This rule is promulgated to implement Section 215.555, Florida Statutes, regarding the Florida Hurricane Catastrophe Fund, for the 2011-2012 contract year.

STATE BOARD OF ADMINISTRATION

Rule No. : RULE TITLE :
19-8.028: Reimbursement Premium Formula
PURPOSE AND EFFECT: This rule is promulgated to implement Section 215.555, Florida Statutes, regarding the Florida Hurricane Catastrophe Fund, for the 2011-2012 contract year.
SUMMARY: Proposed amended Rule 19-8.028, F.A.C., establishes the premium formula and adopts the rates for the 2011-2012 contract year.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: A statement of estimated regulatory costs has not been prepared by the agency for the rule listed above as there is no adverse impact on economic growth, private-sector job creating or employment, or private sector investment from the changes made to this rule. Further, there is no adverse impact on business competitiveness or innovation and no regulatory costs resulting from the changes made to this rule. There is no cost to other states, local governmental entities, small counties or small cities and no impact on state or local revenues from the changes made to this rule.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
RULEMAKING AUTHORITY: 215.555(3) FS.
LAW IMPLEMENTED: 215.555(2), (3), (4), (5), (6), (7) FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE SCHEDULED AND ANNOUNCED IN THE FAW.
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Tracy Allen, Senior Attorney, Florida Hurricane Catastrophe Fund, State Board of Administration, P.O. Box 13300, Tallahassee, FL 32317-3300, [phone], [e-mail]

THE FULL TEXT OF THE PROPOSED RULE IS:

19-8.028 Reimbursement Premium Formula.

(1) through (2)(b) No change.

(c) Citizens Property Insurance Corporation or “Citizens” means the entity formed under Section 627.351, F.S., and refers to both Citizens Property Insurance Corporation High Risk Account and Citizens Property Insurance Corporation Personal Lines and Commercial Lines Accounts.

(d) through (e) No change.

(f) Data Call means the annual reporting of insured values forms. These forms, incorporated into and adopted by Rule 19-8.029, F.A.C., are the FHCF-D1A for the Contract Years after the 2002/2003 Contract Year year and the FHCF-D1A and the FHCF-D1B for the Contract Year 2002/2003 and all prior Contract Years years.

(g) through (3)(l) No change.

(m) For the 2010-2011 Contract Year, the Formula developed by the Board’s Independent Consultant, “Florida Hurricane Catastrophe Fund: 2010 Ratemaking Formula Report Presented to the State Board of Administration of Florida, March 18, 2010” is hereby adopted and incorporated by reference into this rule. The basic premium rates developed in accordance with the Premium Formula methodology approved by the Board on April 13, 2010, are hereby adopted and incorporated by reference in Form FHCF-Rates 2010, “Florida Hurricane Catastrophe Fund Proposed 2010 Rates, Presented to the State Board of Administration of Florida, March 18, 2010” and is hereby adopted and incorporated by reference into this rule. These incorporated documents may be obtained directly from the SBA website: www.sbafla.com/fhcf or by contacting the SBA by mail, P. O. Box 13300, Tallahassee, FL 32317-3300, with a request for the documents.

(n) For the 2011-2012 Contract Year, the Formula developed by the Board’s Independent Consultant, “Florida Hurricane Catastrophe Fund: 2011 Ratemaking Formula Report Presented to the State Board of Administration of Florida, March 17, 2011” is hereby adopted and incorporated by reference into this rule. The basic premium rates developed in accordance with the Premium Formula methodology approved by the Board on May 3, 2011, are hereby adopted and incorporated by reference in Form FHCF-Rates 2011, “Florida Hurricane Catastrophe Fund Proposed 2011 Rates, Presented to the State Board of Administration of Florida March 17, 2011” is hereby adopted and incorporated by reference into this rule. These incorporated documents may be obtained directly from the SBA website: www.sbafla.com/fhcf or by contacting the SBA by mail, P. O. Box 13300, Tallahassee, FL 32317-3300, with a request for the documents.

(4)(a) through (c) No change.

(d) Specialized Fine Arts Risks. Any policy or endorsement exclusively covering Specialized Fine Arts Risks and not covering any residential structure and/or contents thereof other than such specialized fine arts items covered in the fine arts policy, shall be exempt from the Fund as a risk meeting specialized loss control requirements if the insurer employs underwriting criteria and requires its policyholders to adhere to subparagraphs 1. through 7., immediately below. For purposes of the exemption in this paragraph, a “Specialized Fine Arts Risk” is a policy or endorsement which insures paintings, works on paper, etchings, art glass windows, pictures, statuary, sculptures, tapestries, antique furniture, antique silver, antique rugs, rare books, and other bona fide works of art, of rarity, of historic value, or artistic merit; which charges a minimum pPremium of $500; which insures scheduled items valued, in the aggregate, at no less than $100,000; and which requires an investment by the insured in loss control measures to protect the Specialized Fine Arts Risks being insured.

1. The policyholder must demonstrate a willingness and determination to reduce the probability of loss.

2. The insurer must perform a periodic and thorough specialized inspection and must provide a specialized loss prevention service designed to prevent or minimize loss.

3. Insurable values must be sufficient to produce a pPremium amount to warrant the furnishing of special inspection and loss prevention service by the insurer. For purposes of this rule, the insurable value of the scheduled items must be, in the aggregate, no less than $100,000 and the minimum pPremium amount must be no less than $500.

4. through (5) No change.

Rulemaking Authority 215.555(3) FS. Law Implemented 215.555(2), (3), (4), (5), (6), (7) FS. History–New 9-20-99, Amended 7-3-00, 9-17-01, 7-17-02, 7-2-03, 7-29-04, 7-17-05, 7-6-06, 7-17-07, 6-16-08, 8-2-09, 7-8-10,_________.

NAME OF PERSON ORIGINATING PROPOSED RULE: Jack E. Nicholson, FHCF Chief Operating Officer, State Board of Administration
NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: The Trustees of the State Board of Administration of Florida
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: May 3, 2011
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: September 10, 2010, Vol. 36, No. 36