geographical area, the amount of premium to be paid by an
   21  insurer for each $1,000 of insured value under covered policies
   22  in that zip code or other area. In establishing premiums, the
   23  board shall consider the coverage elected under paragraph (4)(b)
   24  and any factors that tend to enhance the actuarial
   25  sophistication of ratemaking for the fund, including
   26  deductibles, type of construction, type of coverage provided,
   27  relative concentration of risks, and other such factors deemed
   28  by the board to be appropriate. The formula must provide for a
   29  cash build-up factor. For the 2009-2010 contract year, the
   30  factor is 5 percent. For the 2010-2011 contract year, the factor
   31  is 10 percent. For the 2011-2012 contract year, the factor is 15
   32  percent. For the 2012-2013 contract year, the factor is 20
   33  percent. For the 2013-2014 contract year and thereafter, the
   34  factor is 25 percent. The formula may provide for a procedure to
   35  determine the premiums to be paid by new insurers that begin
   36  writing covered policies after the beginning of a contract year,
   37  taking into consideration when the insurer starts writing
   38  covered policies, the potential exposure of the insurer, the
   39  potential exposure of the fund, the administrative costs to the
   40  insurer and to the fund, and any other factors deemed
   41  appropriate by the board. The formula must be approved by
   42  unanimous vote of the board. The board may, at any time, revise
   43  the formula pursuant to the procedure provided in this
   44  paragraph.
   45         Section 2. Paragraph (k) of subsection (2) of section
   46  627.062, Florida Statutes, is amended to read:
   47         627.062 Rate standards.—
   48         (2) As to all such classes of insurance:
   49         (k)1. A residential property insurer may make a separate
   50  filing limited solely to an adjustment of its rates for
   51  reinsurance, the cost of financing products used as a
   52  replacement for reinsurance, and financing costs incurred in the
   53  purchase of reinsurance, and the actual cost paid due to the
   54  application of the cash build-up factor pursuant to s.
   55  215.555(5)(b) if the insurer:
   56         a. Elects to purchase financing products such as a
   57  liquidity instrument or line of credit, in which case the cost
   58  included in filing for the liquidity instrument or line of
   59  credit may not result in a premium increase exceeding 3 percent
   60  for any individual policyholder. All costs contained in the
   61  filing may not result in an overall premium increase of more
   62  than 15 percent for any individual policyholder.
   63         b. Includes in the filing a copy of all of its reinsurance,
   64  liquidity instrument, or line of credit contracts; proof of the
   65  billing or payment for the contracts; and the calculation upon
   66  which the proposed rate change is based demonstrating that the
   67  costs meet the criteria of this section.
   68         2. An insurer that purchases reinsurance or financing
   69  products from an affiliated company may make a separate filing
   70  only if the costs for such reinsurance or financing products are
   71  charged at or below charges made for comparable coverage by
   72  nonaffiliated reinsurers or financial entities making such
   73  coverage or financing products available in this state.
   74         3. An insurer may make only one filing per 12-month period
   75  under this paragraph.
   76         4. An insurer that elects to implement a rate change under
   77  this paragraph must file its rate filing with the office at
   78  least 45 days before the effective date of the rate change.
   79  After an insurer submits a complete filing that meets all of the
   80  requirements of this paragraph, the office has 45 days after the
   81  date of the filing to review the rate filing and determine if
   82  the rate is excessive, inadequate, or unfairly discriminatory.
   84  The provisions of this subsection do not apply to workers’
   85  compensation, employer’s liability insurance, and motor vehicle
   86  insurance.
   87         Section 3. Paragraph (n) of subsection (6) of section
   88  627.351, Florida Statutes, is amended to read:
   89         627.351 Insurance risk apportionment plans.—
   91         (n)1. Rates for coverage provided by the corporation must
   92  be actuarially sound and subject to s. 627.062, except as
   93  otherwise provided in this paragraph. The corporation shall file
   94  its recommended rates with the office at least annually. The
   95  corporation shall provide any additional information regarding
   96  the rates which the office requires. The office shall consider
   97  the recommendations of the board and issue a final order
   98  establishing the rates for the corporation within 45 days after
   99  the recommended rates are filed. The corporation may not pursue
  100  an administrative challenge or judicial review of the final
  101  order of the office.
  102         2. In addition to the rates otherwise determined pursuant
  103  to this paragraph, the corporation shall impose and collect an
  104  amount equal to the premium tax provided in s. 624.509 to
  105  augment the financial resources of the corporation.
  106         3. After the public hurricane loss-projection model under
  107  s. 627.06281 has been found to be accurate and reliable by the
  108  Florida Commission on Hurricane Loss Projection Methodology, the
  109  model shall be considered when establishing the windstorm
  110  portion of the corporation’s rates. The corporation may use the
  111  public model results in combination with the results of private
  112  models to calculate rates for the windstorm portion of the
  113  corporation’s rates. This subparagraph does not require or allow
  114  the corporation to adopt rates lower than the rates otherwise
  115  required or allowed by this paragraph.
  116         4. The rate filings for the corporation which were approved
  117  by the office and took effect January 1, 2007, are rescinded,
  118  except for those rates that were lowered. As soon as possible,
  119  the corporation shall begin using the lower rates that were in
  120  effect on December 31, 2006, and provide refunds to
  121  policyholders who paid higher rates as a result of that rate
  122  filing. The rates in effect on December 31, 2006, remain in
  123  effect for the 2007 and 2008 calendar years except for any rate
  124  change that results in a lower rate. The next rate change that
  125  may increase rates shall take effect pursuant to a new rate
  126  filing recommended by the corporation and established by the
  127  office, subject to this paragraph.
  128         5. Beginning on July 15, 2009, and annually thereafter, the
  129  corporation must make a recommended actuarially sound rate
  130  filing for each personal and commercial line of business it
  131  writes, to be effective no earlier than January 1, 2010.
  132         6. Beginning on or after January 1, 2010, and
  133  notwithstanding the board’s recommended rates and the office’s
  134  final order regarding the corporation’s filed rates under
  135  subparagraph 1., the corporation shall annually implement a rate
  136  increase which, except for sinkhole coverage, does not exceed 10
  137  percent for any single policy issued by the corporation,
  138  excluding coverage changes and surcharges.
  139         7. The corporation may also implement an increase to
  140  reflect the effect on the corporation of the cash buildup factor
  141  pursuant to s. 215.555(5)(b).
  142         7.8. The corporation’s implementation of rates as
  143  prescribed in subparagraph 6. shall cease for any line of
  144  business written by the corporation upon the corporation’s
  145  implementation of actuarially sound rates. Thereafter, the
  146  corporation shall annually make a recommended actuarially sound
  147  rate filing for each commercial and personal line of business
  148  the corporation writes.
  149         Section 4. This act shall take effect upon becoming a law.