Florida Senate - 2012                          SENATOR AMENDMENT
       Bill No. HB 1127
                                Barcode 875378                          
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Floor: WD            .                                
             03/09/2012 11:35 PM       .                                

       Senator Alexander moved the following:
    1         Senate Amendment (with title amendment)
    3         Delete line 1053
    4  and insert:
    5         Section 2. Effective upon this act becoming a law,
    6  paragraph (e) of subsection (2) and paragraphs (b) and (c) of
    7  subsection (4) of section 215.555, Florida Statutes, are amended
    8  to read:
    9         215.555 Florida Hurricane Catastrophe Fund.—
   10         (2) DEFINITIONS.—As used in this section:
   11         (e) “Retention” means the amount of losses below which an
   12  insurer is not entitled to reimbursement from the fund. An
   13  insurer’s retention shall be calculated as follows:
   14         1. The board shall calculate and report to each insurer the
   15  retention multiples for that year.
   16         a. For the contract year beginning June 1, 2005, the
   17  retention multiple shall be equal to $4.5 billion divided by the
   18  total estimated reimbursement premium for the contract year; for
   19  subsequent years, the retention multiple shall be equal to $4.5
   20  billion, adjusted based upon the reported exposure for the
   21  contract year occurring 2 years before the particular contract
   22  year to reflect the percentage growth in exposure to the fund
   23  for covered policies since 2004, divided by the total estimated
   24  reimbursement premium for the contract year.
   25         b. For the 2012-2013 contract year, the total reimbursement
   26  premium for purposes of the calculation under this subparagraph
   27  shall be estimated using the assumption that all insurers have
   28  selected the 90-percent coverage level.
   29         c. In order to implement the phase-in of reduced coverage
   30  levels as provided in paragraph (4)(b), total reimbursement
   31  premium for purposes of the calculation under this subparagraph
   32  shall be estimated using the following assumptions:
   33         (I) For the 2013-2014 contract year, the assumption is that
   34  all insurers have selected the 85-percent coverage level.
   35         (II) For the 2014-2015 contract year and subsequent
   36  contract years, the assumption is that all insurers have
   37  selected the 80-percent coverage level.
   38         2. The retention multiple as determined under subparagraph
   39  1. shall be adjusted to reflect the coverage level elected by
   40  the insurer.
   41         a. For an insurer electing the maximum coverage level
   42  available under paragraph (4)(b) for a particular contract year
   43  For insurers electing the 90-percent coverage level, the
   44  adjusted retention multiple is 100 percent of the amount
   45  determined under subparagraph 1.
   46         b. In order to implement the phase-in of reduced coverage
   47  levels as provided in paragraph (4)(b), for an insurer electing
   48  a coverage level other than the maximum coverage level, the
   49  adjusted retention multiple is as follows:
   50         (I) With respect to the 2012-2013 contract year, for an
   51  insurer For insurers electing the 75-percent coverage level, the
   52  retention multiple is 90/75ths 120 percent of the amount
   53  determined under subparagraph 1., and for an insurer For
   54  insurers electing the 45-percent coverage level, the adjusted
   55  retention multiple is 90/45ths 200 percent of the amount
   56  determined under subparagraph 1.
   57         (II) With respect to the 2013-2014 contract year, for an
   58  insurer electing the 75-percent coverage level, the retention
   59  multiple is 85/75ths of the amount determined under subparagraph
   60  1., and for an insurer electing the 45-percent coverage level,
   61  the retention multiple is 85/45ths of the amount determined
   62  under subparagraph 1.
   63         (III) With respect to the 2014-2015 contract year and
   64  subsequent contract years, for an insurer electing the 75
   65  percent coverage level, the retention multiple is 80/75ths of
   66  the amount determined under subparagraph 1., and for an insurer
   67  electing the 45-percent coverage level, the retention multiple
   68  is 80/45ths of the amount determined under subparagraph 1.
   69         3. An insurer shall determine its provisional retention by
   70  multiplying its provisional reimbursement premium by the
   71  applicable adjusted retention multiple and shall determine its
   72  actual retention by multiplying its actual reimbursement premium
   73  by the applicable adjusted retention multiple.
   74         4. For insurers who experience multiple covered events
   75  causing loss during the contract year, beginning June 1, 2005,
   76  each insurer’s full retention shall be applied to each of the
   77  covered events causing the two largest losses for that insurer.
