Florida Hurricane Catastrophe Fund Advisory Council Recommends Approval of Amendments to Rules and Forms
Jan 13, 2012
At its meeting yesterday, January 12, 2012, the Florida Hurricane Catastrophe Fund (“FHCF”) Advisory Council (“Council”) unanimously voted to file proposed Rule 19-8.029 Insurer Reporting Requirements (“Data Call”) and Proposed Rule 19-8.030 Insurer Responsibilities for Notice of Hearing and Final Adoption if no hearing is requested.
It was explained at the meeting that the amendments should simplify business and reduce costs. Many of the changes omit obsolete or repetitive language and cross references.
Two key changes affect the FHCF 2012 Data Call Form (Form FHCF-D1A) by eliminating the Building Code Effectiveness Grading (“BCEG”) and Florida Building Code Indicator fields. It also was explained that the BCEG credit was not a precise credit, but rather more subjective. Had the BCEG credit been eliminated in 2011, it would have had less than a $3 million impact, according to FHCF Chief Operating Officer Jack Nicholson.
The Florida Building Code Indicator Field is being removed because it is not relevant in terms of the information being captured and the credits being provided. No premium impact is expected as a result of the deletions.
“We don’t think any of the [amendments] we are talking about right now would call for any dramatic changes,” Mr. Nicholson stated.
In both proposed Rules, the title for the “High-Risk Account” is being changed to “Coastal Account.”
Amendments to Rule 19-8.029 include the adoption of the 2012 Interim Loss Report (Form FHCF-L1A) and the 2012 Proof of Loss Report (Form FHCF-L1B).
Amendments to Rule 19-8.030 include the adoption of the 2012 Exposure Examination Advance Preparation Instructions (Form FHCF-EAP1) and the 2012 Loss Reimbursement Examination Advance Preparation Instructions (Form FHCF-LAP1).
The Florida State Board of Administration will consider the proposed Rules on February 28, 2012, Mr. Nicholson said.
In other business, the Council:
- Introduced new Council Member Don Brown, a former State Representative from DeFuniak Springs, Florida, who has 40 years of experience in the insurance industry; and new Member Jeff Evans, a Port Orange, Florida resident and State Farm agent since 1974.
- Named John Auer as Council Chair and Floyd Yager as Vice Chair
- Approved the October 18, 2011 meeting minutes
- Noted the dates of the following meetings:
- March 22, 2012 at 1:30 p.m. for the presentation of the 2012 FHCF Premium Formula;
- March 29, 2012 at 10:00 a.m. to vote on the 2012 FHCF Premium Formula;
- May 10, 2012 at 1:30 p.m. to consider the FHCF Estimated Claims Paying Capacity
Mr. Nicholson also gave a brief update on legislative action related to the FHCF, explaining that this year’s goal is to reduce overall mandatory coverage from $17 billion to $12 billion, with proposed changes occurring in 2013. Two bills of interest he noted include:
- HB 833 relating to the Florida Hurricane Catastrophe Fund by State Representative Bill Hager would provide for the phase-in of changes to coverage levels and limits, and revise the cash build-up factor.
- SB 1372 relating to the Florida Hurricane Catastrophe Fund by Senator J.D. Alexander would revise coverage levels available under the FHCF Reimbursement Contract, as well as revise aggregate coverage limits and provide for the phase-in of changes to coverage levels and limits.
Mr. Nicholson said the proposed legislation is an attempt to “right size” the FHCF.
“If you don’t have proper reinsurance protection it puts a lot of risk on the policy owners of this state and could end up in a very catastrophic circumstance for the citizens of this state,” Mr. Nicholson stated.
Said Council Member Brown, “I think the most extreme position that could be taken is to ignore the vulnerability of policyholders in the state of Florida. In my view, the most extreme view would be to do nothing.”
With no further business before the Council, the meeting was adjourned.
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