19-8.028: Reimbursement Premium Formula
PURPOSE AND EFFECT: This rule is promulgated to implement Section 215.555, Florida Statutes, regarding the Florida Hurricane Catastrophe Fund, for the 2006-2007 contract year.
SUMMARY: Proposed amended Rule 19-8.028, F.A.C., establishes the premium formula and adopts the rates for the 2006-2007 contract year.
SUMMARY OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 215.555(3) FS.
LAW IMPLEMENTED: 215.555(2), 215.555(3), 215.555(4), 215.555(5), 215.555(6), 215.555(7) FS.
A HEARING WILL BE HELD AT THE TIME, DATE AND PLACE SHOWN BELOW:
TIME AND DATE: May 11, 2006, 9:00 a.m. to 12:00 Noon.
PLACE: Room 116 (Hermitage Conference Room), 1801 Hermitage Blvd., Tallahassee, FL 32308.
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Patti Elsbernd at (850)413-1346 or by mail at P.O. Box 13300, Tallahassee, FL 32317-3300. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Jack E. Nicholson, Senior FHCF Officer of the Florida Hurricane Catastrophe Fund, State Board of Administration, P.O. Box 13300, Tallahassee, FL 32317-3300; telephone (850)413-1340.
THE FULL TEXT OF THE PROPOSED RULE IS:
19-8.028 Reimbursement Premium Formula.
(1) through (2)(l). No change.
(m) Section I as described in the Data Call.
(n) Section II as described in the Data Call.
(3)(a) through (h) No change.
(3)(i) For the 2006-2007 Contract Year, the Formula developed by the Board’s Independent Consultant, “Florida Hurricane Catastrophe Fund: 2006 Ratemaking Formula Report to the State Board of Administration of Florida, March 15, 2006” is hereby adopted and incorporated by reference. The basic premium rates developed in accordance with the Premium Formula methodology approved by the Board on
(4)(a) Special Circumstances.
1. Allocation of Premium. Premiums paid to the FHCF with reference to property covered by Quota Share Primary Insurance Arrangements, as that phrase is defined in Section 627.351(6)(c)2.a.(I), Florida Statutes, will be allocated by the FHCF between the Insurer and Citizens in accordance with the percentages specified in the Quota Share Primary Insurance Arrangement for the purposes of premium billing, calculating retentions and determining reimbursement payments.
2. Special Rating Circumstances. Section II Exposure. The Premium Formula for policies that, based upon sound actuarial principles, require individual ratemaking and which are not excluded by rule Section II exposure will be based on the use of computer modeling for each individual Company for which it is applicable, i.e. portfolio modeling. Because of the difference in potential loss exposure between Section I and Section II, it is not equitable to apply FHCF rates developed for Section I exposures to Section II exposures. Therefore, Tthe Independent Consultant will recommend guidelines for individual company Section II portfolio reporting and modeling to estimate individual company FHCF expected losses. Individual company FHCF expected losses for portfolio modeling Section II exposures will be loaded for investments and expenses on the same basis as the FHCF premium rates used for non-portfolio modeling Section I exposures, but will also include a loading for the additional cost of individual company modeling. The minimum exposure threshold for FHCF portfolio modeling Section II rating will be sufficient to generate estimated FHCF premium greater than the cost of modeling and other considerations. and will be calculated by the tThe Independent Consultant will calculate the minimum threshold of Section II exposure required for the separate coverage levels of 45%, 75%, and 90% using the Section I rates established pursuant to subsection (3) herein. The methodology used by the Independent Consultant will be based on sound actuarial principles to establish greater actuarial equity in the premium structure. Companies with exposure meeting the definition of Section II, shall report the said exposure under Section II using Section II reporting specifications.
(4)(b) through (4)(c)2. No change.
(4)(c)3. This subparagraph applies to Companies writing new business on or after June 1 but prior to December 1 of the Contract Year.
(4)(c)3.a. through (5) No change.
Specific Authority 215.555(3) FS. Law Implemented 215.555(2), (3), (4), (5), (6), (7) FS. History-New 9-20-99, Amended 7-3-00, 9-17-01, 7-17-02, 7-02-03, 7-29-04, 7-17-05,________.