Insurers

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A bill to be entitled 1
An act relating to insurers; reenacting and amending 2
s. 215.555, F.S.; revising the definition of the term 3
"retention" for the purpose of reimbursement from the 4
Florida Hurricane Catastrophe Fund; revising the 5
reimbursement amount promised by the board in the 6
contract with property insurers; revising the minimum 7
of loss adjustment expenses; providing the hurricane 8
loss portion of the formula that determines the 9
actuarially indicated premiums to be paid to the fund; 10
authorizing, rather than requiring, such formula to 11
provide for cash build-up factors; removing obsolete 12
language; revising the cash build-up factor for a 13
specified contract year; amending s. 627.944, F.S.; 14
providing that risk retention groups registered to do 15
business in this state are deemed insurance companies 16
authorized to do business in this state; reenacting s. 17
215.5551(3)(b), F.S., relating to Reinsurance to 18
Assist Policyholders program, to incorporate the 19
amendments made to s. 215.555, F.S., in a reference 20
thereto; providing an effective date. 21
22
Be It Enacted by the Legislature of the State of Florida: 23
24
Section 1. Paragraph (e) of subsection (2), paragraph (b) 25

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of subsection (4), and paragraph (b) of subsection (5) of 26
section 215.555, Florida Statutes, are amended, and paragraphs 27
(c), (d), and (e) of subsection (4), paragraph (c) of subsection 28
(5), and paragraphs (a) and (d) of subsection (16) of that 29
section are reenacted, to read: 30
215.555 Florida Hurricane Catastrophe Fund.— 31
(2) DEFINITIONS.—As used in this section: 32
(e) "Retention" means the amount of losses below which an 33
insurer is not entitled to reimbursement from the fund. An 34
insurer's retention shall be calculated as follows: 35
1. The board shall calculate and report to each insurer 36
the retention multiples for that year. For the contract year 37
beginning June 1, 2026 2005, the retention multiple must shall 38
be equal to $4.5 billion divided by the total estimated 39
reimbursement premium for the contract year; for subsequent 40
years, the retention multiple shall be equal to $4.5 billion, 41
adjusted based upon the reported exposure for the contract year 42
occurring 2 years before the particular contract year to reflect 43
the percentage growth in exposure to the fund for covered 44
policies since 2004, divided by the total estimated 45
reimbursement premium for the contract year. Total reimbursement 46
premium for purposes of the calculation under this subparagraph 47
shall be estimated using the assumption that all insurers have 48
selected the 90-percent coverage level. 49
2. The retention multiple as determined under subparagraph 50

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1. shall be adjusted to reflect the coverage level elected by 51
the insurer. For insurers electing the 90-percent coverage 52
level, the adjusted retention multiple is 100 percent of the 53
amount determined under subparagraph 1. For insurers electing 54
the 75-percent coverage level, the retention multiple is 120 55
percent of the amount determined under subparagraph 1. For 56
insurers electing the 45-percent coverage level, the adjusted 57
retention multiple is 200 percent of the amount determined under 58
subparagraph 1. 59
3. An insurer shall determine its provisional retention by 60
multiplying its provisional reimbursement premium by the 61
applicable adjusted retention multiple and shall determine its 62
actual retention by multiplying its actual reimbursement premium 63
by the applicable adjusted retention multiple. 64
4. For insurers who experience multiple covered events 65
causing loss during the contract year, beginning June 1, 2005, 66
each insurer's full retention shall be applied to each of the 67
covered events causing the two largest losses for that insurer. 68
For each other covered event resulting in losses, the insurer's 69
retention shall be reduced to one-third of the full retention. 70
The reimbursement contract shall provide for the reimbursement 71
of losses for each covered event based on the full retention 72
with adjustments made to reflect the reduced retentions on or 73
after January 1 of the contract year provided the insurer 74
reports its losses as specified in the reimbursement contract. 75

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(4) REIMBURSEMENT CONTRACTS.— 76
(b)1. The contract shall contain a promise by the board to 77
reimburse the insurer for 45 percent, 75 percent, or 90 percent 78
of its losses and applicable loss adjustment expenses from each 79
covered event in excess of the insurer's retention, plus 5 80
percent of the reimbursed losses to cover loss adjustment 81
expenses. For contracts and rates effective on or after June 1, 82
2026 2019, the loss adjustment expense included reimbursement 83
must be the lesser of 15 10 percent of the total subject losses 84
before reimbursement or the total subject actual loss adjustment 85
expenses reimbursed losses. 86
2. The insurer must elect one of the percentage coverage 87
levels specified in this paragraph and may, upon renewal of a 88
reimbursement contract, elect a lower percentage coverage level 89
if no revenue bonds issued under subsection (6) after a covered 90
event are outstanding, or elect a higher percentage coverage 91
level, regardless of whether or not revenue bonds are 92
outstanding. All members of an insurer group must elect the same 93
percentage coverage level. Any joint underwriting association, 94
risk apportionment plan, or other entity created under s. 95
627.351 must elect the 90-percent coverage level. 96
3. The contract shall provide that reimbursement amounts 97
shall not be reduced by reinsurance paid or payable to the 98
insurer from other sources. 99
(c)1. The contract shall also provide that the obligation 100

