Florida Senate bill SB 1770, which we’ve tracked due to the inclusion of statute 627.352 which would have brought into law, as the bill says, ‘Creating the Catastrophe Risk Capital Access Facility to facilitate insurer access to global risk capital markets and risk-transfer mechanisms’, appears to have dropped the measure we were so interested in. The bill went back to the Senate for a vote on concurrence with the House yesterday.
As this bill passed through the Florida legislative branches of Senate and House, the text regarding the creation of the Florida Catastrophe Risk Capital Access Facility had remained untouched by any amendments to its core text and goals. This facility if approved would have enabled smaller, primary domestic insurers operating in Florida to access the capital markets via risk pooling and use of capital markets instruments such as catastrophe bonds, insurance-linked securities and other risk-linked securitizations to provide reinsurance. You can read much more about the facility in our previous article here.
The latest copy of the bill text which was published yesterday, 2nd May, no longer contains statute 627.352 or indeed any mention of the Florida Catastrophe Risk Capital Access Facility. There are no new amendments to the bill text which have been filed and no historical amendments which mention removing this section of SB 1770.
It appears that what has happened is that the Florida House sent the bill text back to the Senate for concurrence largely replaced by the text of a House bill, HB 909. This bill retains some of the measures from SB 1770, but removes much of the controversial measures that would have increased rates for existing Florida Citizens customers.
It seems that there was no time left in the current legislative session to merge the two bills and so much of SB 1770 was dropped, including areas that had not caused any controversy or been outright rejected such as the Florida Catastrophe Risk Capital Access Facility section.
As far as we can tell, the final bill text which is now on its way to the Florida Governors desk to be signed into law will not include any reference to the creation of this facility.
Unfortunately it appears that the creation of this facility has been wiped from the bill due to the disagreement between the Senate and House over enforcing risk-based, or actuarially sound, pricing on Citizens customers. The House were not prepared to support that and, with the current legislative session running out, it seems that an agreement was found to largely replace SB 1770 with HB 909 in order to at least get something on reforming property insurance in front of the Governor.
The bill is still positive for the private reinsurance market as it contains a measure to create a clearing house to allow more of Citizens policies to flow into the private market. This will likely result in more reinsurance industry involvement in the Florida property insurance market over time.
There’s a good chance that the Florida Catastrophe Risk Capital Access Facility will appear in a future bill, given that there didn’t appear to be any specific disagreement with the proposal for it. We’ll keep you posted if we hear anymore on this.