This rule is promulgated to implement Section 215.5595, Florida Statutes.  

  •  

    STATE BOARD OF ADMINISTRATION

    RULE NO: RULE TITLE
    19-15.001: Insurance Capital Build-Up Incentive Program
    PURPOSE AND EFFECT: This rule is promulgated to implement Section 215.5595, Florida Statutes.
    SUMMARY: The amendments to Rule 19-15.001, F.A.C., address the changes made to the Insurance Capital Build-Up Incentive Program during the 2007 Regular Legislative Session, add a street address for delivery of documents and note that certain documents may be filed electronically.
    SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: The regulatory costs are minimal. 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.
    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.
    SPECIFIC AUTHORITY: 215.5595(6) FS.
    LAW IMPLEMENTED: 215.5595(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 FAW.
    THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Jack E. Nicholson, Senior FHCF Officer of the Florida Hurricane Catastrophe Fund, State Board of Administration, P. O. Box 13300, Tallahassee, FL 32317-3300; telephone (850)413-1340

    THE FULL TEXT OF THE PROPOSED RULE IS:

    19-15.001 Insurance Capital Build-Up Incentive Program.

    (1) through (3)(f) No change.

    (g) “Insurer writing only manufactured housing” includes an Insurer that 1. is a Florida domiciled insurer that begins writing personal lines residential manufactured housing policies in Florida after March 1, 2007, and that removes a minimum of 50,000 policies from Citizens Property Insurance Corporation without accepting a bonus, provided at least 25 percent of its policies cover manufactured housing. Such an insurer may count any funds above the minimum capital and surplus requirement that were contributed into the insurer after March 1, 2007, as new capital under this statute or 2. is a Florida domiciled insurer that writes at least 40 percent of its policies covering manufactured housing in Florida.

    (h)(g) “Minimum Capital Contribution” means, with respect to Insurers who apply to the Board by July 1, 2006, a contribution of New Capital to its Surplus which is at least equal to the amount of the Surplus Note. “Minimum Capital Contribution” means, with respect to all other applicants applying after July 1, 2006 and before June 1, 2007, a contribution to its Surplus that is twice the amount of the Surplus Note. For insurers writing only manufactured housing as defined in paragraph (3)(g), the New Capital Contribution is required to be equal to the amount of the Surplus Note amount subject to paragraph (3)(i), below.

    (i)(h) “Minimum Required Surplus” means, for purposes of this Program, that the Insurer’s total Surplus, after the issuance of the Surplus Note and New Capital contribution equals at least $14 million for Insurers writing only manufactured housing policies and $50 million for all other Insurers.

    (j)(i) “Minimum Writing Ratio” means a 2:1 ratio of Net Written Premium to Surplus except as to a newly formed Insurer writing only manufactured housing policies. The “Minimum Writing Ratio” for an Insurer writing only manufactured housing policies shall be the ratio provisions provided in Section 624.4095, F.S.

    (k)(j) “Net Written Premium” means direct Premium plus assumed Premium less ceded Premium.

    (l)(k) “New Capital” must be in the form of Cash or Cash Equivalents and be recorded as additional paid-in capital or new stock issued. New Capital does not include Citizens Property Insurance Corporation take-out bonuses pursuant to Section 627.3511, F.S. Except as provided below, a A New Capital contribution does not constitute contributions by the Insurer made prior to the Insurer’s application date for the Surplus Note or any other funds contributed to the Insurer’s Surplus which are made for purposes other than in conjunction with the requirements of the Program. New Capital may include the initial contribution to surplus for a new Insurer if such Insurer has been formed in order to participate in the insurance Capital Build-up Incentive Program and the capital contribution was made in conjunction with the Insurer applying for the surplus note. An insurer described in subparagraph (3)(g)1., above, may count any funds above the minimum capital and surplus requirement that were contributed into the insurer after March 1, 2007, as new capital.

    (m)(l) “Surplus Note” means the Surplus Note issued by the Insurer to the Board.

    (n)(m) “Office” means the Office of Insurance Regulation, which was created in Section 20.121(3), F.S.

    (o)(n) “Premium” means premiums relating to residential property insurance in Florida including the peril of wind.

