Florida Property & Casualty Insurance Reform Committee Recommendations

Hurricane Catastrophe Fund

1. Keep the current retention level but consider offering coverage below the retention level/attachment point (first layer of coverage) on a voluntary basis to all admitted companies participating in the CAT Fund.

2. Any change should only be temporary/short-term.

3. The rate for the temporary, below the current retention level, CAT Fund coverage should be increased to a “near market rate”.

4. Encourage the Federal government to create a CAT Fund to deal with high level catastrophic events.

Mitigation/Premium Discounts

1. Maintain and expand the commitment to the Mitigation Program being administered by the Department of Financial Services. Also, state funds need to be leveraged to their maximum amount.

2. The modeling firms (RMS, AIR, ARA, EQE and FIU) need to recalibrate their models to consider the results of mitigation in Florida.

3. Uniform inspection forms need to be developed for all insurers.

4. Where feasible, standardized or uniform credits with smaller ranges should be developed while allowing market competition in the credit process.

5. There is a need for more consumer information as to types of specific mitigation and the resulting potential credits.

6. Develop a measurement methodology to judge the program’s effectiveness and its effect on the market.

7. The mindset of mitigation needs to have a human cost savings component and physical home cost savings. Also, the effect of the avoidance of deductible losses on insureds should be considered.

8. There needs to be “actuarial soundness” in base rates and premium discounts granted for insureds that complete mitigation techniques.

9. There needs to be state funded research concerning mitigation of commercial structures. Consider whether the state’s building code for commercial structures should be strengthened.

10. Whether or not additional state funding for new mitigation grants occurs, the creation of a not-for-profit corporation should be considered to raise funds from the private sector for grants.

11. A statewide building code should be in place that requires American Society of Civil Engineers wind lines to be adopted and then any future changes to the statewide code could only be to strengthen the code.

Citizens Property Insurance

1. Require OIR to set rates for Citizens on a quarterly basis, based on the highest rate approved for the voluntary market, thus eliminating the need for rate filings.

2. Earmark a portion of future mitigation funding to be used for Citizens policyholders.

3. Allow Citizens to write the full policy. Therefore, do away with the wind boundaries and the distinction of wind and ex-wind policies in the wind boundaries.

4. Require Citizens policyholders to upgrade their homes to meet the statewide building code over some period of time or risk higher hurricane deductibles applicable to their policies. Or permit Citizens to surcharge properties until they meet code requirements.

Source: P&C Insurance Reform Committee as of Oct. 18, 2006.