RULE NO: RULE TITLE
19-8.010: Reimbursement Contract
19-8.029: Insurer Reporting Requirements
19-8.030: Insurer Responsibilities
PURPOSE AND EFFECT: The State Board of Administration, Florida Hurricane Catastrophe Fund, seeks to amend the rules listed above to implement Section 215.555, Florida Statutes, including the changes made to the law during the 2007 Special Legislative Session.
SUMMARY: Rule 19-8.010, F.A.C., Reimbursement Contract.: The proposed amendments to Rule 19-8.010, F.A.C., adopt the Reimbursement Contract for the Contract Year 2007-2008, including the three addenda. As outlined below, each addenda addresses one of the three new optional FHCF coverage selections created during the 2007 Special Legislative Session.
Addendum No. 1: This addendum incorporates the additional $10 million dollar coverage option available to insurers taking advantage of a similar program in 2006, to insurers qualifying as limited apportionment companies under Section 627.351(6), Florida Statutes, which began writing property insurance in 2007 and to insurers that were approved to participate in 2006 or that are approved in 2007 to participate in the Section 215.5595, Florida Statutes, Insurance Capital Build-Up Incentive Program. This optional coverage is below the mandatory FHCF layer of coverage.
Addendum No. 2: This addendum incorporates the Temporary Emergency Options for Additional Coverage “TEACO” program. This program allows insurers to purchase its FHCF premium share of a $1 billion, $2 billion, or a $3 billion layer of coverage below the mandatory FHCF layer of coverage.
Addendum No. 3: This addendum incorporates the Temporary Increase in Coverage Limit Options “TICL” program. This program allows insurers to choose from one of twelve options for increasing their level of FHCF coverage above and beyond the mandatory FHCF coverage.
Rule 19-8.029, F.A.C., Insurer Reporting Requirements: The proposed amendments to Rule 19-8.029, F.A.C., updates and adopts the forms for insurer exposure and loss reporting to the Florida Hurricane Catastrophe Fund for the 2007-2008 Contract Year.
Rule 19-8.030, F.A.C., Insurer Responsibilities: The proposed amendments to Rule 19-8.030, F.A.C., incorporate the 2007 Special Legislative Session’s changes to the law, and update and adopt forms for insurer exposure and loss examinations and reporting to the Florida Hurricane Catastrophe Fund for the 2007-2008 Contract Year.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: The Board has prepared a statement and found the cost of the proposed amendments to be minimal.
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), (3), (4), (5), (6), (7), (10), (16), (17) FS.
A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: March 20, 2007, 9:00 a.m. – 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: Tracy Allen, (850)413-1341 or by mail at P. O. Box 13300, Tallahassee, Florida 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:

19-8.010 Reimbursement Contract.

(1) through (12) No change.

(13) The reimbursement contract for the 2007-2008 contract year, including Addenda 1., 2., and 3., required by Section 215.555(4), F.S., which is called Form FHCF-2007K- “Reimbursement Contract” or “Contract” between (name of insurer) (the “Company”)/NAIC #() and The State Board of Administration of the State of Florida (“SBA”) which Administers the Florida Hurricane Catastrophe Fund (“FHCF”), is hereby adopted and incorporated by reference into this rule. This contract is effective from June 1, 2007 through May 31, 2008.

(14)~~(13)~~ Copies of the reimbursement contract may be obtained from the State Board of Administration. The mailing address is P. O. Box 13300, Tallahassee, FL 32317-3300. The street address is 1801 Hermitage Blvd., Tallahassee, Florida 32308, (850)413-1346.

Specific Authority 215.555(3) FS. Law Implemented 215.555 FS. History–New 5-31-94, Amended 8-29-95, 5-19-96, 6-19-97, 5-28-98, 5-17-99, 9-13-99, 6-19-00, 6-3-01, 6-2-02, 11-12-02, 5-13-03, 5-19-04, 8-29-04, 5-29-05, 11-13-05, 5-10-06, 9-5-06,_________.

19-8.029 Insurer Reporting Requirements.

(1) through (4)(g) No change.

(h) For the 2006/2007 Contract Year, the reporting shall be in accordance with Form FHCF-D1A, “Florida Hurricane Catastrophe Fund 2006 Data Call,” rev. 05/06, hereby adopted and incorporated by reference. The form may be obtained from the Fund’s Administrator at the address stated in subsection (6) below. A new participant writing covered policies on or after June 1 but prior to December 1, shall report its actual exposure as of December 31 of the Contract Year on or before March 1 of the Contract Year, to the Administrator.

(i) For the 2007/2008 Contract Year, the reporting shall be in accordance with Form FHCF-D1A, “Florida Hurricane Catastrophe Fund 2007 Data Call,” rev. 05/07, hereby adopted and incorporated by reference. The form may be obtained from the Fund’s Administrator at the address stated in subsection (6) below. A new participant writing covered policies on or after June 1 but prior to December 1, shall report its actual exposure as of December 31 of the Contract Year on or before March 1 of the Contract Year, to the Administrator.

