Optional Date Changes for Certain New Participants

 

STATE BOARD OF ADMINISTRATION

RULE NO.: RULE TITLE:
19ER12-1: Optional Date Changes for Certain New Participants
SPECIFIC REASONS FOR FINDING AN IMMEDIATE DANGER TO THE PUBLIC HEALTH, SAFETY OR WELFARE: This emergency rule is necessary to allow for better coordination of the Florida Hurricane Catastrophe Fund (“FHCF”) coverage for “New Participants” that remove policies from Citizens Property Insurance Corporation (“Citizens”) given the current 2012-2013 efforts being made to reduce Citizens’ exposure and will apply to any FHCF participating insurer that writes its first Covered Policy after June 1, 2012, but before December 1, 2012. Citizens’ board and management are considering various alternatives to depopulate Citizens and reduce its policyholder count and the dollar amount of exposure. The size and exposure of Citizens, a state-created property insurer, is a major concern of the Legislature, the Executive Branch, and the public. As of July 31, 2012, Citizens had 1,449,178 policies in force, representing a total exposure of $494 billion. There is an urgent need to remove impediments in order to assist and accommodate the depopulation efforts of Citizens. A large hurricane could result in significant assessments on most property and casualty policyholders in the state. The timely transfer of policies to the private insurance market would serve the State’s interest and help reduce both Citizens’ policyholder count and its exposure amount. This emergency rule provides an option for New Participants to report their exposures, as used to determine FHCF coverage and premium, one month early, in order to allow such insurers to purchase FHCF coverage that better aligns their FHCF reimbursement coverage to support their Citizens depopulation efforts for the 2012-2013 FHCF Contract Year. Without this flexibility, New Participants may have to delay the timing of a Citizens takeout program resulting in less competition in the marketplace and lost opportunities. The emergency rule would allow New Participants the option to pay FHCF premiums based on their exposure on Covered Policies written from June 1, 2012, to November 30, 2012. This would avoid the situation in which a New Participant is required to pay a premium for FHCF coverage on exposure removed from Citizens after the hurricane season has ended. Under this emergency rule, New Participants would have the ability to select the current “as of” reporting date for exposure of December 31, 2012, or they could select an alternative “as of” reporting date of November 30, 2012.
REASON FOR CONCLUDING THAT THE PROCEDURE IS FAIR UNDER THE CIRCUMSTANCES: The concept of filing an emergency rule with the changes included in this emergency rule has been discussed at a rule workshop, where similar changes are also being proposed for implementation in the 2013-2014 Contract Year and at an FHCF Advisory Council meeting. Both meetings were open to the public. In addition, this rule has been placed on the FHCF website. This emergency rule is a benefit for the public at large, the New Participant, Citizens, and the FHCF. The emergency rule provides affected New Participants with an additional option for exposure reporting to facilitate take-out programs without adversely affecting the administration of the FHCF or other participating insurers.
SUMMARY: SUMMARY: The emergency rule would allow New Participants to select an option which changes the current “as of” reporting date for exposure from December 31, 2012, to November 30, 2012, changes the reporting date of the exposure from March 1, 2013, to February 1, 2013, and changes the actual premium payment from May 1, 2013, to April 1, 2013.
THE PERSON TO BE CONTACTED REGARDING THE EMERGENCY RULE IS: Jack E. Nicholson, Chief Operating Officer, Florida Hurricane Catastrophe Fund, State Board of Administration of Florida.

THE FULL TEXT OF THE EMERGENCY RULE IS:

19ER12-1, Optional Date Changes for New Participants for the 2012-2013 Contract Year.

(1) Definitions. - As used in this emergency rule:

(a)  The term “New Participant” is defined in the 2012-2013 Reimbursment Contract and means any company which begins writing Covered Policies on or after the beginning of the Contract Year.  A Company that removes exposure from either Citizens Property Insurance Corporation entity pursuant to an assumption agreement effective on or after June 1 and had written no other Covered Policies before June 1 is also considered a New Participant.

(b)  The term “As Of Date” refers to the date on which an insurer determines its exposure under Covered Policies. 

(c) The term “Covered Policy” is defined in Section 215.555, F.S.

(2) Optional As Of Date for New Participants.-

(a) A New Participant has the option to change its As Of Date for the 2012-2013 Florida Hurricane Catastrophe Fund Contract Year from December 31, 2012, to November 30, 2012, by executing and filing Form 2012NPO, which is hereby adopted and incorporated by reference into this emergency rule. By selecting this option, the insurer also changes the reporting date of the exposure from March 1, 2013, to February 1, 2013, and changes the due date of the actual Reimbursement Premium from May 1, 2013, to April 1, 2013.

(b) To the extent the dates in Form 2012NPO conflict with the dates contained in Rules 19-8.010, 19-8.028, 19-8.029, and 19-8.030, F.A.C., or the documents incorporated therein, this emergency rule, including Form 2012NPO, shall take precedence.

(c) All other provisions of Rules 19-8.010, 19-8.028, 19-8.029, and 19-8.030, F.A.C., remain in full force and effect with respect to a New Participant.

Rulemaking Authority 215.555(3) FS.  Law Implemented  215.555 FS.  History-New 10-9-12.

 

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: October 9, 2012