1. 2005 Citizens Property Insurance Corporation Emergency Assessment

2. 2 –Per Florida Statue 627.351(6) Citizens may levy an Emergency Assessment when Citizens incurs a deficit in any year and that deficit exceeds the amount to be collected by the Regular Assessment. What is the Emergency Assessment (EA)?

3. 3 The total dollar amount is $887,502,331 to be collected over a 10 year period. 1 Equates to an annual 1.4% surcharge for policies issued or renewed on or after 7/1/2007. 2 1 See slide 4 for the detail of Citizens’ 2005 Deficit by account 2 The percentage rate may vary each year, depending upon the previous years collections and changes to the Direct Written Premium base What is the amount of the Emergency Assessment?

4. 4 Account2005 Deficit Application of $715 M Legislative Appropriation 2005 Regular Assessment Remaining Deficit Emergency Assessment PLA87,180,761(87,180,761)000 CLA4,564,398(4,564,398)000 HRA1,673,836,269(623,254,841)(163,079,097)887,502,331(887,502,331) Totals1,765,581,428(715,000,000)(163,079,097)887,502,331(887,502,331) Citizens 2005 Deficit Recap

5. 5 All policyholders who purchase a policy in the subject lines of business pay through their admitted carriers or the Florida Surplus Lines Service Office. Who will pay Citizens?

6. 6 Insurance written by assessable insurers or procured by assessable insured's on real or personal property, as defined in s. 624.604, including insurance for fire, industrial fire, allied lines, farm owners multiperil, homeowners multiperil, commercial multiperil, and mobile homes, and including liability coverage on all such insurance, but excluding inland marine as defined in s. 624.607(3) and excluding vehicle insurance as defined in s. 624.605(1), other than insurance on mobile homes used as permanent dwellings. Subject Lines of Business

7. 7 Direct Written Premium, including endorsement premium for each subject line of business 1 1 See slide 8 for a detail listing of the subject lines of business What Premiums are Included?

8. 8 Lines of Business Annual Statement Cross Reference (Page 20.FL, Statutory Page 14) FireLine 1 Allied LinesLine 2.1 Farm owners Multi-PerilLine 3 Homeowners Multi-PerilLine 4 Commercial Multi-Peril (non-liability portion)Line 5.1 Commercial Multi-Peril (liability portion)Line 5.2 Earthquake PremiumsLine 12 Mobile Home Premiums OnlyReported under Line 21.1 Aggregate Other Property – only the Mobile Home Premiums reported under this category Line 33 What are the Subject Lines of Business?

9. 9 Beginning with policies issued or renewed on or after July 1, 2007. The 2005 EA will be collected over 10 years, as mandated by the Florida Legislature. The percentage rate to be collected may change annually, depending on the previous years collections and fluctuations to the Direct Written Premium base. When does the EA take effect and how long do we collect the EA?

10. 10 Surplus lines carriers should contact the Florida Surplus Lines Service Office for instructions on remitting the Citizens EA. All admitted carriers are to pay the EA via wire by the 15 th day following month end, beginning August 15, 2007, utilizing the wiring instructions below: Wells Fargo Bank ABA: 121000248 Ben A/C: 0001038377 Attn: Corporate Trust Wire Clearing/Robert Hedgecock (904) 489-3737 FCC: Trust Account # 12681107 Note: Citizens will not bill the admitted carriers for the EA – all carriers are required to wire the EA funds collected from their policyholders each month. Late payments are subject to late fees and notification to the OIR. How is Citizens Paid?

11. 11 No. Citizens will obtain information from the reporting all carriers already prepare for the Florida Hurricane Catastrophe Fund reporting system, via the Office of Insurance Regulation. Remember – You pay Citizens monthly, but you need only report to the Office of Insurance Regulation quarterly. Will Citizens require any reporting to accompany the wire?

12. 12 Both – Citizens’ 2005 Emergency Assessment should be listed as a separate line item on both the billing invoice and the declaration page of each policy, where the direct written premium is one of the subject lines of business. Should the EA be noted on the policy or billing?

13. 13 Florida Statute 627.351(6)(b)3.e, states that failure to pay the Emergency Assessment shall be treated as failure to pay premium. What happens when a policyholder refuses to pay the assessment?

14. 14 On policies rated just once during the multi-year premium period, the assessment is collected once based on the entire direct written premium. On policies that are rated annually, the EA is collected each year and based on the EA percentage in effect at each renewal period. How should the EA be paid on multi-year policies?