Reimbursement Contract

 

STATE BOARD OF ADMINISTRATION
Departmental

RULE NO: RULE TITLE
19ER06-1 (19-8.010): Reimbursement Contract
SPECIFIC REASONS FOR FINDING AN IMMEDIATE DANGER TO THE PUBLIC HEALTH, SAFETY OR WELFARE: The 2006 Legislature passed CS/CS for SB 1980 on Friday, May 5, 2006. This legislation affects the Reimbursement Contract as a whole and specifically impacts options available in the Contract. The Contract (and selected options) must be signed and returned to the Florida Hurricane Catastrophe Fund (FHCF) prior to the June 1, 2006, commencement of the hurricane season. Given the short time frame in which these documents must be reviewed, options chosen and returned to the FHCF and the imminent onset of the 2006 hurricane season, emergency rulemaking is necessary.
REASON FOR CONCLUDING THAT THE PROCEDURE IS FAIR UNDER THE CIRCUMSTANCES:
SUMMARY: Rule 19ER06-1, is titled “Reimbursement Contract”. Paragraph (12) of this rule incorporates the reimbursement contract for the 2006-2007 contract year that participating insurers must sign and return to the FHCF by June 1, 2006. Since the reimbursement contract must be amended to reflect those legislative changes, paragraph (12) of this rule has been amended to reflect that the reimbursement contract now includes three addenda. The changes made to the contract are summarized as follows:
Addendum No. 1: The definition of “losses” in Article VI(4) is amended to clarify that losses covered by the FHCF do not include “rent or rental income.” The language in Article X, which quoted language in Section 215.555(4)(d)2., F.S., which was stricken in CS/CS SB 1980 was removed and the references to the rapid cash build-up in Articles V(16) and Article X were amended to reflect the amendments to Section 215.555(5)(b), F.S. which requires the inclusion of a 25% rapid cash build-up factor in the reimbursement premium formula.
Addendum No. 2: This Addendum, which addresses a new option created in CS/CS for SB 1980 which allows limited apportionment companies to obtain up to $10 million dollars in additional FHCF coverage, must be completed by all limited apportionment companies and allows them to select from $0 up to $10 million in additional coverage. The Addendum also provides information on the cost and payment timeline for such additional coverage and clarifies that other provisions of the Reimbursement Contract, to which the Addendum is attached are applicable to the Addendum.
Addendum No. 3.: This Addendum addresses the changes to Section 215.555(5), F.S. which created a procedure by which Citizens Property Insurance Corporation (“Citizens”) could obtain FHCF coverage for policies when Citizen’s takes over policies from a liquidated insurer. The law allows Citizens to choose whether to include such policies under its Reimbursement Contract with the FHCF or to accept an assignment of the liquidated insurer’s Reimbursement Contract with the FHCF. Addendum No. 3. provides the information on these new options, provides the form on which to make the option and provides the requirements, procedures and timeframes for selecting the option with respect to each transfer of policies from a liquidated insurer to Citizens.
THE PERSON TO BE CONTACTED REGARDING THE EMERGENCY RULE IS: Jack E. Nicholson, Senior FHCF Officer, Florida Hurricane Catastrophe Fund, State Board of Administration of Florida

THE FULL TEXT OF THE EMERGENCY RULE IS:

19ER06-1 Reimbursement Contract.

Paragraphs (1) through (11) No change.

(12) The reimbursement contract for the 2006-2007 contract year, as amended by Addendums 1., 2., and 3., required by Section 215.555(4), F.S., which is called Form FHCF-2006K – “Reimbursement Contract” or “Contract” between (name of insurer) (the “Company”)/NAIC #() and The State Board of Administration of the State of Florida (“SBA”) which Administers the Florida Hurricane Catastrophe Fund (“FHCF”), is hereby adopted and incorporated by reference into this rule. This contract is effective from June 1, 2006 through May 31, 2007.

(13) No change.

THIS RULE TAKES EFFECT UPON BEING FILED WITH THE DEPARTMENT OF STATE UNLESS A LATER TIME AND DATE IS SPECIFIED IN THE RULE.
EFFECTIVE DATE: May 17, 2006