Citizens Actuarial and Underwriting Committee Meeting Report: Feb. 28

On Thursday, February 28, 2008, Citizens Property Insurance Corporation (“Citizens”) held a meeting of its Actuarial and Underwriting Committee (“Committee”) to discuss coverage exclusions, 2009 rate filings, occupancy changes for commercial non-residential wind-only policies, and to receive updates on current Citizens projects. To view a copy of the meeting agenda, click here.

The meeting was called to order by Chairman Richard DeChene, with the following Committee members in attendance: Carol Everhart, Jeffrey Kucera and Paul Palumbo. Also in attendance were Kimberly Abate, Brian Donovan and Loren Gallogly from Citizens.

Ms. Abate gave a presentation on mobile home attached structure hurricane coverage exclusions for personal line policies. To view a copy of the presentation, click here.

Citizens has developed and filed a hurricane coverage exclusion for mobile homes that is inclusive of carports, screened enclosures and any attached structures added to the mobile home after it leaves the manufacturer’s premises.

This exclusion plan has been expanded from the original carport and screened enclosures-only limitation due to actuarial findings. During actuarial analysis, it was revealed in a report commissioned by the Florida Office of Insurance Regulation that “sunrooms” accounted for a significant percentage of exterior structure claims as a result of hurricanes Wilma and Charley. The new, more comprehensive exclusion list includes sunrooms as well as any other after-market addition to a mobile home.

A similar change also has been effected to the optional coverage endorsement form that adds hurricane coverage for these structures into the policy on a limited basis. Policyholders and applicants with specified excluded attached structures will be eligible to add optional hurricane coverage for an additional fee. Wind-only policies will be affected by this new exclusion starting September 1, 2008 and multi-peril policies will be affected starting January 1, 2009. The Committee approved the changes.

Ms. Abate then gave a presentation on Citizens’ 2009 rate filings. These filings will include possible rate changes, significant algorithm modifications and numerous compliance-related initiatives. Three new legislative eligibility requirements for 2009 are required to be filed by January 1, 2009.

These new requirements include:

• Opening protections (shutters) for homes valued at $750,000 or more located in a wind-borne debris region. Citizens has identified homes that currently meet the $750,000 threshold and has noted whether they have shutters, and if so, what type of shutters they have. Once Citizens receives clarification on which shutter types will be acceptable beginning January 1, 2009, communication to existing policyholders who do not currently meet the standards will be completed. Approximately 11,000 policyholders are expected to be affected. To view a map of affected areas, click here.
• Homes valued over $1 million and condominiums with a combined dwelling and contents value of $1 million or more will not be eligible for coverage with Citizens starting January 1, 2009. However, if the property owner provides a sworn affidavit from at least one authorized insurer and three surplus lines agents confirming coverage rejection, he or she will be eligible for Citizens coverage for up to three years. To date, Citizens has identified approximately 7,800 policies that currently meet the $1 million threshold and plans to communicate this information to those policyholders.
• All properties insured by Citizens constructed as of January 1, 2009 and located within 2,500 feet of the coastal construction line must meet new Code Plus building requirements. Citizens is currently analyzing these requirements and the impact they will have on new business.

To view a summary of Citizens’ 2009 rate filings, click here. For detailed filing information, click here.

Ms. Abate then gave a report on occupancy types for the commercial non-residential wind product lines that are reportable to the Florida Hurricane Catastrophe Fund (“FHCF”).

In order to assure that certain risks will be covered by the FHCF, Citizens needs to add the following occupancy types to its commercial residential wind-only policy manual:

• Dormitory, sorority and fraternity house buildings
• Nursing homes that are an integral part of a retirement community
• Owner-occupied boarding house buildings

The Committee approved the addition of descriptions of these structure types to the commercial residential wind-only policy line of business and the removal of corresponding language from the commercial non-residential wind-only line of business. The change will take place before January 1, 2009. To view a copy of the report, click here.

Updates on the reformulation of rates and rating algorithms along with regional and automated underwriting changes were also given. Citizens’ automated underwriting project is expected to be fully functional by the fourth quarter of 2008.

Personal and commercial lines underwriting will be divided into regional teams. This program will be introduced as a pilot prior to statewide roll-out.

The meeting was then adjourned.

Should you have any questions or comments, please do not hesitate to contact this office.