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of the board with respect to all contracts covering a particular 101
contract year shall not exceed the actual claims-paying capacity 102
of the fund up to a limit of $17 billion for that contract year, 103
unless the board determines that there is sufficient estimated 104
claims-paying capacity to provide $17 billion of capacity for 105
the current contract year and an additional $17 billion of 106
capacity for subsequent contract years. If the board makes such 107
a determination, the estimated claims-paying capacity for the 108
particular contract year shall be determined by adding to the 109
$17 billion limit one-half of the fund's estimated claims-paying 110
capacity in excess of $34 billion. However, the dollar growth in 111
the limit may not increase in any year by an amount greater than 112
the dollar growth of the balance of the fund as of December 31, 113
less any premiums or interest attributable to optional coverage, 114
as defined by rule which occurred over the prior calendar year. 115
2. In May and October of the contract year, the board 116
shall publish in the Florida Administrative Register a statement 117
of the fund's estimated borrowing capacity, the fund's estimated 118
claims-paying capacity, and the projected balance of the fund as 119
of December 31. After the end of each calendar year, the board 120
shall notify insurers of the estimated borrowing capacity, 121
estimated claims-paying capacity, and the balance of the fund as 122
of December 31 to provide insurers with data necessary to assist 123
them in determining their retention and projected payout from 124
the fund for loss reimbursement purposes. In conjunction with 125

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the development of the premium formula, as provided for in 126
subsection (5), the board shall publish factors or multiples 127
that assist insurers in determining their retention and 128
projected payout for the next contract year. For all regulatory 129
and reinsurance purposes, an insurer may calculate its projected 130
payout from the fund as its share of the total fund premium for 131
the current contract year multiplied by the sum of the projected 132
balance of the fund as of December 31 and the estimated 133
borrowing capacity for that contract year as reported under this 134
subparagraph. 135
(d)1. For purposes of determining potential liability and 136
to aid in the sound administration of the fund, the contract 137
shall require each insurer to report such insurer's losses from 138
each covered event on an interim basis, as directed by the 139
board. The contract shall require the insurer to report to the 140
board no later than December 31 of each year, and quarterly 141
thereafter, its reimbursable losses from covered events for the 142
year. The contract shall require the board to determine and pay, 143
as soon as practicable after receiving these reports of 144
reimbursable losses, the initial amount of reimbursement due and 145
adjustments to this amount based on later loss information. The 146
adjustments to reimbursement amounts shall require the board to 147
pay, or the insurer to return, amounts reflecting the most 148
recent calculation of losses. 149
2. In determining reimbursements pursuant to this 150

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subsection, the contract shall provide that the board shall pay 151
to each insurer such insurer's projected payout, which is the 152
amount of reimbursement it is owed, up to an amount equal to the 153
insurer's share of the actual premium paid for that contract 154
year, multiplied by the actual claims-paying capacity available 155
for that contract year. 156
3. The board may reimburse insurers for amounts up to the 157
published factors or multiples for determining each 158
participating insurer's retention and projected payout derived 159
as a result of the development of the premium formula in those 160
situations in which the total reimbursement of losses to such 161
insurers would not exceed the estimated claims-paying capacity 162
of the fund. Otherwise, the projected payout factors or 163
multiples shall be reduced uniformly among all insurers to 164
reflect the estimated claims-paying capacity. 165
(e)1. Except as provided in subparagraphs 2. and 3., the 166
contract shall provide that if an insurer demonstrates to the 167
board that it is likely to qualify for reimbursement under the 168
contract, and demonstrates to the board that the immediate 169
receipt of moneys from the board is likely to prevent the 170
insurer from becoming insolvent, the board shall advance the 171
insurer, at market interest rates, the amounts necessary to 172
maintain the solvency of the insurer, up to 50 percent of the 173
board's estimate of the reimbursement due the insurer. The 174
insurer's reimbursement shall be reduced by an amount equal to 175

