Florida Hurricane CAT Fund Developing Emergency Rule re Capital Incentive Build-up Program 5/25/06

The Florida Hurricane Catastrophe Fund (FHCF) is in the process of developing an emergency rule pursuant to the recently passed property insurance legislation to implement the capital incentive build-up program. The proposed emergency rule will be presented to the Governor and Cabinet on Wednesday, May 31, 2006 for review and possible adoption. The State Board of Administration has scheduled a workshop for all interested parties on Tuesday June 6, 2006 from 1:00 pm to 4:00 pm. As of this date, the proposed rule has not been issued. We will attend these sessions and update you on the progress of this matter.

In addition, the FHCF is holding its annual Participating Insurers Workshop on May 31, 2006 and June 1, 2006.

The topics covered will include the status and financial position of the FHCF, the bonding and emergency assessment process, Federal catastrophe legislation, insurance legislation from the 2006 Florida legislative session and its impact on FHCF rates and coverage implications for insurers, an update on its exposure and loss reimbursement examination programs including explanations on how the new loss reimbursement examination program operates with guidelines on how to be successful, changes to the 2006 Data Call and Reimbursement Contract, the FHCF premium formula including rates, retention multiples, payout multiples and modeling, and an introduction to the new FHCF on-line claims reporting system. At the end of the first day, the FHCF will provide an educational training session that will be beneficial to new companies or personnel new to a company on the basic aspects of the FHCF, the data call submission, the examination programs, and reporting losses to the FHCF.

In addition, the Office of Insurance Regulation (OIR) will be conducting an additional meeting on June 1 from 1:00 pm to 4:00 pm, following the closing remarks at the FHCF Workshop, to discuss implementation of the provisions of the recently enacted property insurance legislation. This meeting will be held in the same conference room as the FHCF Workshop. In attendance from OIR will be:

Tom Streukens, Deputy Commissioner for Property & Casualty

Sharon Binnun, Deputy Commissioner for Business Development & Market Research

David Foy, Chief of Staff

Dr. Ray Spudeck, Senior Economist

Our firm will have representatives present at the FHCF workshop and we will provide an update on all material developments. Should you have any questions, please do not hesitate to contact this office.

Regards,

Fred E. Karlinsky