Overview:
The Florida Optional Reinsurance Assistance (FORA)
program that established
Section 215.5552, Florida Statutes, was created by the Florida Legislature during
Special Session 2022A and signed into law on December 16, 2022. The FORA
program, administered by the State Board of Administration (SBA), is a one-year
program designed to operate in conjunction with the Reinsurance to Assist
Policyholders (RAP) program and provides four optional layers of reinsurance.
The Florida Legislature has allocated up to $1 billion in General Revenue funds
to support this program.
Eligible Insurers:
In order to be eligible for coverage under the FORA
program, an insurer must be a participating insurer in the Florida Hurricane
Catastrophe Fund (FHCF) as of November 30, 2022. Citizens Property Insurance
Corporation (Citizens) is not eligible for FORA coverage.
The first three layers of FORA are designed to provide
coverage only for the RAP insurers that were required to participate in
Contract Year 2022-2023. Therefore,
RAP insurers for Contract Year 2023-2024
are not eligible to select FORA layers 1 through 3, because that coverage would
duplicate the RAP coverage already in place.
All insurers who select
FORA layers 1 through 3, and RAP insurers in Contract Year 2023-2024, are
eligible to select layer 4.
Program Details:
An insurer’s coverage in layers 1 through 4 will be
based on the FORA insurer’s FHCF market share, with layer 1 positioned directly
below the FHCF retention. Layers 1 through 3 are designed to equal the
effective 2023 RAP industry layer. The combined coverage available in layers 1
through 3 is approximately $0.9 billion, and the coverage available in layer 4
will be based on the remaining industry limit available from the $1 billion of
General Revenue funds after the take-up of coverage in layers 1, 2 and 3.
Please see the table below for detailed information on each layer of the FORA
program.
Layer
|
Industry Layer
|
Industry Retention
|
Rate on Line *
|
Eligible Insurers
|
1
|
$1.0 B
|
$8.1 B
|
50%
|
2022-2023 RAP Insurers
|
2
|
$1.0 B
|
$7.1 B
|
55%
|
3
|
$0.6 B (est.)
|
$6.5 B (est.)
|
60%
|
4
|
TBD
|
TBD
|
65%
|
Insurers who select FORA Layers 1 through
3 and 2023-2024 RAP Insurers
|
*Rate on line is the ratio of premium paid to limit
FORA insurers will be reimbursed for 100% of their
covered losses from the two covered events with the largest losses in excess of
their FORA retention, not to exceed their aggregate FORA limit. In
exchange for this coverage, FORA insurers will be charged a premium for each
layer purchased. FORA insurers selecting multiple layers must purchase them in
sequence beginning with layer 1. For example, layer 2 cannot be purchased
without purchasing layer 1.
Initial retention and payout multiples will be
provided for each layer of coverage. Contracts binding coverage for layers 1
through 3 must be executed no later than April 15, 2023. When contract
selections for layers 1 through 3 are finalized, the layer 4 available limit
will be calculated and offered under a separate contract. Initial premiums for
all selected layers of coverage will be due on July 1, 2023. Failure to
pay by this date will result in the insurer’s FORA coverage being cancelled and
any executed FORA reimbursement contracts will be void.