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the amount of the advance and interest thereon. 176
2. With respect only to an entity created under s. 177
627.351, the contract shall also provide that the board may, 178
upon application by such entity, advance to such entity, at 179
market interest rates, up to 90 percent of the lesser of: 180
a. The board's estimate of the amount of reimbursement due 181
to such entity; or 182
b. The entity's share of the actual reimbursement premium 183
paid for that contract year, multiplied by the currently 184
available liquid assets of the fund. In order for the entity to 185
qualify for an advance under this subparagraph, the entity must 186
demonstrate to the board that the advance is essential to allow 187
the entity to pay claims for a covered event and the board must 188
determine that the fund's assets are sufficient and are 189
sufficiently liquid to allow the board to make an advance to the 190
entity and still fulfill the board's reimbursement obligations 191
to other insurers. The entity's final reimbursement for any 192
contract year in which an advance has been made under this 193
subparagraph must be reduced by an amount equal to the amount of 194
the advance and any interest on such advance. In order to 195
determine what amounts, if any, are due the entity, the board 196
may require the entity to report its exposure and its losses at 197
any time to determine retention levels and reimbursements 198
payable. 199
3. The contract shall also provide specifically and solely 200

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with respect to any limited apportionment company under s. 201
627.351(2)(b)3. that the board may, upon application by such 202
company, advance to such company the amount of the estimated 203
reimbursement payable to such company as calculated pursuant to 204
paragraph (d), at market interest rates, if the board determines 205
that the fund's assets are sufficient and are sufficiently 206
liquid to permit the board to make an advance to such company 207
and at the same time fulfill its reimbursement obligations to 208
the insurers that are participants in the fund. Such company's 209
final reimbursement for any contract year in which an advance 210
pursuant to this subparagraph has been made shall be reduced by 211
an amount equal to the amount of the advance and interest 212
thereon. In order to determine what amounts, if any, are due to 213
such company, the board may require such company to report its 214
exposure and its losses at such times as may be required to 215
determine retention levels and loss reimbursements payable. 216
(5) REIMBURSEMENT PREMIUMS.— 217
(b) The State Board of Administration shall select an 218
independent consultant to develop a formula for determining the 219
actuarially indicated premium to be paid to the fund. The 220
hurricane loss portion of the formula must be determined by 221
averaging the results of all the catastrophe models accepted by 222
the Florida Commission on Hurricane Loss Projection Methodology. 223
The formula shall specify, for each zip code or other limited 224
geographical area, the amount of premium to be paid by an 225

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insurer for each $1,000 of insured value under covered policies 226
in that zip code or other area. In establishing premiums, the 227
board shall consider the coverage elected under paragraph (4)(b) 228
and any factors that tend to enhance the actuarial 229
sophistication of ratemaking for the fund, including 230
deductibles, type of construction, type of coverage provided, 231
relative concentration of risks, and other such factors deemed 232
by the board to be appropriate. The formula may must provide for 233
a cash build-up factor. For the 2009-2010 contract year, the 234
factor is 5 percent. For the 2010-2011 contract year, the factor 235
is 10 percent. For the 2011-2012 contract year, the factor is 15 236
percent. For the 2012-2013 contract year, the factor is 20 237
percent. For the 2013-2014 contract year and thereafter, the 238
factor is 25 percent; however, the cash build-up factor must be 239
zero in the 2026-2027 contract year. The formula may provide for 240
a procedure to determine the premiums to be paid by new insurers 241
that begin writing covered policies after the beginning of a 242
contract year, taking into consideration when the insurer starts 243
writing covered policies, the potential exposure of the insurer, 244
the potential exposure of the fund, the administrative costs to 245
the insurer and to the fund, and any other factors deemed 246
appropriate by the board. The formula must be approved by 247
unanimous vote of the board. The board may, at any time, revise 248
the formula pursuant to the procedure provided in this 249
paragraph. 250

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(c) No later than September 1 of each year, each insurer 251
shall notify the board of its insured values under covered 252
policies by zip code, as of June 30 of that year. On the basis 253
of these reports, the board shall calculate the premium due from 254
the insurer, based on the formula adopted under paragraph (b). 255
The insurer shall pay the required annual premium pursuant to a 256
periodic payment plan specified in the contract. The board shall 257
provide for payment of reimbursement premium in periodic 258
installments and for the adjustment of provisional premium 259
installments collected prior to submission of the exposure 260
report to reflect data in the exposure report. The board shall 261
collect interest on late reimbursement premium payments 262
consistent with the assumptions made in developing the premium 263
formula in accordance with paragraph (b). 264
(16) FACILITATION OF INSURERS' PRIVATE CONTRACT 265
NEGOTIATIONS BEFORE THE START OF THE HURRICANE SEASON.— 266
(a) In addition to the legislative findings and intent 267
provided elsewhere in this section, the Legislature finds that: 268
1.a. Because a regular session of the Legislature begins 269
approximately 3 months before the start of a contract year and 270
ends approximately 1 month before the start of a contract year, 271
participants in the fund always face the possibility that 272
legislative actions will change the coverage provided or offered 273
by the fund with only a few days or weeks of advance notice. 274
b. The timing issues described in sub-subparagraph a. can 275

