Florida Senate - 2025 SB 1712 By Senator DiCeglie 18-01176-25 20251712__ 1 A bill to be entitled 2 An act relating to the Florida Hurricane Catastrophe 3 Fund and reinsurance assistance; amending s. 215.555, 4 F.S.; deleting obsolete language; specifying the 5 retention multiple for specified contracts under the 6 Florida Hurricane Catastrophe Fund program beginning 7 on a certain date; providing the adjusted retention 8 multiple for insurers electing the 100-percent 9 coverage level; requiring that the reimbursement 10 contract contain a promise by the State Board of 11 Administration to reimburse the insurer a specified 12 percentage of its losses and applicable loss 13 adjustment expenses; specifying the loss adjustment 14 expense for specified contracts and rates; modifying 15 the contract obligation of the board for a contract 16 year; conforming provisions to changes made by the 17 act; deleting provisions relating to reimbursements; 18 requiring that the hurricane loss portion of a 19 specified formula be determined by averaging the 20 results of certain catastrophe models; authorizing, 21 rather than requiring, a certain formula to provide 22 for a cash build-up factor; requiring the cash build 23 up factor to be frozen beginning in a specified 24 contract year and to freeze for a specified period 25 ending by a specified date; requiring that the savings 26 realized as a result of the freeze of the cash build 27 up factor be passed to consumers; requiring the board 28 to file certain premiums with the Office of Insurance 29 Regulation; requiring the office to review such 30 premiums; prohibiting certain costs from being added 31 to the cost of the reimbursement contracts; amending 32 s. 215.5551, F.S.; revising definitions applicable to 33 the Reinsurance to Assist Policyholders (RAP) program; 34 defining the term eligible RAP insurer; deleting the 35 definition of the term RAP qualification ratio; 36 authorizing, rather than requiring, eligible RAP 37 insurers to purchase RAP coverage; revising 38 reimbursement under the RAP program; revising the 39 requirements of reimbursement contracts; deleting 40 calculations for specified amounts of losses to 41 determine reimbursement under the program; deleting 42 insurer eligibility requirements; deleting provisions 43 regarding deferral of coverage under the program; 44 requiring that reimbursement contracts require that 45 insurers annually pay actuarially indicated premiums; 46 deleting a prohibition against insurers being charged 47 premiums for participation in the program; revising 48 obsolete dates; prohibiting transfers from exceeding a 49 specified amount each contract year; revising 50 reporting requirements; revising the expiration date 51 of provisions governing the program; amending s. 52 215.5552, F.S.; revising definitions; revising the 53 coverage layers of the Florida Optional Reinsurance 54 Assistance (FORA) program; revising the coverage 55 limits for certain coverage layers; increasing the 56 maximum aggregate coverage limit for all coverage 57 layers; revising obsolete dates; revising requirements 58 of the reimbursement contract; deleting the 59 calculation of payout multiples; revising the FORA 60 layer retention calculations; revising the calculation 61 of premiums under the program; increasing the amount 62 that certain transfers may not exceed in a contract 63 year; requiring a transfer of a specified amount from 64 the FORA Fund into the Florida Hurricane Catastrophe 65 Fund; revising the expiration date of provisions 66 governing the program; providing an effective date. 67 68 Be It Enacted by the Legislature of the State of Florida: 69 70 Section 1.Paragraphs (c) and (e) of subsection (2), 71 paragraphs (b), (c), and (d) of subsection (4), paragraph (b) of 72 subsection (5), and paragraph (a) of subsection (7) of section 73 215.555, Florida Statutes, are amended to read: 74 215.555Florida Hurricane Catastrophe Fund. 75 (2)DEFINITIONS.As used in this section: 76 (c)Covered policy means any insurance policy covering 77 residential property in this state, including, but not limited 78 to, any homeowner, mobile home owner, farm owner, condominium 79 association, condominium unit owner, tenant, or apartment 80 building policy, or any other policy covering a residential 81 structure or its contents issued by any authorized insurer, 82 including a commercial self-insurance fund holding a certificate 83 of authority issued by the Office of Insurance Regulation under 84 s. 624.462, the Citizens Property Insurance Corporation, and any 85 joint underwriting association or similar entity created under 86 law. The term covered policy includes any collateral 87 protection insurance policy covering personal residences which 88 protects both the borrowers and the lenders financial 89 interests, in an amount at least equal to the coverage amount 90 for the dwelling in place under the lapsed homeowners policy, 91 the coverage amount that the homeowner has been notified of by 92 the collateral protection insurer, or the coverage amount that 93 the homeowner requests from the collateral protection insurer, 94 if such collateral protection insurance policy can be accurately 95 reported as required in subsection (5). Additionally, covered 96 policies include policies covering the peril of wind removed 97 from the Florida Residential Property and Casualty Joint 98 Underwriting Association or from the Citizens Property Insurance 99 Corporation, created under s. 627.351(6), or from the Florida 100 Windstorm Underwriting Association, created under s. 627.351(2), 101 by an authorized insurer under the terms and conditions of an 102 executed assumption agreement between the authorized insurer and 103 such association or Citizens Property Insurance Corporation. 104 Each assumption agreement between the association and such 105 authorized insurer and or Citizens Property Insurance 106 Corporation must be approved by the Office of Insurance 107 Regulation before the effective date of the assumption, and the 108 Office of Insurance Regulation must provide written notification 109 to the board within 15 working days after such approval. 