Purpose


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.