California FAIR Plan Association Member Company Participation and Voluntary Writing Credits Instructions

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Margaret Dennis
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1 California FAIR Plan Association Member Company Participation and Voluntary Writing Credits Instructions 2017 Pool Year (October 1, 2016 to September 30, 2017) 1. OVERVIEW In accordance with California Insurance Code Section 10095, all insurers licensed to write and engaged in writing basic property insurance in the State of California on a direct basis, shall be a member of the California FAIR Plan Association (CFPA). Every insurer shall be a member as a condition of its authority to transact basic property insurance in this state. Each insurer shall participate in the writings, expenses, profits and losses of the CFPA in the same proportion that its premiums written during the second preceding calendar year bear to the aggregate premiums written by all insurers in the plan. Voluntary writing credits are available in Division I for policies providing basic property insurance in Brush/Wildfire Hazard Areas and Designated Inner City Areas and in Division II for Commercial Multi-Peril policies written in Designated Inner City Areas. Those insurers who wish to apply for relief from participation in the California FAIR Plan Association, in accordance with California Insurance Code, Section and Title 10 California Code of Regulations, Sections 2590 and , shall comply with the procedures contained within this document. Any Member Company wishing to apply for voluntary writing credits must submit the necessary forms and reports by October 15, KEY DATES August, 2016 October 15, 2016 January, 2017 February, 2017 June, 2017 November, 2017 Instructions for 2017 Pool Year distributed Submission for brush and inner city credits for pool year 2017 must be received at the CFPA office Summary of Member Company premiums (including CEA, when applicable) and adjustments to Member Company voluntary writing credits sent for confirmation. Corrections and adjustments are due at the CFPA office within 30 days. Corrections and adjustments to Member Company premiums and credits received at the CFPA office 2017 Pool Year final participation rates distributed CFPA 2017 Financials distributed and available at California FAIR Plan Association 2017 Pool Year 1

2 3. VOLUNTARY WRITING CREDITS Member Companies can reduce their 2017 Pool Year premium basis by submitting voluntary writing credits for the period of September 1, 2015 through August 31, All submissions for voluntary writing credits must be received on or before October 15, 2016 to be included in the 2017 Pool Year rate calculation. All listings and forms shall be submitted via to Forms will be provided to Member Companies along with these instructions and can also be found on the Member Company tab of our web site at Division I Policies providing "Basic Property Insurance" may be included in the submission for voluntary writing credits. Basic property insurance is defined in Insurance Code section 10091(c) as insurance against direct loss to real or tangible personal property... from perils insured against under the standard fire policy and extended coverage endorsement and vandalism and malicious mischief... Thus, policies that exclude fire from the scope of coverage do not qualify as basic property insurance. If your company writes Wraparound policies on a form that includes coverage for the risk of fire and wishes to obtain a voluntary writing credit for those policies, please provide us with a copy of the form when your company next applies for a credit. Credits for Division I voluntary writing premiums are adjusted as follows to reflect the property portion of the premiums: Fire 100% credit Homeowners 64% credit Commercial Multi-Peril 100% credit Wraparound 15% credit Brush Area Voluntary Writing Credits - Division I Provide the completed DIVISION I - BRUSH/WILDFIRE HAZARD form along with a listing of policies providing basic property insurance on property in the Brush Areas (as defined by the Insurance Services Office). For assistance in identifying policies in an ISO-designated brush/wildfire zone, contact Verisk/ISO at Inner City Voluntary Writing Credits - Division I Provide the completed DIVISION I - DESIGNATED INNER CITY form along with a listing of policies providing basic property insurance on property in the Inner City Areas as designated by the Commissioner of Insurance. A list of ZIP Codes that qualify for Division I voluntary writing credits will be included on the form and can also be found on the Member Company tab of the CFPA web site at California FAIR Plan Association 2017 Pool Year 2