110 Covered policy does not include any policy that excludes wind 111 coverage or hurricane coverage or any reinsurance agreement and 112 does not include any policy otherwise meeting this definition 113 which is issued by a surplus lines insurer or a reinsurer. All 114 commercial residential excess policies and all deductible buy 115 back policies that, based on sound actuarial principles, require 116 individual ratemaking shall be excluded by rule if the actuarial 117 soundness of the fund is not jeopardized. For this purpose, the 118 term excess policy means a policy that provides insurance 119 protection for large commercial property risks and that provides 120 a layer of coverage above a primary layer insured by another 121 insurer. 122 (e)Retention means the amount of losses below which an 123 insurer is not entitled to reimbursement from the fund. An 124 insurers retention shall be calculated as follows: 125 1.The board shall calculate and report to each insurer the 126 retention multiples for that year. For the contract year 127 beginning June 1, 2025 2005, the retention multiple must shall 128 be equal to $8.5 $4.5 billion divided by the total estimated 129 reimbursement premium for the contract year; for subsequent 130 years, the retention multiple shall be equal to $4.5 billion, 131 adjusted based upon the reported exposure for the contract year 132 occurring 2 years before the particular contract year to reflect 133 the percentage growth in exposure to the fund for covered 134 policies since 2004, divided by the total estimated 135 reimbursement premium for the contract year. Total reimbursement 136 premium for purposes of the calculation under this subparagraph 137 shall be estimated using the assumption that all insurers have 138 selected the 90-percent coverage level. 139 2.The retention multiple as determined under subparagraph 140 1. shall be adjusted to reflect the coverage level elected by 141 the insurer. For insurers electing the 100-percent coverage 142 level, the adjusted retention multiple is 90 percent of the 143 amount determined under subparagraph 1. For insurers electing 144 the 90-percent coverage level, the adjusted retention multiple 145 is 100 percent of the amount determined under subparagraph 1. 146 For insurers electing the 75-percent coverage level, the 147 retention multiple is 120 percent of the amount determined under 148 subparagraph 1. For insurers electing the 45-percent coverage 149 level, the adjusted retention multiple is 200 percent of the 150 amount determined under subparagraph 1. 151 3.An insurer shall determine its provisional retention by 152 multiplying its provisional reimbursement premium by the 153 applicable adjusted retention multiple and shall determine its 154 actual retention by multiplying its actual reimbursement premium 155 by the applicable adjusted retention multiple. 156 4.For insurers who experience multiple covered events 157 causing loss during the contract year, beginning June 1, 2005, 158 each insurers full retention shall be applied to each of the 159 covered events causing the two largest losses for that insurer. 160 For each other covered event resulting in losses, the insurers 161 retention shall be reduced to one-third of the full retention. 162 The reimbursement contract must shall provide for the 163 reimbursement of losses for each covered event based on the full 164 retention with adjustments made to reflect the reduced 165 retentions on or after January 1 of the contract year provided 166 the insurer reports its losses as specified in the reimbursement 167 contract. 168 (4)REIMBURSEMENT CONTRACTS. 169 (b)1.The contract must shall contain a promise by the 170 board to reimburse the insurer for 45 percent, 75 percent, or 90 171 percent, or 100 percent of its losses and applicable loss 172 adjustment expenses from each covered event in excess of the 173 insurers retention, plus 5 percent of the reimbursed losses to 174 cover loss adjustment expenses. For contracts and rates 175 effective on or after June 1, 2025 2019, the loss adjustment 176 expense included reimbursement must be the lesser of 25 10 177 percent of the total subject losses before reimbursement or the 178 total subject actual loss adjustment expenses reimbursed losses. 179 2.The insurer must elect one of the percentage coverage 180 levels specified in this paragraph and may, upon renewal of a 181 reimbursement contract, elect a lower percentage coverage level 182 if no revenue bonds issued under subsection (6) after a covered 183 event are outstanding, or elect a higher percentage coverage 184 level, regardless of whether or not revenue bonds are 185 outstanding. All members of an insurer group must elect the same 186 percentage coverage level. Any joint underwriting association, 187 risk apportionment plan, or other entity created under s. 188 627.351 must elect the 90-percent coverage level. 189 3.The contract must shall provide that reimbursement 190 amounts may shall not be reduced by reinsurance paid or payable 191 to the insurer from other sources. 192 (c)1.The contract must shall also provide that the 193 obligation of the board with respect to all contracts covering a 194 particular contract year is shall not exceed the actual claims 195 paying capacity of the fund up to a limit of $17 billion for 196 that contract year, unless the board determines that there is 197 sufficient estimated claims-paying capacity to provide $17 198 billion of capacity for the current contract year and an 199 additional $17 billion of capacity for subsequent contract 200 years. If the board makes such a determination, the estimated 201 claims-paying capacity for the particular contract year shall be 202 determined by adding to the $17 billion limit one-half of the 203 funds estimated claims-paying capacity in excess of $34 204 billion. However, the dollar growth in the limit may not 205 increase in any year by an amount greater than the dollar growth 206 of the balance of the fund as of December 31, less any premiums 207 or interest attributable to optional coverage, as defined by 208 rule which occurred over the prior calendar year. 209 2.In May and October of the contract year, the board shall 210 publish in the Florida Administrative Register a statement of 211 the funds estimated borrowing capacity, the funds estimated 212 