    (p)(o) “Program” means the Insurance Capital Build-Up Incentive Program created by Section 215.5595, F.S.

    (q)(p) “Substantial Impairment” or “Substantially Impair” means that the Commissioner of Insurance Regulation (Commissioner) has solvency concerns that the Insurer may not be able to meet the obligations of its policyholders and has provided the Board with a written explanation.

    (r)(q) “Surplus” means the Insurer’s admitted assets less the Insurer’s liabilities and refers to the entire Surplus of the Insurer.

    (4) through (5)(a) No change.

    (b) Insurers who apply to the Board after July 1, 2006, other than insurers writing only manufactured housing, but before June 1, 2007, must contribute an amount of New Capital to its Surplus which is at least twice the amount of the Surplus Note requested.

    (c) Insurers must submit a completed application including supplying all the required documentation to the Board. The application, Form SBA 15-1, rev. 09/07 2/07, is hereby adopted and incorporated by reference into this rule. This Form is available on the Board’s website, www.sbafla.com, under “Insurance Capital Build-Up Incentive Program”.

    (d) Prior to the time the application, Form SBA 15-1, rev. 09/07 06/07, is submitted, the Insurer must review and accept the terms of the Surplus Note, Form SBA 15-2, rev. 09/07 06/07, which is hereby adopted and incorporated by reference into this rule. The Surplus Note is available on the Board’s website, www.sbafla.com, under “Insurance Capital Build-Up Incentive Program”.

    (e) through (h) No change.

    (i) The Insurer must commit to meeting the Minimum Writing Ratio of Net Written Premium for the term of the Surplus Note and must submit quarterly filings to the Office and the Board. The quarterly filings shall be on Form SBA 15-3, rev. 09/07 06/07, which is hereby adopted and incorporated by reference into this rule. This Form is available on the Board’s website, www.sbafla.com, under “Insurance Capital Build-Up Incentive Program”.

    (j) through (7) No change.

    (a) In addition to Insurers submitting the Surplus Note application, SBA Form 15-1, rev. 09/07 06/07, the Board may request additional information and data prior to the time the Surplus Note is executed. Such additional information may consist of additional documentation, answers to questions that arise as a result of the review process, and additional information solicited through oral interviews.

    (b) through (9)(a)1. No change.

    2. Failure to submit quarterly filings of Form SBA 15-3, rev. 09/07 06/07, to the Office.

    3. Failure to maintain the Minimum Required Surplus except for situations involving the payment of losses resulting from a catastrophic event or a series of events resulting in catastrophic losses or where Minimum Required Surplus is reduced as a result of the accounting treatment for deferred acquisition costs or where Minimum Required Surplus is reduced as a result of the repayment of principal.

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

    Specific Authority 215.5595 FS. Law Implemented 215.5595(2), (2)(c), (d), (e), (g) FS. History–New 2-22-07, Amended 6-3-07, ________.


    NAME OF PERSON ORIGINATING PROPOSED RULE: Jack E. Nicholson, Senior FHCF Officer, Florida Hurricane Catastrophe Fund, State Board of Administration of Florida
    NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: The Trustees of the State Board of Administration of Florida
    DATE PROPOSED RULE APPROVED BY AGENCY HEAD: June 12, 2007
    DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: May 25, 2007, Vol. 33, No. 21

Document Information

Comments Open:
6/22/2007
Summary:
The amendments to Rule 19-15.001, F.A.C., address the changes made to the Insurance Capital Build-Up Incentive Program during the 2007 Regular Legislative Session, add a street address for delivery of documents and note that certain documents may be filed electronically.
Purpose:
This rule is promulgated to implement Section 215.5595, Florida Statutes.
Rulemaking Authority:
215.5595(6) FS.
Law:
215.5595(2), (3), (4), (5), (6), (7) FS.
Contact:
Jack E. Nicholson, Senior FHCF Officer of the Florida Hurricane Catastrophe Fund, State Board of Administration, P. O. Box 13300, Tallahassee, FL 32317-3300; telephone (850)413-1340
Related Rules: (1)
19-15.001. Insurance Capital Build-Up Incentive Program