(5) Loss Reimbursement Reporting Requirements.

(a) As directed by the Board, after a covered event occurs, insurers shall report all their estimated ultimate net losses (as defined in the Reimbursement Contract, adopted and incorporated into Rule 19-8.010, F.A.C.) for Covered Policies on the Form FHCF-L1A, “Florida Hurricane Catastrophe Fund Interim Loss Report,” for the applicable Contract Year, as specified in subsection (7) herein ~~rev. 05/2006, which is hereby adopted and incorporated by reference,~~ in no less than fourteen days from the date of the notice from the Board that such a report is required. The Board may request subsequent Interim Loss Reports. To obtain copies of this form, see subsection (6), below. Prompt reporting in the format requested will aid the Board in determining whether to seek additional sources of funds to pay for reimbursable losses. The losses reported on the Interim Loss Report are expected to result from a good faith effort, using best business practices for the insurance industry, on the part of the insurer to report as accurately as possible. Preliminary reports will not be binding. Reimbursements by the Fund will be made on the basis of the Proof of Loss Report, adopted in (b) below.

(b) Insurers shall report their ultimate net losses (as defined in the Reimbursement Contract, adopted and incorporated into Rule 19-8.010, F.A.C.) for each loss occurrence on the Form FHCF-L1B, “Florida Hurricane Catastrophe Fund Proof of Loss Report,” ~~rev. 05/2006, which is hereby adopted and incorporated by reference.~~ for the applicable Contract Year, as specified in subsection (7) herein. To obtain copies of this form, see subsection (6), below. To qualify for reimbursement, the Proof of Loss Report must have the original signatures of two executive officers authorized by the Company to sign the report. Proof of Loss Reports may be faxed only if the Company does not qualify for a reimbursement. While a Company may submit a Proof of Loss Report requesting reimbursement at any time following a loss occurrence, all Companies shall submit a mandatory Proof of Loss Report for each loss occurrence no earlier than December 1 and no later than December 31 of the Contract Year during which the Covered Event(s) occurs using the most current data available, regardless of the amount of Ultimate Net Loss or the amount of loss reimbursements or advances already received. After the mandatory December Proof of Loss Report, quarterly Proof of Loss Reports are required. For purposes of this rule, quarterly Proof of Loss Reports shall be those reports submitted at each quarter end date after December 31 of the Contract Year in which the loss occurrence occurs and continuing until all claims and losses resulting from loss occurrences commencing during the Contract Year are fully discharged, including any adjustments to such losses due to salvage or other recoveries, in accordance with the reporting requirements in this paragraph. “Fully Discharged” means the earlier of the date on which the insurer has paid its policyholders in full or the commutation clause, in Article X of the Reimbursement Contract, adopted in Rule 19-8.010, F.A.C., takes effect. For the quarterly report due on March 31 ~~3/31~~, any insurer whose losses exceed 50% of its FHCF retention for a specific loss occurrence shall submit a Proof of Loss Report for that loss occurrence. For the quarterly report due on June 30 ~~6/30~~, any insurer whose losses exceed 75% of its FHCF retention for a specific loss occurrence submit a Proof of Loss Report for that loss occurrence. For the quarterly reports due on September 30, ~~9/30~~ and thereafter, any insurer which anticipates that its losses will exceed its FHCF retention for a specific loss occurrence shall submit quarterly Proof of Loss Reports until all its losses are paid to its policyholders and the insurer has received reimbursement from the Fund. Annually, all Companies which experienced losses for a specific loss occurrence, but are not required to report quarterly loss reports for that loss occurrence because they received their full coverage under the Contract Year in which the loss occurrence(s) occurred, ~~do not meet the quarterly requirements outlined in this section~~ shall submit a mandatory year-end Proof of Loss Report for each loss occurrence, using the most current data available unless the Company has no losses. This Proof of Loss Report shall be filed no earlier than December 1 and no later than December 31 of each year and shall continue until the earlier of the expiration of the commutation period or until all claims and losses resulting from the loss occurrence are fully discharged including any adjustments to such losses due to salvage or other recoveries.

(7)(a) For the 2005/2006 and earlier Contract Years the applicable Interim Loss Report is that form that was in effect for the Contract Year as reflected by the revision date on the form. For example, the applicable Interim Loss Report for the Contract Year 2004-2005 is the FHCF-L1A, with the revision date of 5/05.

(b) For the 2006/2007 Contract Year, the applicable Interim Loss Report is the “Contract Year 2006 Interim Loss Report, Florida Hurricane Catastrophe Fund (FHCF)”, FHCF-L1A, rev. 05/06, which is hereby adopted and incorporated by reference. The applicable Proof of Loss Report is the “Contract Year 2006 Proof of Loss Report, Florida Hurricane Catastrophe Fund (FHCF),” FHCF-L1B, rev. 05/06, which is hereby adopted and incorporated by reference.