claims-paying capacity, and the projected balance of the fund as 213 of December 31. After the end of each calendar year, the board 214 shall notify insurers of the estimated borrowing capacity, 215 estimated claims-paying capacity, and the balance of the fund as 216 of December 31 to provide insurers with data necessary to assist 217 them in determining their retention and projected payout from 218 the fund for loss reimbursement purposes. In conjunction with 219 the development of the premium formula, as provided for in 220 subsection (5), the board shall publish factors or multiples 221 that assist insurers in determining their retention and 222 projected payout for the next contract year. For all regulatory 223 and reinsurance purposes, an insurer may calculate its projected 224 payout from the fund as its share of the total fund premium for 225 the current contract year multiplied by the sum of the projected 226 balance of the fund as of December 31 and the estimated 227 borrowing capacity for that contract year as reported under this 228 subparagraph. 229 (d)1.For purposes of determining potential liability and 230 to aid in the sound administration of the fund, the contract 231 must shall require each insurer to report such insurers losses 232 from each covered event on an interim basis, as directed by the 233 board. The contract must shall require the insurer to report to 234 the board no later than December 31 of each year, and quarterly 235 thereafter, its reimbursable losses from covered events for the 236 year. The contract must shall require the board to determine and 237 pay, as soon as practicable after receiving these reports of 238 reimbursable losses, the initial amount of reimbursement due and 239 adjustments to this amount based on later loss information. The 240 adjustments to reimbursement amounts must shall require the 241 board to pay, or the insurer to return, amounts reflecting the 242 most recent calculation of losses. 243 2.In determining reimbursements pursuant to this 244 subsection, the contract shall provide that the board shall pay 245 to each insurer such insurers projected payout, which is the 246 amount of reimbursement it is owed, up to an amount equal to the 247 insurers share of the actual premium paid for that contract 248 year, multiplied by the actual claims-paying capacity available 249 for that contract year. 250 3.The board may reimburse insurers for amounts up to the 251 published factors or multiples for determining each 252 participating insurers retention and projected payout derived 253 as a result of the development of the premium formula in those 254 situations in which the total reimbursement of losses to such 255 insurers would not exceed the estimated claims-paying capacity 256 of the fund. Otherwise, the projected payout factors or 257 multiples shall be reduced uniformly among all insurers to 258 reflect the estimated claims-paying capacity. 259 (5)REIMBURSEMENT PREMIUMS. 260 (b)The State Board of Administration shall select an 261 independent consultant to develop a formula for determining the 262 actuarially indicated premium to be paid to the fund. The 263 hurricane loss portion of the formula must be determined by 264 averaging the results of all the catastrophe models approved by 265 the Florida Commission on Hurricane Loss Projection Methodology. 266 The formula must shall specify, for each zip code or other 267 limited geographical area, the amount of premium to be paid by 268 an insurer for each $1,000 of insured value under covered 269 policies in that zip code or other area. In establishing 270 premiums, the board shall consider the coverage elected under 271 paragraph (4)(b) and any factors that tend to enhance the 272 actuarial sophistication of ratemaking for the fund, including 273 deductibles, type of construction, type of coverage provided, 274 relative concentration of risks, and other such factors deemed 275 by the board to be appropriate. The formula may must provide for 276 a cash build-up factor. For the 2009-2010 contract year, the 277 factor is 5 percent. For the 2010-2011 contract year, the factor 278 is 10 percent. For the 2011-2012 contract year, the factor is 15 279 percent. For the 2012-2013 contract year, the factor is 20 280 percent. For the 2013-2014 contract year and thereafter, the 281 factor is 25 percent; however, the cash build-up factor must be 282 frozen beginning in the 2025-2026 contract year and must freeze 283 for a 12-month period ending no later than July 1, 2026. Any 284 savings realized as a result of the freeze of the cash build-up 285 factor must be passed directly to the consumers. The formula may 286 provide for a procedure to determine the premiums to be paid by 287 new insurers that begin writing covered policies after the 288 beginning of a contract year, taking into consideration when the 289 insurer starts writing covered policies, the potential exposure 290 of the insurer, the potential exposure of the fund, the 291 administrative costs to the insurer and to the fund, and any 292 other factors deemed appropriate by the board. The formula must 293 be approved by unanimous vote of the board. The board may, at 294 any time, revise the formula pursuant to the procedure provided 295 in this paragraph. The board shall file the premiums to be paid 296 with the Office of Insurance Regulation, and the office shall 297 review such premiums. 298 (7)ADDITIONAL POWERS AND DUTIES. 299 (a)The board may procure reinsurance from reinsurers 300 acceptable to the Office of Insurance Regulation for the purpose 301 of maximizing the capacity of the fund and may enter into 302 capital market transactions, including, but not limited to, 303 industry loss warranties, catastrophe bonds, side-car 304 arrangements, or financial contracts permissible for the boards 305 usage under s. 215.47(11) and (12), consistent with prudent 306 management of the fund. The cost of any reinsurance or other 307 capital market transaction other than issuing bonds secured by 308 assessments purchased by the board to maximize the claims-paying 309 capacity of the fund may not be added to the actuarially 310 determined cost of the reimbursement contracts. 