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CAS RATEMAKING SEMINAR PROP-31. CURRENT ISSUES IN FLORIDA PROPERTY INSURANCE RATEMAKING By David R. Chernick. HURRICANE CLASS PLAN. History Filed April 1999 Effective July 2000 Residential Class Plan Developed 1998-1999. HURRICANE CLASS PLAN. HOW WAS THE CLASS PLAN DEVELOPED?

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cas ratemaking seminar prop 31
CAS RATEMAKING SEMINAR PROP-31

CURRENT ISSUES IN FLORIDA PROPERTY INSURANCE RATEMAKING

By David R. Chernick

hurricane class plan
HURRICANE CLASS PLAN
  • History
  • Filed April 1999
  • Effective July 2000
  • Residential Class Plan
  • Developed 1998-1999
hurricane class plan1
HURRICANE CLASS PLAN
  • HOW WAS THE CLASS PLAN DEVELOPED?
  • The Process used
  • Selection of rating variables
  • Selection of rating factors
hurricane class plan the process
HURRICANE CLASS PLANThe Process
  • Lack of Data
  • Lack of precedent
  • Input from Hurricane Modelers
  • Input from Wind Experts
  • Interaction of Rating Variables
hurricane class plan selection of rating variables primary factors
HURRICANE CLASS PLANSelection of Rating VariablesPrimary Factors
  • Construction
  • Secondary Water Resistance
  • Sheathing Attachment
  • Shuttering
  • Roof Straps
  • Roof Type
hurricane class plan selection of rating variables secondary factors
HURRICANE CLASS PLANSelection of Rating VariablesSecondary Factors
  • Number of Stories
  • Roof Type
  • Patio Doors
  • Garage Door Bracing
  • Attached Carport/Porch
  • BCEGS
hurricane class plan classification definitions
HURRICANE CLASS PLANClassification Definitions
  • Superior Sheathing/Attachment - Roof Sheathing with a minimum thickness of 1/2” attached to roof trusses/rafters by 8d nails or greater which are properly spaced or a AFG-01 structural adhesive, that is continuously applied, per the manufacturer's instructions, on both sides of the truss/rafter with a 1/4” or greater bead between the sheathing and each truss/rafter over the entire length of the truss/rafter and its connection with the sheathing to within a foot of the roof overhang.
hurricane class plan impact of rating factors primary factors
HURRICANE CLASS PLANImpact of Rating FactorsPrimary Factors
  • Construction 4% - 20%
  • Secondary Water Resistance 5% - 25%
  • Sheathing Attachment 10% - 35%
  • Shuttering 18% - 42%
  • Roof Straps 3% - 8%
  • Roof Type 12% - 15%
hurricane class plan impact of rating factors secondary factors additive
HURRICANE CLASS PLANImpact of Rating FactorsSecondary Factors - Additive
  • Number of Stories +.05
  • Roof Type -.15
  • Patio Doors -.04
  • Garage Door Bracing -.03
  • Attached Carport/Porch -.05
  • BCEGS -.07
hurricane class plan5
HURRICANE CLASS PLAN
  • Rating Territories
  • Frequency accounted for by territory going up and down the coast
  • Severity accounted for by territory bands going inland from the coast
hurricane class plan6
HURRICANE CLASS PLAN
  • All rate filings made on or after 3/1/2001 must comply with new provisions included in Section 627.0629 of the Florida Statues.
  • In general this statute requires reasonable premium reductions for housing features that reduce potential loss from windstorms
hurricane class plan7
HURRICANE CLASS PLAN
  • Section 627.0629 Florida Statutes:
  • “A rate filing for residential property insurance must include actuarially reasonable discounts, credits, or other rate differentials, or appropriate reductions in deductibles, for properties on which fixtures or construction techniques demonstrated to reduce the amount of loss in a windstorm have been installed or implemented.”
hurricane class plan8
HURRICANE CLASS PLAN
  • “The fixtures or construction techniques shall include, but not be limited to, fixtures or construction techniques which enhance roof strength, roof covering performance, roof-to-wall strength, wall-to-floor-to-foundation strength, opening protection, and window, door, and skylight strength.”
hurricane class plan9
HURRICANE CLASS PLAN
  • “Credits, discounts, or other rate differentials for fixtures and construction techniques which meet the minimum requirements of the Florida Building Code must be included in the rate filing.”
hurricane class plan10
HURRICANE CLASS PLAN
  • Informational Memorandum issued 2/21/02 by Florida DOI.
  • Asks for comments by 3/18/02
  • A copy is included in my handout
hurricane class plan11
HURRICANE CLASS PLAN
  • COMMERCIAL RESIDENTIAL
hurricane class plan20
HURRICANE CLASS PLAN
  • COMMERCIAL BUILDINGS