Cabinet Approves Florida Hurricane Catastrophe Fund Emergency Rule on Optional Date Changes for New Citizens Takeout Companies, Participating Insurers for the 2012-2013 Contract Year
Oct 9, 2012
As part of its meeting agenda this morning, October 9, 2012, the Florida Cabinet approved an Emergency Rule for the Florida Hurricane Catastrophe Fund (“FHCF”) that will provide an optional date change for the FHCF 2012-2013 Contract Year in an effort to mitigate any unintended consequences for property insurance companies taking policies out of Citizens Property Insurance Corporation (“Citizens”).
Also on the agenda, Jay Etheridge was appointed as the Deputy Chief Commissioner of Law Enforcement for the Florida Office of Financial Regulation. Mr. Etheridge previously held the position of Chief of Investigations for the Florida Department of Law Enforcement.
Drew Breakspear was appointed as the Commissioner of the Office of Financial Regulation.
For the Florida Department Highway Safety and Motor Vehicles, Executive Director Julie Jones received approval from the Cabinet for the repeal of 56 obsolete rules. The Department was also granted final approval for new rules relating to laser speed measuring devices.
To view today’s complete Cabinet agenda, click here.
Florida Hurricane Catastrophe Fund Issues Emergency Rule on Optional Date Changes for New Citizens Takeout Companies, Participating Insurers for the 2012-2013 Contract Year
Given the current 2012-2013 efforts being made to reduce Citizens’ exposure, the FHCF issued Emergency Rule 19ER12-1, entitled “Optional Date Changes for New Participants for the 2012-2013 Contract Year”
Effective October 9, 2012, the Emergency Rule will allow for “better coordination” of FHCF coverage for “New Participants” that remove policies from Citizens. It also will apply to any FHCF participating insurer that writes its first Covered Policy after June 1, 2012, but before December 1, 2012.
The Notice of Emergency Rule states that Citizens’ Board of Governors and management are ” . . . considering various alternatives to depopulate Citizens and reduce its policyholder count and the dollar amount of exposure. The size and exposure of Citizens, a state-created property insurer, is a major concern of the Legislature, the Executive Branch, and the public. As of July 31, 2012, Citizens had 1,449,178 policies in force, representing a total exposure of $494 billion. There is an urgent need to remove impediments in order to assist and accommodate the depopulation efforts of Citizens. A large hurricane could result in significant assessments on most property and casualty policyholders in the state. The timely transfer of policies to the private insurance market would serve the State’s interest and help reduce both Citizens’ policyholder count and its exposure amount.”
Emergency Rule 19ER12-1 provides an option for New Participants to report their exposures, as used to determine FHCF coverage and premium, one month early, in order to allow such insurers to purchase FHCF coverage that better aligns their FHCF reimbursement coverage to support their Citizens depopulation efforts for the 2012-2013 FHCF Contract Year.
According to the Notice of Emergency Rule, without this flexibility, New Participants may have to delay the timing of a Citizens takeout program, resulting in less competition in the marketplace and lost opportunities.
The Emergency Rule would allow New Participants the option to pay FHCF premiums based on their exposure on Covered Policies written from June 1, 2012, to November 30, 2012. This is designed to avoid a situation in which a New Participant is required to pay a premium for FHCF coverage on exposure removed from Citizens after a hurricane season has ended.
Under this Emergency Rule, New Participants would have the ability to select the current “as of” reporting date for exposure of December 31, 2012, or they could select an alternative “as of” reporting date of November 30, 2012.
The Notice of Emergency Rule and related Form 2012NPO are attached in PDF format. The complete Emergency Rule text is reprinted below.
Should you have any questions or comments, please contact Colodny Fass& Webb.
THE FULL TEXT OF THE EMERGENCY RULE IS:
19ER12-1, Optional Date Changes for New Participants for the 2012-2013 Contract Year.
(1) Definitions.-As used in this emergency rule:
(a) The term “New Participant” is defined in the 2012-2013 Reimbursment Contract and means any company which begins writing Covered Policies on or after the beginning of the Contract Year. A Company that removes exposure from either Citizens Property Insurance Corporation entity pursuant to an assumption agreement effective on or after June 1 and had written no other Covered Policies before June 1 is also considered a New Participant.
(b) The term “As Of Date” refers to the date on which an insurer determines its exposure under Covered Policies.
(c) The term “Covered Policy” is defined in Section 215.555, F.S.
(2) Optional As Of Date for New Participants.-
(a) A New Participant has the option to change its As Of Date for the 2012-2013 Florida Hurricane Catastrophe Fund Contract Year from December 31, 2012, to November 30, 2012, by executing and filing Form 2012NPO, http://www.flrules.org/Gateway/reference.asp?No=ref-XXXXX, which is hereby adopted and incorporated by reference into this emergency rule. By selecting this option, the insurer also changes the reporting date of the exposure from March 1, 2013, to February 1, 2013, and changes the due date of the actual Reimbursement Premium from May 1, 2013, to April 1, 2013.
(b) To the extent the dates in Form 2012NPO conflict with the dates contained in Rules 19-8.010, 19-8.028, 19-8.029, and 19-8.030, F.A.C., or the documents incorporated therein, this emergency rule, including Form 2012NPO, shall take precedence.
(c) All other provisions of Rules 19-8.010, 19-8.028, 19-8.029, and 19-8.030, F.A.C., remain in full force and effect with respect to a New Participant.
Rulemaking Authority 215.555(3), F.S. Law Implemented 215.555, F.S. History-New 10-9-2012.
THIS RULE TAKES EFFECT UPON BEING FILED WITH THE DEPARTMENT OF STATE UNLESS A LATER TIME AND DATE IS SPECIFIED IN THE RULE.
EFFECTIVE DATE: October 9, 2012
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