311 Section 2.Section 215.5551, Florida Statutes, is amended 312 to read: 313 215.5551Reinsurance to Assist Policyholders program. 314 (1)CREATION OF THE REINSURANCE TO ASSIST POLICYHOLDERS 315 PROGRAM.There is created the Reinsurance to Assist 316 Policyholders program to be administered by the State Board of 317 Administration. 318 (2)DEFINITIONS.As used in this section, the term: 319 (a)Board means the State Board of Administration. 320 (b)Contract year means the period beginning on June 1 of 321 a specified calendar year and ending on May 31 of the following 322 calendar year. 323 (c)Covered event means any hurricane, tropical storm, 324 hail storm, tornado, wind event, or wildfire that one storm 325 declared to be a hurricane by the National Hurricane Center, 326 which storm causes insured losses in this state. 327 (d)Covered policy has the same meaning as in s. 328 215.555(2)(c). 329 (e)Eligible RAP insurer means an insurer participating 330 in FHCF as of June 1 of a contract year. However, any joint 331 underwriting association, risk apportionment plan, or other 332 entity created under s. 627.351 is not considered a RAP insurer 333 and is prohibited from obtaining coverage under the RAP program. 334 (f)(e)FHCF means the Florida Hurricane Catastrophe Fund 335 created under s. 215.555. 336 (g)(f)Losses and loss adjustment expenses means the 337 amounts paid by an insurer to adjust and pay covered claims has 338 the same meaning as in s. 215.555(2)(d). 339 (h)(g)RAP means the Reinsurance to Assist Policyholders 340 program created by this section. 341 (i)(h)RAP insurer means an eligible RAP insurer that 342 elects to purchase is a participating insurer in the FHCF on 343 June 1, 2022, which must obtain coverage under the RAP program 344 and qualifies under subsection (5). A However, any joint 345 underwriting association, risk apportionment plan, or other 346 entity created under s. 627.351 is not considered a RAP insurer 347 and is prohibited from obtaining coverage under the RAP program. 348 (j)(i)RAP limit means, for the 2022-2023 contract year, 349 the RAP insurers maximum payout, which is its share of the $2 350 billion per event and $4 billion in the aggregate RAP layer 351 aggregate limit. The ratio of a RAP insurers RAP limit to the 352 $4 billion RAP layer aggregate limit may not exceed the ratio of 353 the RAP insurers actual FHCF premium paid during that contract 354 year to the actual FHCF premium paid by all eligible RAP 355 insurers participating in the FHCF during that contract year For 356 the 2023-2024 contract year, for RAP insurers that are subject 357 to participation deferral under subsection (6) and participate 358 during the 2023-2024 contract year, the RAP limit means the RAP 359 insurers maximum payout, which is its share of the total amount 360 of the RAP program layer aggregate limit deferred from 2022 361 2023. 362 (j)RAP qualification ratio means: 363 1.For the 2022-2023 contract year, the ratio of FHCF 364 mandatory premium adjusted to 90 percent for RAP insurers 365 divided by the FHCF mandatory premium adjusted to 90 percent for 366 all insurers. The preliminary RAP qualification ratio shall be 367 based on the 2021-2022 contract years company premiums, as of 368 December 31, 2021, adjusted to 90 percent based on the 2022-2023 369 contract year coverage selections. The RAP qualification ratio 370 shall be based on the reported 2022-2023 contract year company 371 premiums, as of December 31, 2022, adjusted to 90 percent. 372 2.For the 2023-2024 contract year, the ratio of FHCF 373 mandatory premium adjusted to 90 percent for the qualified RAP 374 insurers that have deferred RAP coverage to 2023-2024 divided by 375 the FHCF mandatory premium adjusted to 90 percent for all 376 insurers. The preliminary RAP qualification ratio shall be based 377 on the 2022-2023 contract years company premiums as of December 378 31, 2022, adjusted to 90 percent based on the 2023-2024 contract 379 year coverage selections. The RAP qualification ratio shall be 380 based on the reported 2023-2024 contract year company premiums 381 as of December 31, 2023, adjusted to 90 percent. 382 (k)RAP reimbursement contract means the reimbursement 383 contract reflecting the obligations of the RAP program to 384 insurers. 385 (l)RAP retention means the amount of losses below which 386 a RAP insurer is not entitled to reimbursement under the RAP 387 program. 388 (m)Unsound insurer means a RAP insurer determined by the 389 Office of Insurance Regulation to be in unsound condition as 390 defined in s. 624.80(2) or a RAP insurer placed in receivership 391 under chapter 631. 392 (3)COVERAGE. 393 (a)An eligible RAP insurer may purchase RAP coverage As a 394 condition of doing business in this state, each RAP insurer 395 shall obtain coverage under the RAP program. 396 (b)The board shall provide a reimbursement layer of $2 397 billion per event below the FHCF retention for losses and loss 398 adjustment expenses paid to covered policies for covered events 399 prior to the third event dropdown of the FHCF retention set 400 forth in s. 215.555(2)(e). Subject to the mandatory notice 401 provisions in subsection (5), The board shall enter into a RAP 402 reimbursement contract with each eligible RAP insurer writing 403 covered policies in this state which requests RAP coverage to 404 provide to the insurer the reimbursement described in this 405 section. 406 (4)RAP REIMBURSEMENT CONTRACTS. 407 (a)1.The board shall issue an initial a RAP reimbursement 408 contract to each eligible RAP insurer that requests RAP coverage 409 which is effective June 1, 2025. RAP contracts must be made 410 available annually thereafter until the fiscal year beginning 411 July 1, 2030: 412 a.June 1, 2022, for RAP insurers that participate in the 413 RAP program during the 2022-2023 contract year; or 414 b.June 1, 2023, for RAP insurers that are subject to 415 participation deferral under subsection (6) and participate in 416 the RAP program during the 2023-2024 contract year. 417 2.The reimbursement contract shall be executed no later 418 than: 419 a.July 15, 2022, for RAP insurers that participate in the 420 RAP program during the 2022-2023 contract year; or 421 b.March 1, 2023, for RAP insurers that are subject to 422 participation deferral under subsection (6) and participate in 423 the RAP program during the 2023-2024 contract year. 424 3.If a RAP insurer fails to execute the RAP reimbursement 425 contract by the dates required in this paragraph, the RAP 426 insurance contract is deemed to have been executed by the RAP 427 insurer. 