   78  For each other covered event resulting in losses, the insurer’s
   79  retention shall be reduced to one-third of the full retention.
   80  The reimbursement contract must shall provide for the
   81  reimbursement of losses for each covered event based on the full
   82  retention with adjustments made to reflect the reduced
   83  retentions on or after January 1 of the contract year provided
   84  the insurer reports its losses as specified in the reimbursement
   85  contract.
   87         (b)1. The contract shall contain a promise by the board to
   88  reimburse the insurer for a specified percentage 45 percent, 75
   89  percent, or 90 percent of its losses from each covered event in
   90  excess of the insurer’s retention, plus 5 percent of the
   91  reimbursed losses to cover loss adjustment expenses. The
   92  available coverage levels are as follows:
   93         a. For the 2012-2013 contract year, 90 percent, 75 percent,
   94  and 45 percent.
   95         b. For the 2013-2014 contract year, 85 percent, 75 percent,
   96  and 45 percent.
   97         c. For the 2014-2015 contract year and subsequent contract
   98  years, 80 percent, 75 percent, and 45 percent.
   99         2.a. The insurer must elect one of the percentage coverage
  100  levels specified in this paragraph and may, upon renewal of a
  101  reimbursement contract, elect a lower percentage coverage level
  102  if no revenue bonds issued under subsection (6) after a covered
  103  event are outstanding, or elect a higher percentage coverage
  104  level, regardless of whether or not revenue bonds are
  105  outstanding. All members of an insurer group must elect the same
  106  percentage coverage level. A Any joint underwriting association,
  107  risk apportionment plan, or other entity created under s.
  108  627.351 must elect the maximum 90-percent coverage level
  109  available under subparagraph 1.
  110         b. In order to implement the phase-in of reduced coverage
  111  levels as provided in subparagraph 1., and notwithstanding sub
  112  subparagraph a., if revenue bonds issued under subsection (6)
  113  after a covered event are outstanding and the insurer has
  114  elected the maximum coverage level available under subparagraph
  115  1., the insurer must, upon renewal of the reimbursement
  116  contract, elect the maximum coverage level available under
  117  subparagraph 1. for the renewal contract year.
  118         3. The contract must shall provide that reimbursement
  119  amounts shall not be reduced by reinsurance paid or payable to
  120  the insurer from other sources.
  121         4. Notwithstanding any other provision contained in this
  122  section, the board shall make available to insurers that
  123  purchased coverage provided by this subparagraph in 2008,
  124  insurers qualifying as limited apportionment companies under s.
  125  627.351(6)(c), and insurers that have been approved to
  126  participate in the Insurance Capital Build-Up Incentive Program
  127  pursuant to s. 215.5595 a contract or contract addendum that
  128  provides an additional amount of reimbursement coverage of up to
  129  $10 million. The premium to be charged for this additional
  130  reimbursement coverage shall be 50 percent of the additional
  131  reimbursement coverage provided, which must shall include one
  132  prepaid reinstatement. The minimum retention level that an
  133  eligible participating insurer must retain associated with this
  134  additional coverage layer is 30 percent of the insurer’s surplus
  135  as of December 31, 2008, for the 2009-2010 contract year; as of
  136  December 31, 2009, for the 2010-2011 contract year; and as of
  137  December 31, 2010, for the 2011-2012 contract year. This
  138  coverage is shall be in addition to all other coverage that may
  139  be provided under this section. The coverage provided by the
  140  fund under this subparagraph is shall be in addition to the
  141  claims-paying capacity as defined in subparagraph (c)1., but
  142  only with respect to those insurers that select the additional
  143  coverage option and meet the requirements of this subparagraph.
  144  The claims-paying capacity with respect to all other
  145  participating insurers and limited apportionment companies that
  146  do not select the additional coverage option shall be limited to
  147  their reimbursement premium’s proportionate share of the actual
  148  claims-paying capacity otherwise defined in subparagraph (c)1.
  149  and as provided for under the terms of the reimbursement
  150  contract. The optional coverage retention as specified shall be
  151  accessed before the mandatory coverage under the reimbursement
  152  contract, but once the limit of coverage selected under this
  153  option is exhausted, the insurer’s retention under the mandatory
  154  coverage applies will apply. This coverage will apply and be
  155  paid concurrently with mandatory coverage. This subparagraph
  156  expires on May 31, 2012.