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create uncertainties and disadvantages for the residential 276
property insurers that are required to participate in the fund 277
when such insurers negotiate for the procurement of private 278
reinsurance or other sources of capital. 279
c. Providing participating insurers with a greater degree 280
of certainty regarding the coverage provided or offered by the 281
fund and more time to negotiate for the procurement of private 282
reinsurance or other sources of capital will enable the 283
residential property insurance market to operate with greater 284
stability. 285
d. Increased stability in the residential property 286
insurance market serves a primary purpose of the fund and 287
benefits Florida consumers by enabling insurers to operate more 288
economically. In years when reinsurance and capital markets are 289
experiencing a capital shortage, the last-minute rush by 290
insurers only weeks before the start of the hurricane season to 291
procure adequate coverage in order to meet their capital 292
requirements can result in higher costs that are passed on to 293
Florida consumers. However, if more time is available, 294
residential property insurers should experience greater 295
competition for their business with a corresponding beneficial 296
effect for Florida consumers. 297
2. It is the intent of the Legislature to provide insurers 298
with the terms and conditions of the reimbursement contract well 299
in advance of the insurers' need to finalize their procurement 300

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of private reinsurance or other sources of capital, and thereby 301
improve insurers' negotiating position with reinsurers and other 302
sources of capital. 303
3. It is also the intent of the Legislature that the board 304
publish the fund's maximum statutory limit of coverage and the 305
fund's total retention early enough that residential property 306
insurers can have the opportunity to better estimate their 307
coverage from the fund. 308
(d) The board shall publish in the Florida Administrative 309
Register the maximum statutory adjusted capacity for the 310
mandatory coverage for a particular contract year, the maximum 311
statutory coverage for any optional coverage for the particular 312
contract year, and the aggregate fund retention used to 313
calculate individual insurer's retention multiples for the 314
particular contract year no later than January 1 of the 315
immediately preceding contract year. 316
Section 2. Section 627.944, Florida Statutes, is amended 317
to read: 318
627.944 Risk retention groups not certificated in this 319
state.—Risk retention groups registered to do business in this 320
state pursuant to this section are deemed insurance companies 321
authorized to do business in this state. Risk retention groups 322
certificated or licensed in states other than this state and 323
seeking to do business as a risk retention group in this state 324
must observe and abide by the laws of this state as follows: 325

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(1) NOTICE OF OPERATIONS AND DESIGNATION OF CHIEF 326
FINANCIAL OFFICER AS AGENT.—Before offering insurance in this 327
state, a risk retention group shall submit to the office: 328
(a) A statement identifying the state or states in which 329
the risk retention group is certificated or licensed as a 330
liability insurance company, date of certification or licensing, 331
its principal place of business, and such other information, 332
including information on its membership, as the office may 333
require to verify that the risk retention group is qualified as 334
a risk retention group under the provisions of this part. 335
(b) A copy of its plan of operations or a feasibility 336
study and revisions of such plan or study submitted to its state 337
of domicile; provided, however, that the provision relating to 338
the submission of a plan of operation or a feasibility study 339
shall not apply with respect to any line or classification of 340
liability insurance which was defined in the Product Liability 341
Risk Retention Act of 1981 before October 27, 1986, and which 342
was offered before such date by any risk retention group which 343
had been certificated or licensed and operating for not less 344
than 3 years before such date. 345
(c) A statement of registration which designates the Chief 346
Financial Officer or her or his designee as its agent for the 347
purpose of receiving service of legal documents of process. 348
(2) FINANCIAL CONDITION.—Any risk retention group doing 349
business in this state shall submit to the office: 350