428 (b)For the two covered events with the largest losses, The 429 RAP reimbursement contract must contain a promise by the board 430 to reimburse the RAP insurer for 100 90 percent of its losses 431 and loss adjustment expenses from each covered event in excess 432 of the insurers RAP retention up to the RAP insurers, plus 10 433 percent of the reimbursed losses to cover loss adjustment 434 expenses. The sum of the losses and 10 percent loss adjustment 435 expense allocation from the RAP layer may not exceed the RAP 436 limit. Recoveries on losses in the FHCF mandatory layer must 437 shall inure to the benefit of the RAP contract layer. 438 (c)The RAP reimbursement contract must provide that 439 reimbursement amounts are not reduced by reinsurance paid or 440 payable to the insurer from other sources excluding the FHCF. 441 (d)The board shall calculate and report to each RAP 442 insurer the RAP payout multiples as the ratio of the RAP 443 industry limit of $2 billion for the 2022-2023 contract year, or 444 the deferred limit for the 2022-2023 contract year, to the 445 mandatory FHCF retention multiplied by the mandatory FHCF 446 retention multiples divided by the RAP qualification ratio. The 447 RAP payout multiple for an insurer is multiplied by the RAP 448 insurers FHCF premium to calculate its RAP maximum payout. RAP 449 payout multiples are calculated for 45 percent, 75 percent, and 450 90 percent FHCF mandatory coverage selections. 451 (e)A RAP insurers RAP retention is calculated as follows: 452 1.The board shall calculate and report to each RAP insurer 453 the RAP retention multiples for each FHCF coverage selection as 454 the FHCF retention multiple minus the RAP payout multiple. The 455 RAP retention multiple for an insurer is multiplied by the RAP 456 insurers FHCF premium to calculate its RAP retention. RAP 457 retention multiples are calculated for 45 percent, 75 percent, 458 and 90 percent FHCF mandatory coverage selections. 459 2.The RAP industry retention for the 2022-2023 contract 460 year is the FHCFs industry retention minus $2 billion, prior to 461 allocation to qualifying RAP insurers. The RAP industry 462 retention for the 2023-2024 contract year is the FHCFs industry 463 retention for the 2023-2024 contract year minus the total 464 deferred RAP limit, prior to allocation to qualifying RAP 465 insurers. 466 3.A RAP insurer determines its actual RAP retention by 467 multiplying its actual mandatory reimbursement FHCF premium by 468 the RAP retention multiple. 469 (d)(f)To ensure that insurers have properly reported the 470 losses for which RAP reimbursements have been made, the board 471 may inspect, examine, and verify the records of each RAP 472 insurers covered policies at such times as the board deems 473 appropriate for the specific purpose of validating the accuracy 474 of losses required to be reported under the terms and conditions 475 of the RAP reimbursement contract. 476 (5)INSURER QUALIFICATION. 477 (a)An insurer is not eligible to participate in the RAP 478 program if the board receives a notice from the Commissioner of 479 Insurance Regulation which certifies that the insurer is in an 480 unsound financial condition no later than: 481 1.June 15, 2022, for RAP insurers that participate during 482 the 2022-2023 contract year; or 483 2.February 1, 2023, for RAP insurers subject to 484 participation deferral under subsection (6) that participate 485 during the 2023-2024 contract year. 486 (b)The office must make this determination based on the 487 following factors: 488 1.The insurers compliance with the requirements to 489 qualify for and hold a certificate of authority under s. 490 624.404; 491 2.The insurers compliance with the applicable surplus 492 requirements of s. 624.408; 493 3.The insurers compliance with the applicable risk-based 494 capital requirements under s. 624.4085; 495 4.The insurers compliance with the applicable premium to 496 surplus requirements under s. 624.4095; and 497 5.An analysis of quarterly and annual statements, 498 including an actuarial opinion summary, and other information 499 submitted to the office pursuant to s. 624.424. 500 (c)If the board receives timely notice pursuant to 501 paragraph (a) regarding an insurer, such insurer is disqualified 502 from participating in the RAP program. 503 (6)PARTICIPATION DEFERRAL. 504 (a)A RAP insurer that has any private reinsurance that 505 duplicates RAP coverage that such insurer would receive for the 506 2022-2023 contract year shall notify the board in writing of 507 such duplicative coverage no later than June 30, 2022. 508 Participation in the RAP program for such RAP insurers shall be 509 deferred until the 2023-2024 contract year. 510 (b)A new participating insurer that begins writing covered 511 policies in this state after June 1, 2022, is deemed to defer 512 its RAP coverage to the 2023-2024 contract year. 513 (5)(7)RAP PREMIUMS.Each RAP reimbursement contract must 514 require that the insurer annually pay to the fund an actuarially 515 indicated premium for the full annual aggregate reimbursement 516 limit Premiums may not be charged for participation in the RAP 517 program. 518 (6)(8)FHCF OBLIGATION CLAIMS-PAYING CAPACITY.The RAP 519 program may shall not affect the obligation claims-paying 520 capacity of the FHCF as provided in s. 215.555(4)(c)1. 521 (7)(9)INSOLVENCY OF RAP INSURER. 522 (a)The RAP reimbursement contract shall provide that in 523 the event of an insolvency of a RAP insurer, the RAP program 524 shall pay reimbursements directly to the applicable state 525 guaranty fund for the benefit of policyholders in this state of 526 the RAP insurer. 527 (b)If an authorized insurer or the Citizens Property 528 Insurance Corporation accepts an assignment of an unsound RAP 529 insurers RAP contract, the FHCF shall apply the unsound RAP 530 insurers RAP contract to such policies and treat the authorized 531 insurer or the Citizens Property Insurance Corporation as if it 532 were the unsound RAP insurer for the remaining term of the RAP 533 contract, with all rights and duties of the unsound RAP insurer 534 beginning on the date it provides coverage for such policies. 