FPCA Immediate Feedback Needed: FHCF Liquidity Legislative Proposals
Mar 13, 2009
Members:
Per our conference call today, please see the legislative proposals below that attempt to address the Florida Hurricane Catastrophe Fund (“FHCF”) liquidity issues. Please provide any input or suggestions that you may have. We would like to get these concepts to Representatives Pat Patterson and Bryan Nelson, as well as House staff tomorrow (Saturday, March 14).
(1) Require the Florida pension plan or other state investment vehicles to buy FHCF bonds. The FHCF is a better investment risk than some of the other investments the pension plan currently purchases, and this would provide liquidity. This may require a statutory change stating that FHCF bonds are a permissible investment for the pension plan, and it may also require a statutory exception for the pensions plan’s investment concentration.
(2) Rather than decreasing the Temporary Increase in Coverage Layer (“TICL”) or increasing the TICL co-payment, state that Citizens Property Insurance Corporation (“Citizens”) cannot purchase TICL coverage. This will decrease the exposure in TICL and provide a more accurate view of Citizens’ rate deficiencies. If this is done, it will be very important to have Citizens’ assessment mechanism mirror that of the FHCF’s. This would make Citizens assessment function as a “collect and remit” rather than requiring insurers to pay the assessments up front.
(3) Reinstate prior law by allowing an insurer to pay the actual cash value for repairs within 90 days and pay replacement costs once the repairs are made. The current law requiring payment in 90 days exacerbates the current liquidity problem. Additionally, include the contractor or builder on the payments to the insured. This would also cut back on fraud.
(4) Ensure FHCF recoveries are admitted assets. This appears to be current law, but the statute should be strengthened to avoid confusion.
(5) State that the FHCF “will pay” its obligations pursuant to any reimbursement contract, rather than the FHCF will pay up to the amount of cash it can raise.
Please send your feedback to Katie Webb at kwebb@cftlaw.com.