|August 27, 2014|
Previously published on August 21, 2014
Yesterday, August 20, 2014, Florida's State Board of Administration ("SBA") held a Rule Development Workshop relating to the Florida Hurricane Catastrophe Fund's ("FHCF's") 2015-2016 Reimbursement Contract.
The majority of the proposed revisions to the Reimbursement Contract are technical in nature, such as updates to FHCF Contract Year references, along with editorial and grammatical changes.
Language being moved from Article IV to subsection (5) of Article IV provides that, once a participating insurer exhausts its limit of coverage, the company is no longer entitled to reimbursement. In prior versions of the Reimbursement Contract, the language relating to exhaustion of limits has appeared in Article V within the definition of "retention."
This year, the definition of "Citizens Property Insurance Corporation" ("Citizens") is revised in Article V to clarify that each of Citizens' two accounts (Coastal and combined Personal Lines and Commercial Lines Accounts) is to be treated as if it were a separate participating insurer with its own reportable exposures, reimbursement premium, retention and ultimate net loss. This clarification reflects current practice.
Subparagraph (28)(b)(1) of Article V, which relates to adjustments to reflect the applicability of a one-third retention, is changed to specify that the adjustment will occur after January 1 of the FHCF Contract Year, as provided by s. 215.555(2)(e)4, F.S.
Subsection (4) of Article VI, relating to policies that provide only partial coverage of a structure, is revised to clarify that a policy providing a layer of windstorm or hurricane coverage for a particular structure below a layer of self-insured windstorm or hurricane coverage is excluded. This clarification is consistent with existing exclusions that apply to policies providing a layer of coverage above or below other windstorm coverage.
Subsection (14) of Article VI is clarified to provide that the exclusion applies to barns and barns with apartments or living quarters.
Subsection (27) of Article VI is clarified to provide that the exclusion in paragraph (b) for certain policies primarily covering collectibles also applies to endorsements meeting the same criteria.
Subsection (3)(c)1 of Article X relating to loss reimbursement calculations and adjustments to retention is changed to specify that the adjustment will occur after January 1 of the Contract Year, as specified in s. 215.555(2)(e)4, F.S., reflecting the change made in Article V.
Subsection (1) of Article XVIII relating to reimbursement percentage is clarified to specify that a company may not reduce its reimbursement percentages at the start of a Contract Year until FHCF post-event revenue bonds are no longer outstanding. Prior Contracts required that the bonds be "fully repaid" before an insurer could reduce its percentage. This change, which conforms the FHCF Reimbursement Contract to s. 215.555 (4)(b)2, F.S. Subsection (2) of Article XVIII relating to reporting of a single structure that has a mix of commercial-habitational and non-habitational exposures, specifies that the reporting requirements for exposures also apply to the ultimate net loss as reported on the FHCF Proof of Loss report.
After the Workshop, the FHCF Advisory Council met to discuss and approve the 2015-2016 FHCF Reimbursement Contract changes.
FHCF Advisory Council Approves 2015-2016 Reimbursement Contract For Notice and Adoption
At its meeting yesterday afternoon, the FHCF Advisory Council voted to approve the filing for notice and adoption of the 2015-2016 Reimbursement Contract as revised.
The Advisory Council also heard a report from FHCF Chief Operating Officer Ann Burt on the defeasance of the FHCF's 2010 post-event bond, which was issued in response to losses generated by damage claims resulting from the 2004 and 2005 Hurricane Seasons. The 2010 bonds were not scheduled to be satisfied until 2016. The early defeasance also allowed for the early termination of the FHCF's corresponding 2010 Emergency Assessment. Last month, the Florida Office of Insurance Regulation issued an order terminating the Emergency Assessment effective January 1, 2015.
The Advisory Council will next meet on October 14, 2014 to discuss the FHCF's estimated claims-paying capacity.