CS/SB 2D
Reinsurance to Assist Policyholders (RAP) Program
pp. 6–16; §215.5551, F.S.
Authorizes a $2 billion reimbursement layer of reinsurance for hurricane losses directly below the mandatory layer of the Florida Hurricane Catastrophe Fund (FHCF). All eligible insurers must participate in the program.
The FHCF mandatory retention is $8.5 billion for the 2022-2023 contract year.
Requires the RAP program to reimburse 90 percent of each insurer’s covered losses and 10 percent of their loss adjustment expenses up to each individual insurer’s limit of coverage for the two hurricanes causing the largest losses for that insurer during the contract year.
Specifies that each insurer’s limit of the $2 billion in RAP coverage is their pro-rata market share among all insurers that participate in the RAP program.
Thus, an insurer with five percent of the risk reinsured by RAP coverage would have a limit of coverage of $100 million.
Requires all eligible insurers to participate in the RAP program for one year. Insurers that do not have private reinsurance within the RAP layer of coverage for the 2022–2023 contract year must participate during the 2022–2023 contract year. Insurers that have private reinsurance at the RAP layer for the 2022–2023 contract year must defer using RAP program coverage until the 2023–2024 contract year. A RAP insurer that has any private reinsurance that duplicates RAP coverage for the 2022–2023 contract year must notify the State Board of Administration (SBA) of the private reinsurance and must defer participation in the RAP program until the 2023–2024 contract year.
Prohibits an insurer from obtaining RAP coverage if the insurance commissioner certifies it is in “unsound financial condition.”
Specifies that insurers do not pay premiums for RAP program coverage but must reduce rates to reflect savings. Insurers that participate in the RAP program for 2022–2023 must reduce their rates by June 30, 2022, to reflect the savings from RAP coverage. Insurers that defer using the RAP program until 2023–2024 must reduce rates to reflect savings by May 1, 2023.
Provides funding for the RAP coverage through a $2 billion appropriation from the General Revenue Fund. Monies are only transferred to the SBA, the program administrator, if the RAP program coverage must be paid because of a hurricane.
Specifies that, if funds are transferred to the SBA because of a hurricane, the SBA may request funds for the administration of the program from the General Revenue Fund, not to exceed $5 million.
Provides the RAP program expires July 1, 2025, if no General Revenue funds have been transferred to fund the RAP program. If such funds were transferred, the statute expires July 1, 2029, and all unencumbered RAP Program funds must be transferred back to the General Revenue Fund.
Effective date: May 26, 2022, except as otherwise provided
Chapter No. 2022-268, LOF