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(a) A copy of the group's financial statement submitted to 351
its state of domicile, which shall be certified by an 352
independent public accountant and contain a statement of opinion 353
on loss and loss adjustment expense reserves made by a member of 354
the American Academy of Actuaries or a qualified loss reserve 355
specialist under criteria established by rule of the commission 356
after considering any criteria established by the National 357
Association of Insurance Commissioners. 358
(b) A copy of each examination of the risk retention group 359
as certified by the insurance commissioner or public official 360
conducting the examination. 361
(c) Upon request by the office, a copy of any audit 362
performed with respect to the risk retention group. 363
(d) Such information as may be required to verify its 364
continuing qualification as a risk retention group under the 365
provisions of this part. 366
(3) TAXATION.—All premiums paid for insurance or coverages 367
on risks located within this state to a risk retention group 368
shall be subject to taxation at the same rate and subject to the 369
same interest, fines, and penalties for nonpayment as that 370
applicable to eligible surplus lines insurers. Each agent 371
utilized in any transaction shall report and pay the taxes for 372
the premiums for risks which they have placed with or on behalf 373
of a risk retention group not certificated in this state. In the 374
event that an agent fails to pay the tax, each risk retention 375

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group shall pay the tax for insured or covered risks located 376
within this state. Further, each risk retention group shall 377
report all premiums paid to it for insured or covered risks 378
located within this state. 379
(4) COMPLIANCE WITH UNFAIR CLAIM SETTLEMENT PRACTICES 380
LAW.—Any risk retention group, its agents, and its 381
representatives shall comply with the unfair claim settlement 382
practices law of this state as set forth in s. 626.9541(1)(i). 383
(5) DECEPTIVE, FALSE, OR FRAUDULENT PRACTICES.—Any risk 384
retention group shall comply with and be subject to the laws of 385
this state regarding deceptive, false, or fraudulent acts or 386
practices, including the provisions of part IX of chapter 626. 387
If the office seeks an injunction regarding conduct in violation 388
of these laws, the injunction may be obtained from any Florida 389
court of competent jurisdiction. 390
(6) EXAMINATION REGARDING FINANCIAL CONDITION.—Any risk 391
retention group must submit to an examination by the office to 392
determine its financial condition if the insurance commissioner 393
of the jurisdiction in which the group is certificated or 394
licensed has not initiated an examination or does not initiate 395
an examination within 30 days after a request by the office. Any 396
examination shall be coordinated to avoid unjustified repetition 397
and conducted in an expeditious manner. 398
(7) NOTICE TO PURCHASERS.—Any policy issued by a risk 399
retention group shall contain in 10-point type on the front page 400

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and the declaration page, the following provision: 401
"Notice, this policy is issued by your risk retention group. 402
Your risk retention group may not be subject to all of the 403
insurance laws and regulations of your state. State insurance 404
insolvency guaranty funds are not available for your risk 405
retention group." 406
(8) PROHIBITED ACTS REGARDING SOLICITATION OR SALE.—The 407
following acts by a risk retention group are hereby prohibited: 408
(a) The solicitation or sale of insurance by a risk 409
retention group to any person who is not eligible for membership 410
in the group. 411
(b) The solicitation or sale of insurance by, or operation 412
of, a risk retention group that is in a hazardous financial 413
condition or is financially impaired. 414
(9) PROHIBITED OWNERSHIP BY AN INSURANCE COMPANY.—No risk 415
retention group shall be allowed to do business in this state if 416
an insurer is directly or indirectly a member or owner of the 417
risk retention group, other than in the case of a risk retention 418
group all of whose members are insurers. 419
(10) PROHIBITED COVERAGE.—No risk retention group may 420
offer insurance coverage prohibited by the Florida Insurance 421
Code or declared unlawful by the highest court of this state. 422
(11) DELINQUENCY PROCEEDINGS.—A risk retention group not 423
domiciled in this state but doing business in this state shall 424
comply with a lawful order issued in a voluntary dissolution 425

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proceeding or in a delinquency proceeding commenced by the 426
office if there has been a finding of financial impairment after 427
an examination under subsection (6). 428
(12) UTILIZATION OF AGENT.—A risk retention group shall 429
utilize an agent licensed and appointed in this state in order 430
to solicit, transact, underwrite, or provide insurance on a risk 431
of a group member, which risk is located in this state. 432
Section 3. For the purpose of incorporating the amendment 433
made by this act to section 215.555, Florida Statutes, in a 434
reference thereto, paragraph (b) of subsection (3) of section 435
215.5551, Florida Statutes, is reenacted to read: 436
215.5551 Reinsurance to Assist Policyholders program.— 437
(3) COVERAGE.— 438
(b) The board shall provide a reimbursement layer of $2 439
billion below the FHCF retention prior to the third event 440
dropdown of the FHCF retention set forth in s. 215.555(2)(e). 441
Subject to the mandatory notice provisions in subsection (5), 442
the board shall enter into a RAP reimbursement contract with 443
each eligible RAP insurer writing covered policies in this state 444
to provide to the insurer the reimbursement described in this 445
section. 446
Section 4. This act shall take effect July 1, 2026. 447