Florida Cabinet Approves Florida Hurricane Catastrophe Fund 2011/2012 Premium Formula and Proposed 2011/2012 Rates: May 3, 2011

At its regular meeting Tuesday, May 3, 2011, the Florida Cabinet, acting in its capacity as the State Board of Administration (“SBA”), considered several insurance-related items.  To view the SBA meeting agenda, click here.  To view the complete meeting materials, click here.

SBA Executive Director and Chief Investment Officer Ash Williams, who presented the SBA items, requested the Cabinet’s approval of the Florida Hurricane Catastrophe Fund’s (“FHCF”) 2011/2012 Premium Formula and proposed 2011/2012 FHCF Rates.  Both were approved with no discussion.

The process for determining and approving the rate structure entailed extensive input from FHCF Advisory Council Members, and is the same one that has been used since 1995, Mr. Williams assured the Cabinet Members. 

 “It’s a sound recommendation,” he said.

Highlights of the 2011 FHCF Ratemaking Formula Report include: 

• The recommendation of a 6.28 percent increase in FHCF mandatory rates for the 2011 Contract Year. According to the Report, this increase is largely due to the change in the Cash Build-Up factor from 10 percent in 2010 to 15 percent for the 2011 FHCF Contract Year.
• Based on the recommended rate change, the FHCF premium for mandatory coverage would increase by $70 million from $1.111 billion to $1.181 billion.
• As required by law, the rates for the FHCF’s Temporary Increase in Coverage Limit (“TICL”) optional coverage would increase by approximately 25 percent, and the maximum TICL limit would decrease from $8 billion to $6 billion.

The SBA also requested approval and authority to file a Notice of Proposed Rule for Rule 19-8.028, entitled, “Reimbursement Premium Formula.”  The request was approved with no discussion.

As a “technical cleanup” measure, the SBA then voted unanimously and with no discussion to repeal the following obsolete FHCF-related Rules:

• Rule 19-8.015 Definitions Applicable to the 1995-1996 Contract Year
• Rule 19-8.016 1995 Reimbursement Premium Formula
• Rule 19-8.017 Insurer Reporting Requirements for the 1995-1996 Contract Year
• Rule 19-8.018 Definitions Applicable to the 1996-1997 Contract Year
• Rule 19-8.019 1996 Reimbursement Premium Formula
• Rule 19-8.020 Insurer Reporting Requirements for the 1996-1997 Contract Year
• Rule 19-8.021 Definitions Applicable to the 1997-1998 Contract Year
• Rule 19-8.022 1997 Reimbursement Premium Formula
• Rule 19-8.023 Insurer Reporting Requirements for the 1997-1998 Contract Year
• Rule 19-8.024 Definitions Applicable to the 1998-1999 Contract Year
• Rule 19-8.025 1998 Reimbursement Premium Formula
• Rule 19-8.026 Insurer Reporting Requirements for the 1998-1999 Contract Year
• Rule 19-8.027 Definitions Applicable to the 1999-2000 Contract Year

In other business, the SBA:

• Approved a draft letter to the Joint Legislative Auditing Committee affirming that the SBA’s Trust Fund is in compliance with the requirements of sections 218.409 (6)(a)1 and 218.421(2)(a),F.S.
• Approved $7,990,000 in Florida Housing Finance Corporation Multi-Family Revenue Bonds, for construction of an apartment complex for senior citizens

With no further business to conduct, the SBA portion of the meeting was concluded.

Additional agencies presenting agendas during the Cabinet meeting included the Florida Department of Revenue and the Florida Land and Water Adjudicatory Commission.  Neither had any insurance-related items.  To view the complete Cabinet agenda, click here.

Should you have any questions or comments, please contact Colodny Fass.

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