(c) For the 2007/2008 Contract Year, the applicable Interim Loss Report is the “Contract Year 2007 Interim Loss Report, Florida Hurricane Catastrophe Fund (FHCF)”, FHCF-L1A, rev. 05/07, which is hereby adopted and incorporated by reference. The applicable Proof of Loss Report is the “Contract Year 2007 Proof of Loss Report, Florida Hurricane Catastrophe Fund (FHCF),” FHCF-L1B, rev.05/07, which is hereby adopted and incorporated by reference.

Specific Authority 215.555(3) FS. Law Implemented 215.555(2), (3), (4), (5), (6), (7), (15) FS. History–New 5-17-99, Amended 6-19-00, 6-3-01, 6-2-02, 11-12-02, 5-13-03, 5-19-04, 8-29-04, 5-29-05, 5-10-06,_________.

19-8.030 Insurer Responsibilities.

(1) through (7) No change.

(a) Advance Examination Record Requirements: Within 30 days from the date on the letter from the FHCF, Companies are required to provide the FHCF with the records indicated in the applicable Contract Year’s Form FHCF-EAP1, “Exposure Examination Advance Preparation Instructions” ~~rev. 05/06~~ or in the applicable Contract Year’s Form FHCF-LAP1 “Loss Reimbursement Examination Advance Preparation Instructions”, ~~05/06~~. An extension of 30 days may be granted if the Insurer can show that the need for the additional time is due to circumstances beyond the reasonable control of the participant. These forms are hereby adopted and incorporated by reference into this rule. Copies of these forms may be obtained from the FHCF website, www.sbafla.com/fhcf or by contacting the State Board of Administration. The mailing address is P. O. Box 13300, Tallahassee, FL 32317-3300. The street address is 1801 Hermitage Blvd., Tallahassee, Florida 32308.

(b) through (c) No change.

(d) Resubmissions~~/Updates~~ as a Result of a Completed Examination: A Company required to resubmit exposure data ~~or update a Proof of Loss Report~~ as a result of the examination must do so within 30 days of the date on the letter from the FHCF notifying the Company of the need to resubmit. An extension of 30 days will be granted if the Company can show that the need for additional time is due to circumstances beyond the reasonable control of the Company.

(8) Loss Reporting. Participating Insurers are required to file the following two types of loss reports at the times prescribed in Rule 19-8.029, F.A.C. Form FHCF-L1A, “Florida Hurricane Catastrophe Fund Interim Loss Report,” for the applicable Contract Year ~~rev. 05/06~~ and Form FHCF-L1B, “Florida Hurricane Catastrophe Fund Proof of Loss Report, for the applicable Contract Year ~~rev. 05/06~~. For the Contract Year 2006-2007, the applicable “Florida Hurricane Catastrophe Fund Interim Loss Report,” is the FHCF-L1A rev. 05/06 and the applicable “Florida Hurricane Catastrophe Fund Proof of Loss Report,” is the FHCF-L1B rev. 05/06. For the Contract Year 2007-2008, the applicable “Florida Hurricane Catastrophe Fund Interim Loss Report,” is the FHCF-L1A rev. 05/07 and the applicable “Florida Hurricane Catastrophe Fund Proof of Loss Report,” is the FHCF-L1B rev. 05/07. ~~Both of~~ Tthese forms are hereby adopted and incorporated by reference into this rule.

(a) Companies must submit a detailed claims listing (in a delimited ASCII format) to support the losses reported in the FHCF-L1B at the same time it submits its first Proof of Loss Report for a specific Covered Event that qualifies the company for reimbursement under that Covered Event, and should be prepared to supply a detailed claims listing for any subsequent Proof of Loss Report upon request. Refer to Form FHCF-LAP1 for the required file layout. The FHCF-L1B and the detailed claims listing are required to be sent to the FHCF Administrator, Paragon Strategic Solutions Inc, 3600 American Boulevard West, Minneapolis, MN 55431. If your company submits its Proof of Loss Reports electronically through the FHCF’s Online Claims System at www.sbafla.com/fhcf/, the detailed claims listing may be attached to the Company’s submission.

(9) through (10) No change.

(11) Optional Coverage Programs: Except as provided in this subsection, this Rule applies to the Additional Coverage option created in Section 215.555(4)(b)4., Florida Statutes (“Section (4)(b)4. Additional Coverage Option”), the Temporary Emergency Additional Coverage Option (“TEACO”) created in Section 215.555(16), Florida Statutes and the Temporary Increase in Coverage Limit option created in Section 215.555(17), Florida Statutes (“TICL”).

(a) The definition of Premium in paragraph (3)(m), above, does not apply to the Section (4)(b)4. Additional Coverage Option. With respect to this Option, the word “Premium” when used in this Rule shall refer to the amount payable under Section 215.555(4)(b)4., Florida Statutes, for this optional coverage.

(b) The definition of Premium in paragraph (3)(m), above, does not apply to TEACO. With respect to this Option, the word “Premium” when used in this Rule shall refer to the amount payable under Section 215.555(16)(f), Florida Statutes, for this optional coverage.

Specific Authority 215.555(3) FS. Law Implemented 215.555 FS. History–New 5-13-03, Amended 5-19-04, 5-29-05, 5-10-06, ________.