Florida Senate - 2022                        COMMITTEE AMENDMENT
       Bill No. CS for CS for SB 468
                              LEGISLATIVE ACTION                        
                    Senate             .             House              

       The Committee on Appropriations (Brandes) recommended the
    1         Senate Amendment (with title amendment)
    3         Before line 73
    4  insert:
    5         Section 1. Effective June 1, 2022, paragraph (e) of
    6  subsection (2) of section 215.555, Florida Statutes, is amended
    7  to read:
    8         215.555 Florida Hurricane Catastrophe Fund.—
    9         (2) DEFINITIONS.—As used in this section:
   10         (e) “Retention” means the amount of losses below which an
   11  insurer is not entitled to reimbursement from the fund. An
   12  insurer’s retention shall be calculated as follows:
   13         1. The board shall calculate and report to each insurer the
   14  retention multiples for that year. For the contract year
   15  beginning June 1, 2022 2005, the retention multiple shall be
   16  equal to $4.5 billion divided by the total estimated
   17  reimbursement premium for the contract year; for subsequent
   18  years, the retention multiple shall be equal to $4.5 billion,
   19  adjusted based upon the reported exposure for the contract year
   20  occurring 2 years before the particular contract year to reflect
   21  the percentage growth in exposure to the fund for covered
   22  policies since 2021 2004, divided by the total estimated
   23  reimbursement premium for the contract year. Total reimbursement
   24  premium for purposes of the calculation under this subparagraph
   25  shall be estimated using the assumption that all insurers have
   26  selected the 90-percent coverage level.
   27         2. The retention multiple as determined under subparagraph
   28  1. shall be adjusted to reflect the coverage level elected by
   29  the insurer. For insurers electing the 90-percent coverage
   30  level, the adjusted retention multiple is 100 percent of the
   31  amount determined under subparagraph 1. For insurers electing
   32  the 75-percent coverage level, the retention multiple is 120
   33  percent of the amount determined under subparagraph 1. For
   34  insurers electing the 45-percent coverage level, the adjusted
   35  retention multiple is 200 percent of the amount determined under
   36  subparagraph 1.
   37         3. An insurer shall determine its provisional retention by
   38  multiplying its provisional reimbursement premium by the
   39  applicable adjusted retention multiple and shall determine its
   40  actual retention by multiplying its actual reimbursement premium
   41  by the applicable adjusted retention multiple.
   42         4. For insurers who experience multiple covered events
   43  causing loss during the contract year, beginning June 1, 2005,
   44  each insurer’s full retention shall be applied to each of the
   45  covered events causing the two largest losses for that insurer.
   46  For each other covered event resulting in losses, the insurer’s
   47  retention shall be reduced to one-third of the full retention.
   48  The reimbursement contract shall provide for the reimbursement
   49  of losses for each covered event based on the full retention
   50  with adjustments made to reflect the reduced retentions on or
   51  after January 1 of the contract year provided the insurer
   52  reports its losses as specified in the reimbursement contract.
   53         Section 2. Paragraph (b) of subsection (5) of section
   54  215.555, Florida Statutes, is amended to read:
   55         215.555 Florida Hurricane Catastrophe Fund.—
   56         (5) REIMBURSEMENT PREMIUMS.—
   57         (b) The State Board of Administration shall select an
   58  independent consultant to develop a formula for determining the
   59  actuarially indicated premium to be paid to the fund. The
   60  formula shall specify, for each zip code or other limited
   61  geographical area, the amount of premium to be paid by an
   62  insurer for each $1,000 of insured value under covered policies
   63  in that zip code or other area. In establishing premiums, the
   64  board shall consider the coverage elected under paragraph (4)(b)
   65  and any factors that tend to enhance the actuarial
   66  sophistication of ratemaking for the fund, including
   67  deductibles, type of construction, type of coverage provided,
   68  relative concentration of risks, and other such factors deemed
   69  by the board to be appropriate. The formula must provide for a
   70  cash build-up factor only in contract years when the fund’s cash
   71  balance at the end of the previous calendar year is below $10
   72  billion and for two subsequent contract years after the year in
   73  which such a cash build-up factor is triggered. For the 2009
   74  2010 contract year, the factor is 5 percent. For the 2010-2011
   75  contract year, the factor is 10 percent. For the 2011-2012
   76  contract year, the factor is 15 percent. For the 2012-2013
   77  contract year, the factor is 20 percent. For the 2013-2014
   78  contract year and thereafter, The factor is and may not exceed
   79  25 percent. The formula may provide for a procedure to determine
   80  the premiums to be paid by new insurers that begin writing
   81  covered policies after the beginning of a contract year, taking
   82  into consideration when the insurer starts writing covered
   83  policies, the potential exposure of the insurer, the potential
   84  exposure of the fund, the administrative costs to the insurer
   85  and to the fund, and any other factors deemed appropriate by the
   86  board. The formula must be approved by unanimous vote of the
   87  board. The board may, at any time, revise the formula pursuant
   88  to the procedure provided in this paragraph.
   89         Section 3. For the purpose of incorporating the amendments
   90  made by this act to section 215.555, Florida Statutes, in a
   91  reference thereto, paragraph (k) of subsection (2) of section
   92  627.062, Florida Statutes, is reenacted to read:
   93         627.062 Rate standards.—
   94         (2) As to all such classes of insurance:
   95         (k)1. A residential property insurer may make a separate
   96  filing limited solely to an adjustment of its rates for
   97  reinsurance, the cost of financing products used as a
   98  replacement for reinsurance, financing costs incurred in the
   99  purchase of reinsurance, and the actual cost paid due to the
  100  application of the cash build-up factor pursuant to s.
