FPCA Member Comment Requested on Proposed Legislation To Delay Citizens’ Wind-Only Boundary Changes

Feb 3, 2010

Unless certain conditions are met, Florida law provides that, beginning December 1, 2010, Citizens Property Insurance Corporation’s (“Citizens”) Board of Governors must reduce the geographic area eligible for wind-only insurance coverage.  This process is sometimes known as a “choke down” on wind-only policies.

Certain insurers are interested in pursuing legislation that would delay the date on the “choke down” for a period of years.  In light of this development, Florida Property and Casualty Association (“FPCA”) Members are asked to submit their comments, questions and concerns to Katie Webb at kwebb@cftlaw.com as soon as possible.

Citizens’ annual statutory Probable Maximum Loss Report documents any changes in Citizens’ wind-only eligible area relative to a 2001 benchmark. Further reductions to the wind-only boundaries will be required in the future if the benchmark is not met again. In the past, Florida’s Legislature has extended the boundary reduction deadlines twice. 

The applicable statute, F.S. 627.351(6)(y)(2), reads:

(y)(2.)  Beginning December 1, 2010, if the report under subparagraph 1. for any year indicates that the 100-year probable maximum loss attributable to wind-only coverages and the quota share program combined does not reflect a reduction of at least 25 percent from the benchmark, the board shall reduce the boundaries of the high-risk area eligible for wind-only coverages under this subsection in a manner calculated to reduce such probable maximum loss to an amount at least 25 percent below the benchmark. 

This issue will be discussed in further detail at the next FPCA Homeowners’ Division meeting.