3 Division II Commercial Multi-Peril Voluntary Writing Credits - Division II Provide the completed DIVISION II - DESIGNATED INNER CITY form along with a listing of policies providing Commercial Multi-Peril Insurance on property in the Inner City Areas as designated by the Commissioner of Insurance. A list of ZIP Codes that qualify for Division II voluntary writing credits will be included on the form and can also be found on the Member Company tab of the CFPA web site at Credits for Division II voluntary writing premiums are reflected at 100%. 4. PARTICIPATION RATES Each year the Financial Analysis Section of the California Department of Insurance produces a report showing direct written premiums of all insurance companies licensed to do business in California. This special report, generated solely for the CFPA, shows those lines of business that will be used in calculating Member Company participation. The following lines of business are included in the report: Line 1 - Fire Line 2 - Allied Lines Line 4 - Homeowners Insurance Line Commercial Multiple Peril Property Line Commercial Multiple Peril Liability Line 12 - Earthquake Earthquake premiums written through the California Earthquake Authority Participation rates for the 2017 Pool Year will be based on Member Company 2015 calendar year written premiums. All written premium data are considered at 100% except homeowner s premiums, which is reduced to 64% representing the property portion of the premiums. 5. ADJUSTMENTS TO PARTICIPATION RATES Excludable Premiums In January 2017, the CFPA will distribute a report that lists the 2015 Member Company calendar year premiums to be used for the participation rates as well as premiums written attributable to the CFPA that will be excluded from the premium base. California FAIR Plan Association 2017 Pool Year 3

4 Member Companies may submit a completed MEMBER COMPANY PREMIUMS form to exclude the following premiums: Flood Insurance Premiums written under the federal program included in the company s calendar year premium exhibit. Monoline or Plate Glass premiums included in Allied Lines (Annual Statement Line 2) Crop and Farm insurance included in Allied Lines (Annual Statement Line 2) Policyholders' dividends If brush and inner city credits were submitted to the CFPA the previous October, a report titled MEMBER COMPANY SUBMITTED CREDITS summarizing those credits will be distributed at the same time. Companies are given 30 days to submit any corrections or adjustments to the reports. If no changes are needed, no action is necessary. 6. FINAL 2017 POOL YEAR PARTICIPATION RATE The final 2017 Pool Year participation rate will be distributed to all Member Companies in June. The final 2017 Pool Year participation rate reflects voluntary writing credits and excludable premiums. The 2017 pool year participation rate shall be applied to the premiums and losses reported in the CFPA's 2017 Annual Statement of Income and Members' Equity Account and Statement of Assets, Liabilities and Members' Equity, and recorded as DIRECT BUSINESS by each Member Company. Each Member Company's share of premiums and losses will be distributed in November. The CFPA's year-end financials will be posted on the CFPA website Instructions for availability of and access to the data will be sent to Member Companies in November, California FAIR Plan Association 2017 Pool Year 4

5 7. SUMMARY OF 2017 POOL YEAR PARTICIPATION CALCULATION CFPA 2017 Pool Year Participation Calculation Data Member Company 2015 Annual Statement premiums (Homeowners premiums adjusted by CFPA to 64% of reported premiums) and CEA premiums Source California Department of Insurance CEA website Adjusted Member Company Inner City and Brush Credits for policies written from September 1, 2015 to August 31, 2016 Adjustments are made by CFPA as follows: Fire 100% credit Homeowners 64% credit Commercial Multi-Peril 100% credit Wraparound 15% credit Member Companies provide to CFPA on the following forms: DIVISION I - BRUSH/WILDFIRE HAZARD DIVISION I - DESIGNATED INNER CITY DIVISION II - DESIGNATED INNER CITY CFPA premiums booked to the 2015 Member Company premiums Member Companies provide to CFPA on the form: MEMBER COMPANY PREMIUMS Member Company 2015 Annual Statement premiums for: Flood Insurance Premiums Monoline or Plate Glass premiums Crop and Farm insurance included in Allied Lines Policyholder's Dividends Member Companies provide to CFPA on form: MEMBER COMPANY PREMIUMS Once all adjustments to Member Company premiums are made, individual Member Company participation rates are calculated as a percent of the total Member Company premiums. California FAIR Plan Association 2017 Pool Year 5

Property Insurance Association of Louisiana

General These instructions outline the information to report to Property Insurance Association of Louisiana (PIAL) each year for use in the calculations of the PIAL assessments. Prior to this newly revised