DRAFT Implementation Orders Imminent on Discontinued Florida Hurricane Catastrophe Fund 2005 Emergency Assessment
Jul 9, 2014
According to Florida State Board of Administration (“SBA”) officials, the Florida Office of Insurance Regulation (“OIR”) is expected to issue Orders implementing the June 17, 2014 Florida Cabinet resolution terminating the 1.3 percent emergency assessment (“assessment”) levied by the Florida Hurricane Catastrophe Fund (“FHCF”) on certain Florida policyholders since 2010. Florida law empowers the OIR to issue Orders separately applicable to authorized and surplus lines placements. The FHCF assessment will be discontinued on all applicable policies incepting or renewed on or after January 1, 2015. This is considered to be a positive development demonstrating improvement in the Florida insurance market.
Originally scheduled to end on July 1, 2016, the assessment was first authorized in 2010 to finance the repayment of FHCF claims stemming from Hurricanes Dennis, Katrina, Rita and Wilma–all of which struck the state of Florida during the 2005 Hurricane Season.
The OIR is expected to issue its implementation Orders sometime between July and early August 2014, pending the satisfaction of outstanding bonds related to the payment of the 2005 claims. The SBA is currently working on an informational memorandum that will provide further clarification of the anticipated Orders.
According to the Cabinet’s June 17th resolution, the current 1.3 percent assessment will not apply to insurance policies written or renewed on or after January 1, 2015. However, a policy with an effective date prior to January 1, 2015 will continue to be subject to the assessment, including any endorsements of that policy.
The assessment applies to all property and casualty lines of business, including surplus lines coverages, but excludes workers’ compensation policies, accident and health policies, medical malpractice policies, and policies written under the National Flood Insurance Program and the Federal Crop Insurance Act.
Of note, similar future assessments are always possible and may be imposed in accordance with Florida law.
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