535 (8)(10)VIOLATIONS.Any violation of this section or of 536 rules adopted under this section constitutes a violation of the 537 insurance code. 538 (9)(11)LEGAL PROCEEDINGS.The board is authorized to take 539 any action necessary to enforce the rules, provisions, and 540 requirements of the RAP reimbursement contract, required by and 541 adopted pursuant to this section. 542 (10)(12)RULEMAKING.The board may adopt rules to implement 543 this section. In addition, the board may adopt emergency rules, 544 pursuant to s. 120.54, at any time, as are necessary to 545 implement this section for the 2025-2026 2022-2023 fiscal year. 546 The Legislature finds that such emergency rulemaking power is 547 necessary in order to address a critical need in this the 548 states problematic property insurance market. The Legislature 549 further finds that the uniquely short timeframe needed to 550 effectively implement this section for the 2025-2026 2022-2023 551 fiscal year requires that the board adopt rules as quickly as 552 practicable. Therefore, in adopting such emergency rules, the 553 board need not make the findings required by s. 120.54(4)(a). 554 Emergency rules adopted under this section are exempt from s. 555 120.54(4)(c) and shall remain in effect until replaced by rules 556 adopted under the nonemergency rulemaking procedures of chapter 557 120, which must occur no later than July 1, 2023. 558 (11)(13)APPROPRIATION. 559 (a)Within 60 days after a covered event, the board must 560 shall submit written notice to the Executive Office of the 561 Governor if the board determines that funds from the RAP program 562 coverage established by this section will be necessary to 563 reimburse RAP insurers for losses associated with the covered 564 event. The initial notice, and any subsequent requests, must 565 specify the amount necessary to provide RAP reimbursements. Upon 566 receiving such notice, the Executive Office of the Governor 567 shall instruct the Chief Financial Officer to draw a warrant 568 from the General Revenue Fund for a transfer to the board for 569 the RAP program in the amount requested. The Executive Office of 570 the Governor shall provide written notification to the chair and 571 vice chair of the Legislative Budget Commission at least 3 days 572 before the effective date of the warrant. Cumulative Transfers 573 authorized under this paragraph may not exceed $4 $2 billion, 574 less reimbursement premium paid, for each contract year. 575 (b)If general revenue funds are transferred to the board 576 for the RAP program under paragraph (a), the board must shall 577 submit written notice to the Executive Office of the Governor 578 that funds will be necessary for the administration of the RAP 579 program and post-event examinations for covered events that 580 require RAP coverage. The initial notice, and any subsequent 581 requests, must specify the amount necessary for administration 582 of the RAP program and post-event examinations. Upon receiving 583 such notice, the Executive Office of the Governor shall instruct 584 the Chief Financial Officer to draw a warrant from the General 585 Revenue Fund for a transfer to the board for the RAP program in 586 the amount requested. The Executive Office of the Governor shall 587 provide written notification to the chair and vice chair of the 588 Legislative Budget Commission at least 3 days before the 589 effective date of the warrant. Cumulative transfers authorized 590 under this paragraph may not exceed $5 million. 591 (c)No later than January 31, 2026 2023, and quarterly 592 thereafter, the board shall submit a report to the Executive 593 Office of the Governor, the President of the Senate, and the 594 Speaker of the House of Representatives detailing any 595 reimbursements of the RAP program, all loss development 596 projections, the amount of RAP reimbursement coverage deferred 597 until the 2023-2024 contract year, and detailed information 598 about administrative and post-event examination expenditures. 599 (12)(14)EXPIRATION DATE.If no general revenue funds have 600 been transferred to the board for the RAP program under 601 subsection (11) (13) by June 30, 2030 2025, this section expires 602 on July 1, 2030 2025. If general revenue funds have been 603 transferred to the board for the RAP program under subsection 604 (11) (13) by June 30, 2030 2025, this section expires on July 1, 605 2035 2029, and all unencumbered RAP program funds shall be 606 transferred by the board back to the General Revenue Fund 607 unallocated. 608 Section 3.Paragraphs (c), (f), (h), (o), and (q) of 609 subsection (2), subsections (3) through (6) and (10), paragraphs 610 (a) and (c) of subsection (11), and subsection (12) of section 611 215.5552, Florida Statutes, are amended, and paragraph (d) is 612 added to subsection (11) of that section, to read: 613 215.5552Florida Optional Reinsurance Assistance program. 614 (2)DEFINITIONS.As used in this section, the term: 615 (c)Covered event means any event in which a catastrophe 616 serial number is assigned by the Insurance Services Offices 617 Property Claim Services has the same meaning as in s. 618 215.555(2)(b). 619 (f)Final FORA premium means the premium due no later 620 than March 1, 2024, paid by a FORA insurer after the actual 2023 621 FHCF premiums for that contract year are calculated. 622 (h)FORA eligible insurer means a FHCF participating 623 insurer as of November 30, 2022. New FHCF participants after 624 that date are ineligible for FORA coverage. In addition, any 625 joint underwriting association, risk apportionment plan, or 626 other entity created under s. 627.351 is not considered a FORA 627 insurer and may not obtain coverage under FORA. 628 (o)Initial FORA premium means the premium paid by a FORA 629 insurer in the same installment plan as the FHCF premium by July 630 1, 2023, for coverage under the FORA program. 631 (q)RAP insurer has the same meaning as in s. 632 215.5551(2)(i) s. 215.5551(2)(h). 633 (3)COVERAGE. 