Florida Office of Insurance Regulation Issues Orders Terminating Certain Florida Hurricane Catastrophe Fund Emergency Assessments
Jul 22, 2014
The Florida Office of Insurance Regulation (“OIR”) advised today, July 22, 2014, that it has issued Orders to insurance companies terminating a 1.3 percent Florida Hurricane Catastrophe Fund (“FHCF”) emergency assessment on most property insurance policies. The assessment, which has been used to pay off past hurricane claims, will be eliminated on policies issued or renewed on, or after January 1, 2015. The termination comes 18 months ahead of schedule, due to an early payoff of the bonds used to pay the claims.
Both Orders, one issued to property and casualty insurers and the second, to the Florida Surplus Lines Service Office (FSLSO) and surplus lines agents give specific guidance as to the types of insurance affected and related information on reporting requirements. An Informational Memoranda was also issued, providing further guidance.
To view each document, click on the hyperlinks in bold above.
The emergency assessment applied to all premiums on property and casualty insurance policies in Florida, including surplus lines, but excluded those lines specifically exempted by law. The charge began at one percent in 2007 and was increased to 1.3 percent in 2011. The $2.9 billion collected through May 31, 2014 was used to reimburse insurance companies for claims from the series of eight hurricanes that hit Florida in 2004 and 2005.
The FHCF currently has $12.95 billion available, which comprises a projected 2014 year-end fund balance of $10.95 billion and $2 billion in pre-event bonds, with additional borrowing ability to pay future claims–its highest level in recent years.
Pursuant to the Orders, all policies issued or renewed on or after January 1, 2015 will no longer be subject to the FHCF emergency assessment. The assessment will continue to apply to the direct written premium on all related transactions including, but not limited to, endorsements, policy cancellations, and audit premiums related to policies issued or renewed prior to January 1, 2015 at the applicable percentage below:
- Policies issued or renewed on or after January 1, 2015: emergency assessment is zero percent
- Policies issued or renewed January 1, 2011 – December 31, 2014: emergency assessment is 1.3 percent
- Policies issued or renewed January 1, 2007 – December 31, 2011: emergency assessment is 1 percent
- Policies issued or renewed prior to January 1, 2007: emergency assessment is zero percent
For more information, visit the OIR’s “Assessments” Web page at: http://www.floir.com/Sections/PandC/Assessments.aspx.
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