Florida Hurricane Catastrophe Fund Advisory Council Hears Legislative Report, Schedules Rule Hearings

On May 15, 2007, the Florida Hurricane Catastrophe Fund Advisory Council (“Council”) met in Tallahassee, Florida and discussed several matters.  A copy of the agenda is attached for your review.

Jack Nicholson, Senior Officer for the Florida Hurricane Catastrophe Fund (“FHCF”), reported on the 2007 legislative activities that will likely impact the FHCF.  Specifically, he reported on House Bill 7031, which expands the definition of FHCF coverages to include commercial self-insurance funds.

Mr. Nicholson indicated that this provision could cause some administrative issues.  Also, he reported on Senate Bill 2498 as it relates to the FHCF.  He explained that the bill allows limited apportionment companies to access optional coverage, extends the medical malpractice exemption from assessments to 2010, includes manufactured housing in the Insurance Capital Build-Up Program, and provides clean-up language regarding Temporary Emergency Additional Coverage Options.

Mr. Nicholson also reported on the 2004/2005 FHCF losses.  He stated that although $851 million in claims remain unpaid, approximately 94% of claims have been paid from 2004 and 95% from 2005.

Tracy Allen, Senior Attorney for the FHCF, then reported on Rule 19-8.028 relating to Premium Formula, Rule 19-8.010 relating to Reimbursement Contract and Rule 19-8.030 relating to Insurers Responsibilities.  With very little discussion, the Council voted to approve filing on all three Rules.  Adoption hearings for these Rules are scheduled for June 12, 2007.

Next, John Forney of Raymond James and Associates, Inc. gave a presentation on bonding estimates.  He stated that the FHCF was downgraded to AA-rated since the Special Session in January 2007.  He also indicated that the FHCF has a very good chance of providing adequate coverage in the event of a major storm.  However, concerns were raised regarding the increased exposure for Citizens Property Insurance Corporation as well as concerns of future downgrades.  Positively, Mr. Forney indicated that the current interest rate environment is good for the FHCF.  Mr. Forney also stated that he would like to see the $28 billion FHCF debt better diversified.  The bonding estimates were approved by the Council.

The next FHCF meeting is scheduled for mid-October, but a specific date has not been set. 

The above information is intended to be a brief summary of the pertinent activities that took place during the Council Meeting and is not intended to be a comprehensive analysis of any particular item.  Please do not hesitate to contact this office should you have any questions or require additional information.