  101  215.555(5)(b) if the insurer:
  102         a. Elects to purchase financing products such as a
  103  liquidity instrument or line of credit, in which case the cost
  104  included in filing for the liquidity instrument or line of
  105  credit may not result in a premium increase exceeding 3 percent
  106  for any individual policyholder. All costs contained in the
  107  filing may not result in an overall premium increase of more
  108  than 15 percent for any individual policyholder.
  109         b. Includes in the filing a copy of all of its reinsurance,
  110  liquidity instrument, or line of credit contracts; proof of the
  111  billing or payment for the contracts; and the calculation upon
  112  which the proposed rate change is based demonstrating that the
  113  costs meet the criteria of this section.
  114         2. An insurer that purchases reinsurance or financing
  115  products from an affiliated company may make a separate filing
  116  only if the costs for such reinsurance or financing products are
  117  charged at or below charges made for comparable coverage by
  118  nonaffiliated reinsurers or financial entities making such
  119  coverage or financing products available in this state.
  120         3. An insurer may make only one filing per 12-month period
  121  under this paragraph.
  122         4. An insurer that elects to implement a rate change under
  123  this paragraph must file its rate filing with the office at
  124  least 45 days before the effective date of the rate change.
  125  After an insurer submits a complete filing that meets all of the
  126  requirements of this paragraph, the office has 45 days after the
  127  date of the filing to review the rate filing and determine if
  128  the rate is excessive, inadequate, or unfairly discriminatory.
  130  The provisions of this subsection do not apply to workers’
  131  compensation, employer’s liability insurance, and motor vehicle
  132  insurance.
  133         Section 4. For the purpose of incorporating the amendments
  134  made by this act to section 215.555, Florida Statutes, in a
  135  reference thereto, paragraph (n) of subsection (6) of section
  136  627.351, Florida Statutes, is reenacted to read:
  137         627.351 Insurance risk apportionment plans.—
  139         (n)1. Rates for coverage provided by the corporation must
  140  be actuarially sound and subject to s. 627.062, except as
  141  otherwise provided in this paragraph. The corporation shall file
  142  its recommended rates with the office at least annually. The
  143  corporation shall provide any additional information regarding
  144  the rates which the office requires. The office shall consider
  145  the recommendations of the board and issue a final order
  146  establishing the rates for the corporation within 45 days after
  147  the recommended rates are filed. The corporation may not pursue
  148  an administrative challenge or judicial review of the final
  149  order of the office.
  150         2. In addition to the rates otherwise determined pursuant
  151  to this paragraph, the corporation shall impose and collect an
  152  amount equal to the premium tax provided in s. 624.509 to
  153  augment the financial resources of the corporation.
  154         3. After the public hurricane loss-projection model under
  155  s. 627.06281 has been found to be accurate and reliable by the
  156  Florida Commission on Hurricane Loss Projection Methodology, the
  157  model shall be considered when establishing the windstorm
  158  portion of the corporation’s rates. The corporation may use the
  159  public model results in combination with the results of private
  160  models to calculate rates for the windstorm portion of the
  161  corporation’s rates. This subparagraph does not require or allow
  162  the corporation to adopt rates lower than the rates otherwise
  163  required or allowed by this paragraph.
  164         4. The corporation must make a recommended actuarially
  165  sound rate filing for each personal and commercial line of
  166  business it writes.
  167         5. Notwithstanding the board’s recommended rates and the
  168  office’s final order regarding the corporation’s filed rates
  169  under subparagraph 1., the corporation shall annually implement
  170  a rate increase which, except for sinkhole coverage, does not
  171  exceed the following for any single policy issued by the
  172  corporation, excluding coverage changes and surcharges:
  173         a. Eleven percent for 2022.
  174         b. Twelve percent for 2023.
  175         c. Thirteen percent for 2024.
  176         d. Fourteen percent for 2025.
  177         e. Fifteen percent for 2026 and all subsequent years.
  178         6. The corporation may also implement an increase to
  179  reflect the effect on the corporation of the cash buildup factor
  180  pursuant to s. 215.555(5)(b).
  181         7. The corporation’s implementation of rates as prescribed
  182  in subparagraph 5. shall cease for any line of business written
  183  by the corporation upon the corporation’s implementation of
  184  actuarially sound rates. Thereafter, the corporation shall
  185  annually make a recommended actuarially sound rate filing for
  186  each commercial and personal line of business the corporation
  187  writes.
  189  ================= T I T L E  A M E N D M E N T ================
  190  And the title is amended as follows:
  191         Delete lines 3 - 5
  192  and insert:
  193         F.S.; revising the retention of losses for which an
  194         insurer is not entitled to reimbursement from the
  195         Florida Hurricane Catastrophe Fund; requiring the
  196         formula for determining actuarially indicated premiums
  197         to include a cash build-up factor only in contract
  198         years under certain circumstances; deleting obsolete
  199         language; limiting the amount of the cash build-up
  200         factor; redefining the term “covered policy” under the
  201         Florida Hurricane Catastrophe Fund in relation to
  202         certain collateral protection insurance policies;
  203         reenacting ss. 627.062(2)(k) and 627.351(6)(n), F.S.,
  204         relating to rate standards and insurance risk
  205         apportionment plans, respectively, to incorporate the
  206         amendments made to s. 215.555, F.S., in references
  207         thereto;