Florida Hurricane Catastrophe Fund Projected Aggregate 2015 Premium Updated
Jul 6, 2015
The Florida Hurricane Catastrophe Fund (“FHCF”) advised today, July 6, 2015, that, subsequent to the development of its 2015 Ratemaking Formula Report, several insurers revised their coverage selections for the 2015 FHCF Contract Year. As a result of these changes, the estimate of the Projected Aggregate 2015 FHCF Premium has been updated from the originally projected value, which impacts the Projected Payout Multiple.
The Projected Payout Multiple is used to calculate an insurer’s projected payout for the mandatory FHCF coverage pursuant to Section 215.555(4)(d)2.b., Florida Statutes.
The FHCF noted that today’s update takes into account only the change in coverage selections for the 2015 Contract Year. The final Payout Multiple is not determined until reimbursement premiums have been billed as of the end of the year (December 31) and the amount of bond proceeds has been determined. The final payout multiple will equal $17 billion divided by the total reimbursement premiums billed as of December 31.
The Projected Payout Multiple is derived by dividing the FHCF’s estimated single season Claims-Paying Capacity by the estimated total aggregate industry Reimbursement Premium for the FHCF for the Contract Year. An insurer’s Reimbursement Premium is multiplied by the Projected Payout Multiple to estimate FHCF coverage for the Contract Year.
Florida’s State Board of Administration (which oversees the FHCF) is not obligated to reimburse for any losses under the Reimbursement Contract unless the insurer incurs losses from Covered Events for Covered Policies in excess of its retention.
To view the current projected Payout Multiple calculation for mandatory FHCF coverage, click here.
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