$10 million Drop-Down Layer Included in Financial Bill Passed Today
Apr 29, 2009
After unanimous passage by the Florida House of Representatives on April 27, House Bill 569 was substituted for its identical counterpart, Senate Bill 732, and passed by the Senate on third reading today, April 29, 2009. The bill now goes to Florida Governor Charlie Crist for action.
An insurance-related amendment offered by State Representative Bryan Nelson and adopted during the April 27 House passage of HB 569 included the reauthorization of the Florida Hurricane Catastrophe Fund (“FCHF”) $10 million drop-down layer for certain companies.
As part of the final bill passed today by the Senate, the amendment’s provisions extend the availability of an additional amount of FHCF reimbursement coverage up to $10 million until December 31, 2011 for limited apportionment companies, insurers that purchased such coverage in 2008, and for insurers that qualified for Florida’s Insurance Capital Build-Up Incentive Program. Without this extension, the availability of this coverage would cease on May 31, 2009.
The insurance portion of HB 569 also specifies that the optional coverage retention as provided for limited apportionment insurers and others will be triggered prior to the mandatory coverage under the FHCF reimbursement contract; however, once the limit of the optional coverage is exhausted, the insurer’s retention under the mandatory coverage will apply.
Of note: Similar coverage was offered in 2006, 2007, and 2008 that reimburses an insurer for up to $10 million in losses for each of two hurricanes during those years. As it has been in past years, under HB 569 this coverage will be priced at a 50 percent rate on line (e.g., $5 million premium for $10 million in coverage) with a free reinstatement for a second event. An insurer’s retention for such coverage remains at 30 percent of its surplus.
The non-insurance provisions of HB 569 expand the scope of the applicable Florida law by providing an option for state and local government funds to be deposited into money market deposit accounts and other financial instruments insured by the Federal Deposit Insurance Corporation. The bill also removes a limitation on the conditions under which local governments can deposit surplus public funds in certain depository institutions. As a result, the range of depository institutions available is increased.
To view complete bill information on HB 569, click here.
For additional information on Florida’s legislative process and terminology, click here.
Should you have any questions or comments, please contact Colodny Fass.
To unsubscribe from this newsletter, please send an e-mail to ccochran@cftlaw.com