634 (a)Each FORA eligible insurer may purchase coverage under 635 FORA. The board shall provide three four optional layers above a 636 $500 million FHCF industry retention below the FHCF retention 637 prior to the third event dropdown of the FHCF retention set 638 forth in s. 215.555(2)(e)4. Only RAP insurers required to 639 participate in the 2022-2023 contract year may select FORA 640 layers 1 through 3. All FORA eligible insurers may purchase FORA 641 layer 4. If a RAP insurer required to participate in the 2022 642 2023 contract year chooses to purchase layer 2, 3, or 4, such 643 layers must be purchased inclusive of the prior layer and cannot 644 be purchased separately. 645 (b)FORA industry limits before prior to FORA insurer 646 selections are as follows: 647 1.FORA industry layer 1 limit is $1 billion. 648 2.FORA industry layer 2 limit is $1 billion. 649 3.FORA industry layer 3 limit is $2 billion divided by the 650 RAP Qualification ratio minus $2 billion. 651 3.4.FORA industry layer 3 4 limit is $1 billion minus the 652 total FORA industry limit selected for FORA layers 1, 2, and 3, 653 plus the total FORA premium collected for FORA layers 1, 2, and 654 3. 655 (c)The maximum aggregate coverage for all selected FORA 656 layers is $3 $1 billion as provided under paragraph (11)(a) plus 657 premiums needed to fulfill the obligations of this section. 658 (4)FORA REIMBURSEMENT CONTRACTS. 659 (a)FORA eligible insurers selecting coverage must execute 660 a FORA reimbursement contract with the board. 661 (b)The board must enter into a FORA reimbursement contract 662 effective June 1, 2025 2023, with each FORA eligible insurer 663 electing to purchase coverage. Such contract must provide 664 coverage pursuant to this section in exchange for premium paid. 665 (c)The FORA reimbursement contract must be executed by the 666 FORA insurer no later than May 30 of the contract year April 15, 667 2023, for layers 1 through 3, and May 30, 2023, for layer 4. 668 (d)For the two covered events with the largest losses for 669 the FORA insurer, the FORA reimbursement contract must contain a 670 promise by the board to reimburse the FORA insurer for 100 671 percent of its losses from each covered event in excess of the 672 lowest selected FORA layers retention. The sum of the FORA 673 insurers covered losses from the two covered events with the 674 largest losses from each FORA layer may not exceed the FORA 675 insurers combined selected FORA layer limit or limits. 676 (e)The FORA reimbursement contract must provide that 677 reimbursement amounts are not reduced by reinsurance paid or 678 payable to the insurer from other sources other than the 679 mandatory FHCF layer. 680 (f)The board shall calculate and report to each FORA 681 insurer the initial and final FORA payout multiples for each 682 FORA layer using the source data described in paragraph (5)(a). 683 1.For FORA layer 1, the FORA payout multiple is the 684 quotient of $1 billion divided by the FHCF industry aggregate 685 retention multiplied by the FHCF retention multiple for the FHCF 686 coverage selected. 687 2.For FORA layer 2, the FORA payout multiple is the 688 quotient of $1 billion divided by the FHCF industry aggregate 689 retention multiplied by the FHCF retention multiple for the FHCF 690 coverage selected. 691 3.For FORA layer 3, the FORA payout multiple is calculated 692 as follows: the numerator is the quotient of $2 billion divided 693 by the RAP qualification ratio as defined in s. 215.5551(2)(j) 694 minus $2 billion. The denominator is the FHCF industry aggregate 695 retention. The FORA multiple is the FHCF retention multiple 696 multiplied by the numerator divided by the denominator. 697 4.The FORA layer 4 payout multiple is the total FORA 698 industry layer 4 limit divided by the FHCF industry aggregate 699 retention multiplied by the FHCF retention multiple for the FHCF 700 coverage selected. For FORA layer 4, the total FORA industry 701 layer limit is $1 billion minus the total FORA industry limit 702 selected for FORA layers 1, 2, and 3, plus the total FORA 703 premium collected for FORA layers 1, 2, and 3. 704 (g)For each FORA layer, the FORA payout multiple is 705 multiplied by the FORA insurers FHCF premium to calculate its 706 FORA maximum payout. FORA payout multiples are calculated for 45 707 percent, 75 percent, and 90 percent FHCF mandatory coverage 708 selections. 709 (f)(h)For a FORA insurer that selects more than one layer, 710 the FORA layer limits must shall be combined to a single 711 aggregate limit for the two covered events with the largest 712 losses for the FORA insurer. 713 (g)(i)FORA layer retentions are calculated as follows: 714 1.For each FORA layer, the board shall calculate and 715 report to each FORA insurer the initial and final FORA retention 716 multiples for each FHCF coverage selection as the FORA layer 717 retention divided by the total estimated reimbursement FHCF 718 premium for the contract year FHCF retention multiple minus the 719 FORA payout multiple using the source data described in 720 paragraph (5)(a). Total reimbursement premium for purposes of 721 the calculation under this subparagraph must be estimated using 722 the assumption that all insurers have selected the 90-percent 723 coverage level. The FORA retention multiple is multiplied by the 724 FORA insurers FHCF premium to calculate its FORA retention. 725 FORA retention multiples are calculated for 45 percent, 75 726 percent, and 90 percent FHCF mandatory coverage selections. 727 2.The retention multiple as determined under subparagraph 728 1. must be adjusted to reflect the coverage level elected by the 729 insurer. For insurers electing the 90-percent coverage level, 730 the adjusted retention multiple is 100 percent of the amount 731 determined under subparagraph 1. For insurers electing the 75 732 percent coverage level, the retention multiple is 120 percent of 733 the amount determined under subparagraph 1. For insurers 734 electing the 45-percent coverage level, the adjusted retention 735 multiple is 200 percent of the amount determined under 736 subparagraph 1 The FORA industry retention for the 2023-2024 737 contract year for FORA layer 1 is the FHCFs industry retention 738 minus $1 billion. The FORA layer 2 industry retention is the 739 FHCF industry retention minus $2 billion. The FORA layer 3 740 industry retention is the FHCFs industry retention minus the 741 quotient of $2 billion divided by the RAP qualification ratio. 