Florida Hurricane Catastrophe Fund Advisory Council Votes to File Reimbursement Contract for Notice, Adoption
Aug 30, 2012
At its meeting today, August 30, 2012, the Florida Hurricane Catastrophe Fund (“FHCF”) Advisory Council (“Council”) unanimously voted to file Rule 19-8.010 Reimbursement Contract and its Incorporated Forms for Notice of Proposed Rule and, if no one requests a timely hearing, subsequent adoption. Proposed revisions include clarification of certain provisions, removal of obsolete language, and numerous date changes.
To view the agenda for today’s meeting, click here.
During a Rule Development Workshop held earlier in the day, the State Board of Administration (“SBA”) reviewed the proposed changes to Rule 19-8.010 Reimbursement Contract article by article, discussing the relevance of each proposed revision, elimination, and language modification.
The Council subsequently approved the proposed changes after FHCF Chief Operating Officer Dr. Jack Nicholson summarized each proposed change during a brief review.
Some of the most noteworthy changes are contained in Article X, which includes a provision that would reduce coverage to 45 percent if premium payment to the FHCF is late. Another revision changed actual exposure dates for new participants.
To view the proposed Rule amendments, click here. Key changes follow:
Article VI – Exclusions: Paragraph (13) has been eliminated. This paragraph would have excluded coverage of personal contents in a commercial storage facility (including jewelry in an off-premises vault under a policy that covers only those personal contents). SBA members agreed this coverage should not be excluded.
Article IX – Reimbursement Premium: Paragraph (2) — Language was clarified to make the provision more precise. This paragraph refers to exposure as of June 30 in accordance with Article X. The section also states that new business written after June 30 will not increase or decrease the company’s FHCF Reimbursement Premium or impact its FHCF coverage.
Article X – Reports and Remittances: Paragraph (1)(c) has been eliminated. The information was moved into a separate section entitled “Confidential Information/Trade Secret Information” at the end of Article X.
Paragraphs (2)(b)(2), (3), and (4) add several specific provisions relating to reimbursement.
(2)(b)(2): This paragraph states that if the company fails to pay the full annual provisional Reimbursement Premium as specified in paragraph (1) on time, coverage will be reduced to 45 percent for the Contract Year.
(2)(b)(3): This paragraph states that the provisions in (1) and (2) will not apply if a state regulator provides a letter of assurance to the FHCF that the company has the resources to pay the full Reimbursement Premium for the selected coverage level.
(2)(b)(4): This paragraph states that after control or oversight has been transferred through a legal or regulatory agency, the company shall specify by August 1 in a letter to the FHCF its intentions to pay the full Reimbursement Premium or default to 45 percent coverage or to provide assurances it will pay.
Article XIII – Inspection of Records: Paragraph (1), entitled “Purpose of FHCF Examination,” was added to explain the purpose of examinations conducted by the SBA. The provision warns that such examinations are limited and cannot be relied upon to determine if a company’s data is reported accurately nor used as a legal determination to measure a company’s compliance.
Article XVII – Applicable Law: Paragraphs (1) and (2) are both stricken. The paragraphs outline legal rights already defined by Florida Statute and were deemed unnecessary.
Addendum No. 1, Addendum No. 2, Appendix A to Addendum No. 2, and an Optional Amendment: All changes to these sections involved minor language cleanup.
Chief Operating Officer’s Report
During his report, Dr. Nicholson focused on the need to draw Legislative attention to the FHCF and urged Council members to begin thinking about possible legislation for the 2013 Session. He added that ideas are needed since nothing of any substance has yet been developed.
“I felt like last year we went after steak and lobster and, by end of Session, we were hoping to get a French Fry off the floor that had been stepped on, with a little bit of ketchup on it,” Dr. Nicholson said.
“I think this year I would be satisfied with a hamburger,” he added.
“We certainly didn’t even get the bill heard in the House,” Dr. Nicholson recalled of the 2012 Session. “I just feel like it’s important to get a critical mass of support.”
Dr. Nicholson said the Council will discuss the FHCF’s claims paying capacity next month.
With no further business before the Council, the meeting was adjourned.
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