  157         (c)1. The contract must shall also provide that the
  158  obligation of the board with respect to all contracts covering a
  159  particular contract year shall not exceed the actual claims
  160  paying capacity of the fund up to the limit specified in this
  161  subparagraph.
  162         a. For the 2012-2013 contract year, the limit is $17
  163  billion.
  164         b. For the 2013-2014 contract year, the limit is $16
  165  billion.
  166         c. For the 2014-2015 contract year, the limit is $15
  167  billion.
  168         d. For contract years after the 2014-2015 contract year, if
  169  a limit of $17 billion for that contract year, unless the board
  170  determines that there is sufficient estimated claims-paying
  171  capacity to provide $15 $17 billion of capacity for the current
  172  contract year and an additional $15 $17 billion of capacity for
  173  subsequent contract years. If the board makes such a
  174  determination, the estimated claims-paying capacity for the
  175  particular contract year shall be determined by adding to the
  176  $15 $17 billion limit one-half of the fund’s estimated claims
  177  paying capacity in excess of $30 $34 billion. However, the
  178  dollar growth in the limit may not increase in any year by an
  179  amount greater than the dollar growth of the balance of the fund
  180  as of December 31, less any premiums or interest attributable to
  181  optional coverage, as defined by rule, which occurred over the
  182  prior calendar year.
  183         2. In May and October of the contract year, the board shall
  184  publish in the Florida Administrative Weekly a statement of the
  185  fund’s estimated borrowing capacity, the fund’s estimated
  186  claims-paying capacity, and the projected balance of the fund as
  187  of December 31. After the end of each calendar year, the board
  188  shall notify insurers of the estimated borrowing capacity,
  189  estimated claims-paying capacity, and the balance of the fund as
  190  of December 31 to provide insurers with data necessary to assist
  191  them in determining their retention and projected payout from
  192  the fund for loss reimbursement purposes. In conjunction with
  193  the development of the premium formula, as provided for in
  194  subsection (5), the board shall publish factors or multiples
  195  that assist insurers in determining their retention and
  196  projected payout for the next contract year. For all regulatory
  197  and reinsurance purposes, an insurer may calculate its projected
  198  payout from the fund as its share of the total fund premium for
  199  the current contract year multiplied by the sum of the projected
  200  balance of the fund as of December 31 and the estimated
  201  borrowing capacity for that contract year as reported under this
  202  subparagraph.
  203         Section 3. Except as otherwise expressly provided in this
  204  act and except for this section, which shall take effect upon
  205  this act becoming a law, this act shall take effect July 1,
  206  2012.
  208  ================= T I T L E  A M E N D M E N T ================
  209         And the title is amended as follows:
  210         Delete lines 2 - 28
  211  and insert:
  212         An act relating to property insurance; amending s.
  213         627.351, F.S.; conforming cross-references; reducing
  214         to 2 percent from 6 percent the amount of the
  215         projected deficit in the coastal account for the prior
  216         calendar year which is recovered through regular
  217         assessments; requiring that remaining projected
  218         deficits in personal and commercial lines accounts be
  219         recovered through emergency assessments after
  220         accounting for the Citizens policyholder surcharge;
  221         requiring the Office of Insurance Regulation of the
  222         Financial Services Commission to notify assessable
  223         insurers and the Florida Surplus Lines Service Office
  224         of the dates assessable insurers shall collect and pay
  225         emergency assessments; removing reference to
  226         recoupment of residual market deficit assessments;
  227         requiring the board of governors to make a
  228         determination that an account has a projected deficit
  229         before it levies a Citizens policy holder surcharge;
  230         requiring that a limited apportionment company begin
  231         collecting regular assessments within 90 days and pay
  232         in full within 15 months after the assessment is
  233         levied; authorizing the Office of Insurance Regulation
  234         to assist the Citizens Property Insurance Corporation
  235         in the collection of assessments; replacing the term
  236         “market equalization surcharge” with the term
  237         “policyholder surcharge”; amending s. 215.555, F.S.;
  238         revising the definition of “retention”; providing for
  239         calculation of an insurer’s reimbursement premium and
  240         retention under the reimbursement contract; revising
  241         coverage levels available under the reimbursement
  242         contract; revising aggregate coverage limits;
  243         providing for the phase-in of changes to coverage
  244         levels and limits; providing effective dates.