Florida Hurricane Catastrophe Fund Discusses Proposed Amendments to Rules and Forms

Jan 9, 2012


During a Rule Development Workshop today, January 9, 2012, representatives of the Florida Hurricane Catastrophe Fund (“FCHF”) proposed the elimination of the Building Code Effectiveness Grading (“BCEG”) Code and the Florida Building Code Indicator fields from the FHCF’s Data Call Form (FHCF-D1A). 

During the Workshop, FHCF officials also recommended the removal of obsolete and unnecessary language from Rules 19-8.028, 19-8.029 and 19-8.030 of the Florida Administrative Code, respectively entitled “Reimbursement Premium Formula,” “Insurer Reporting Requirements” and “Insurer Responsibilities.”

The meeting materials are attached.

The FHCF Advisory Council will consider the proposed changes during its January 12 meeting.

FHCF Chief Operating Officer Jack Nicholson explained that the proposed modifications essentially expressed “the need to simplify, as well as eliminate some of the problems with the exactness of trying to capture certain mitigation data.”  He said the proposed changes should simplify business and reduce costs.

Mr. Nicholson added that individual mitigation factors are important from a direct insurer’s standpoint.  He explained that the FHCF’s goal is to provide mitigation discounts for insurers’ books of business.

“We are looking to use mitigation factors that are not controversial, that are very clear and easy to report by the insurance companies,” Mr. Nicholson stated. “The factors we have come up with are opening protections, year built and the roof shape.  We are dropping the building code probability indicator and the BCEG credit-that is kind of a universal thing. “

Proposed changes to the three Rules follow:


Rule 19-8.028 Reimbursement Premium Formula

FHCF Senior Attorney Tracy Allen said the title for the “High-Risk Account” should be changed to “Coastal Account” in all three Rules and all cross references.  Also, unnecessary, repetitive language and obsolete language should be removed.

In Rule 19-8.028, in Paragraph 4 (d) Specialized Fine Art Risks, a clarification is proposed to include only those items that are normally included in a homeowners policy and would be covered by the FHCF, she said.


Rule 19-8.029 Insurer Reporting Requirements

It was recommended that the FHCF 2012 Data Call (Form FHCF-D1A) be adopted with the elimination of the BCEG Field and the Building Code Indicator Field.

The BSEG credit, it was explained, is not precise, but rather a “judgmental” credit.  This credit was being overridden by the credit that is provided for other mitigation fields, it was noted.  About $1 billion in premium was analyzed to make this determination.

It is estimated that, if the BCEG field were to have been eliminated in 2011, it would have had less than a $3 million impact.  Thus, the FHCF is recommending that the BCEG reporting requirement should be eliminated because of its relatively small impact on premium collected.

The Florida Building Code Indicator Field was also recommended for elimination because it is not relevant in terms of the information being captured and the credits being provided.  No premium impact is expected as a result of the deletion.

The FHCF is also recommending the adoption of the 2012 Interim Loss Report (Form FHCF-L1A) and the 2012 Proof of Loss Report (Form FHCF-L1B).  Language below the signature requirement for the latter was strengthened, it was noted.


Rule 19-8.030 Insurer Responsibilities

The FHCF is proposing the adoption of the 2012 Exposure Examination Advance Preparation Instructions (Form-EAP1) and the 2012 Loss Reimbursement Examination Advance Preparation Instructions (Form FHCF-LAP1). 

Comments on any of the proposed Rule changes are being accepted until 5:00 p.m. on January 11, 2012, Ms. Allen noted.

With no further business, the Workshop was adjourned.



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