742 The FORA layer 4 industry retention is the FORA layer 3 743 retention minus the FORA layer 4 limit. 744 3.A FORA insurers initial and final FORA retentions are 745 determined by multiplying its FHCF reimbursement premium by the 746 FORA retention multiple for each FHCF coverage selection using 747 the source data in paragraph (5)(a). 748 4.For a FORA insurer that selects more than one layer, the 749 FORA combined layer retention is shall be the lowest selected 750 layer retention for each of the two covered events with the 751 largest losses for the FORA insurer. 752 (h)(j)To ensure that insurers have properly reported the 753 losses for which FORA reimbursements have been made, the board 754 may inspect, examine, and verify the records of each FORA 755 participating insurers covered policies at such times as the 756 board deems appropriate for the specific purpose of validating 757 the accuracy of losses required to be reported under the terms 758 and conditions of the FORA reimbursement contract. 759 (5)FORA PREMIUMS. 760 (a)Each FORA reimbursement contract must require that the 761 insurer annually pay to the fund an actuarially indicated 762 premium for the annual aggregate limit. Premiums shall be 763 charged as follows: 764 1.Fifty percent Rate on Line multiplied by the FORA 765 insurers FORA layer 1 limit. 766 2.Fifty-five percent Rate on Line multiplied by the FORA 767 insurers FORA layer 2 limit. 768 3.Sixty percent Rate on Line multiplied by the FORA 769 insurers FORA layer 3 limit. 770 4.Sixty-five percent Rate on Line multiplied by the FORA 771 insurers FORA layer 4 limit. 772 (b)Initial FORA premiums must shall be based on the 773 contract year 2023 FHCF projected industry retention, FHCF 774 retention multiples, 2022 RAP qualification ratio, and insurers 775 prior contract year 2022 FHCF premiums. Final FORA premiums will 776 be adjusted after December 31 of the contract year, 2023, based 777 on FHCF premiums on December 31 of the contract year, 2023, FHCF 778 premiums, FHCF industry retention, the 2023 RAP qualification 779 ratio, and insurers 2023 FHCF premiums for the contract year. 780 (c)Failure to pay the initial FORA premium in full by 781 December 1 of the contract year will July 1, 2023, shall result 782 in disqualification as a FORA insurer. The final FORA premium 783 will be due no later than March 1 following the contract year, 784 2024. 785 (6)FHCF OBLIGATION CLAIMS-PAYING CAPACITY.FORA may shall 786 not affect the obligation claims-paying capacity of the FHCF as 787 provided in s. 215.555(4)(c)1. 788 (10)RULEMAKING.The board may adopt rules to implement 789 this section. In addition, the board may adopt emergency rules 790 pursuant to s. 120.54(4) at any time as are necessary to 791 implement this section for the 2025-2026 2023-2024 fiscal year. 792 The Legislature finds that such emergency rulemaking power is 793 necessary in order to address a critical need in the states 794 problematic property insurance market. The Legislature further 795 finds that the uniquely short timeframe needed to effectively 796 implement this section for the 2025-2026 2023-2024 fiscal year 797 requires that the board adopt rules as quickly as practicable. 798 Therefore, in adopting such emergency rules, the board need not 799 make the findings required by s. 120.54(4)(a). Emergency rules 800 adopted under this section are exempt from s. 120.54(4)(c) and 801 shall remain in effect until replaced by rules adopted under the 802 nonemergency rulemaking procedures of chapter 120, which must 803 occur no later than December 31 of the contract year, 2023. 804 (11)APPROPRIATION. 805 (a)Within 60 days after a covered event, the board must 806 shall submit written notice to the Executive Office of the 807 Governor if the board determines that funds from FORA coverage 808 established by this section will be necessary to reimburse FORA 809 insurers for losses associated with the covered event. The 810 initial notice, and any subsequent requests, must specify the 811 amount necessary to provide FORA reimbursements. Upon receiving 812 such notice, the Executive Office of the Governor shall instruct 813 the Chief Financial Officer to draw a warrant from the General 814 Revenue Fund for a transfer to the board for FORA in the amount 815 requested. The Executive Office of the Governor shall provide 816 written notification to the chair and vice chair of the 817 Legislative Budget Commission at least 3 days before the 818 effective date of the warrant. Cumulative Transfers authorized 819 under this paragraph may not exceed $3 $1 billion, less 820 reimbursement premium paid, per contract year. 821 (c)If a covered event occurs that triggers reimbursements 822 under FORA, no later than January 31 following the covered 823 event, 2024, and quarterly thereafter, the board must shall 824 submit a report to the Executive Office of the Governor, the 825 President of the Senate, and the Speaker of the House of 826 Representatives detailing any reimbursements of FORA, all 827 premiums collected, all loss development projections, and 828 detailed information about administrative and post-event 829 examination activities and expenditures. 830 (d)On July 1, 2025, or as soon as reasonably practicable 831 thereafter, the Executive Office of the Governor shall instruct 832 the Chief Financial Officer to draw a warrant from the FORA Fund 833 and transfer $580 million into FHCF to offset losses that occur 834 as result of the freeze of the cash build-up as set forth in s. 835 215.555(5)(b). 836 (12)EXPIRATION DATE.If no general revenue funds have been 837 transferred to the board for FORA under subsection (11) by June 838 30, 2030 2026, this section expires on July 1, 2030 2026. If 839 general revenue funds have been transferred to the board for 840 FORA under subsection (11) by June 30, 2030 2026, this section 841 expires on July 1, 2035 2030, and all unencumbered funds 842 collected under this section shall be transferred by the board 843 back to the General Revenue Fund unallocated. 844 Section 4.This act shall take effect upon becoming a law.