19-15.001: Insurance Capital Build-Up Incentive Program
PURPOSE AND EFFECT: This rule is promulgated to implement Section 215.5595, Florida Statutes.
SUMMARY: The amendments to Rule 19-15.001, F.A.C., address the changes made to the Insurance Capital Build-Up Incentive Program during the 2007 Special Legislative Session, to provide a street address for delivery of documents, to clarify the due date for the quarterly net written premium report and to remind applicants of the public records laws.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: The regulatory costs are as outlined in the application and in section 5 of CS/CS/SB 1980.
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: 215.5595(6) FS.
LAW IMPLEMENTED: 215.5595(2), (3), (4), (5), (6), (7) FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN FAW.
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: Donna Sirmons, (850)413-1349. 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:
19-15.001 Insurance Capital Build-Up Incentive Program.
(1) through (2)(d) No change.
(e) An Insurer may qualify and be eligible for consideration under this Program provided that the Insurer contributes New Capital and commits to meeting the Minimum Writing Ratio for the term of the Surplus Note. Additionally, the Insurer’s Surplus, New Capital contribution, and Surplus Note must total at least $14 million for those Insurers writing only manufactured housing policies, must total at least $50 million for other Insurers, and all the Insurers must submit the application as adopted under this Rule within the time frames referenced in Section 215.5595(2)(b), F.S.
(f) The Board may Approve an application by an eligible and qualifying Insurer for a Surplus Note, unless the Board determines that the financial condition of the Insurer and its business plan for writing residential property insurance in
(g) If the amount of Surplus Notes requested by Insurers exceeds the amount of funds available, the Board may prioritize Insurers that are eligible and Approved, regardless of the date of application within the application time frames. Consideration shall be given to the type of insurance written, with preference given to insurers writing only manufactured housing policies, financial strength of the Insurer, the viability of the Insurer’s proposed business plan for writing additional residential property insurance, and the effect on competition.
(3) through (3)(g) No change.
(h) “Minimum Required Surplus” means, for purposes of this Program, that the Insurer’s total Surplus, after the issuance of the Surplus Note and New Capital contribution equals at least $14 million for Insurers writing only manufactured housing policies and $50 million for all other Insurers.
(i) “Minimum Writing Ratio” means a 2:1 ratio of Net Written Premium to Surplus except as to a newly formed Insurer writing only manufactured housing policies. The “Minimum Writing Ratio” for an Insurer writing only manufactured housing policies shall be the ratio provisions provided in Section 624.4095, F.S.
(j) through (5)(b) No change.
(c) Insurers must submit a completed application including supplying all the required documentation to the Board. The application Form, SBA 15-1, rev. __/07new 2/07, is hereby adopted and incorporated by reference into this Rule. This Form is available on the Board’s website, www.sbafla.com, under “Insurance Capital Build-Up Incentive Program,” then “Application.”
(d) Prior to the time the application, Form SBA 15-1, rev. __/07new, 2/07, is submitted, the Insurer must review and accept the terms of the Surplus Note, Form SBA 15-2, rev.__/07new 2/07, which is hereby adopted and incorporated by reference into this Rule. The Surplus Note is available on the Board’s website, www.sbafla.com, under “Insurance Capital Build-Up Incentive Program,” then “Surplus Note.”
(e) The principal amount of the Surplus Note issued to any Insurer or Insurer group, other than an insurer writing only manufactured housing policies may not exceed $50 million. The principal amount of the Surplus Note issued to any Insurer or Insurer group writing only manufactured housing policies may not exceed $7 million.
(f) For Insurers, other than those writing only manufactured housing policies, an Insurer’s Surplus, New Capital, and the Surplus Note must total at least $50 million as a result of participating in the Program. For an Insurer writing only manufactured housing policies, the Insurer’s Surplus, New Capital, and the Surplus Note must total at least $14 million as a result of participating in the Program.
(g) through (h) No change.
(i) The Insurer must commit to meeting the Minimum Writing Ratio of Net Written Premium for the term of the Surplus Note and must submit quarterly filings to the Office and the Board. The quarterly filings shall be on Form SBA 15-3, rev. __/07new 2/07, which is hereby adopted and incorporated by reference into this Rule. This Form is available on the Board’s website, www.sbafla.com, under “Insurance Capital Build-Up Incentive Program,” then “Quarterly Net Written Premium Report.”
(j) through (6)(a) No change.
(b) The type of insurance written. All other prioritization factors being equal, preference will be given to Insurers writing only manufactured housing policies.
(c)(b) The amount of an Insurer’s New Capital contributions in excess of the minimum requirement.
(d)(c) An Insurer’s financial strength.
(e)(d) The Insurer’s ability to timely and expeditiously meet the Minimum Writing Ratio requirement as described in the Insurer’s business plan.
(f)(e) The viability and the level of detail and specificity associated with the Insurer’s proposed business plan for writing additional residential property insurance covering the peril of wind.
(g)(f) The effect on competition in the residential property insurance market including the number of new policies which the Insurer contemplates writing as a result of the Program.
(h)(g) Whether the repayment of the Surplus Note will be guaranteed by a financially strong guarantor.
(i)(h) Whether the Insurer is willing to pledge any assets as collateral for the repayment of the Surplus Note.
(j)(i) Any other concessions an Applicant is willing to make that would enhance the purposes and effectiveness of the Program.
(7) Additional Information.
(a) In addition to Insurers submitting the Surplus Note application, SBA Form 15-1, rev. __/07new 2/07, the Board may request additional information and data prior to the time the Surplus Note is executed. Such additional information may consist of additional documentation, answers to questions that arise as a result of the review process, and additional information solicited through oral interviews.
(b) through (9)(a)1. No change.
(9)(a)2. Failure to submit quarterly filings of Form SBA 15-3, rev. __/07new 2/07, to the Office.
3. through (9)(c) No change.
Specific Authority 215.5595 FS. Law Implemented 215.5595(2), (2)(c), (d), (e), (g) FS. History–New 2-22-07, Amended_________.