Citizens Actuarial and Underwriting Committee Meeting Report: January 22
Jan 23, 2009
Citizens Property Insurance Corporation (“Citizens”) Actuarial and Underwriting Committee (“Committee”) held a meeting on January 22, 2009 during which the following issues were discussed. To view the meeting agenda, click here.
Revised Animal Liability Exclusion
Citizens’ 2010 product filing will include an amendment to the animal liability exclusion language expressly stating that bodily injury and property damage that occurs as result of an animal owned or kept by an insured will no longer be covered, regardless of the cause. The exclusion is being modified to eliminate potential misinterpretation of the term “caused by.”
For example, if an insured’s dog was released from confinement due to an improperly-latched gate and subsequently the dog bit someone, the existing policy language contains some ambiguity as to whether the bite would be “caused by” the dog or “caused by” the improperly-latched gate. Thus, a liability claim submitted in this instance would result in Citizens incurring loss adjustment expenses.
The Committee decided to eliminate such discrepancies by explicitly denying coverage for damage or injury resulting from such a scenario, regardless of the cause.
To view Committee materials related to this discussion, click here.
New Contiguous Flooring Limitation
The Committee unanimously voted to continue exploring coverage limits for contiguous flooring.
Over the last several years, a considerable increase in the frequency and severity of personal residential claims in which payment for undamaged flooring represents a large portion has been reported.
When loss to any portion of flooring occurs, policyholders expect any repairs or replacements to match the original flooring. When a close or exact match cannot be found, the issue of contention becomes what constitutes “reasonable repair.” Thus, a single cracked tile can turn into a $50,000 loss. Such disproportionate payments relative to the extent of actual loss is an unintended impact of Florida law that has not been accounted for in the calculation of current rates.
Industry research revealed an opportunity for Citizens to make product modifications that will reduce exposure to excessive loss payments for undamaged contiguous flooring.
The Committee discussed corollaries among contiguous flooring, siding, and roofing. However, the Committee decided to pursue only the issue of contiguous flooring at this time.
To view Committee materials related to this discussion, click here.
Automated Underwriting
Citizens currently is operating a pilot Automated Underwriting program utilizing approximately 20 large agencies throughout the State of Florida. As a result of the pilot program, Citizens’ Staff has identified several modifications they feel are necessary for the program to operate correctly.
Specifically, Staff is working to ensure that automatically-approved items are aligned with compliance expectations. Referral criteria are being fine-tuned to ensure that automatically-approved items are not being improperly referred for manual underwriting review.
When the pilot program was initiated, its anticipated duration was three to four months, followed by a full rollout to all agents. Based on findings from the pilot program, this timeframe remains viable.
Commercial Non-Residential Multi-Peril Policy
While the Commercial Non-Residential Multi-Peril product has generated significant interest, Citizens currently is not writing a significant number of policies for it, but rather providing new business quotes. Although commercial underwriting staff issued approximately 700 quotes during the first six weeks it was offered, only 48 new business applications were submitted by the end of December 2008. Staff, however, continues to receive a large number of phone calls from agents with eligibility questions. The majority of submissions received so far are from landlords or land owners located in the Panhandle area.
Personal Residential Rating Algorithms for 2010 Rate Filings
Committee members were updated on personal residential rating algorithms to be used for 2010 rate filings. Work continues on these new algorithms for the personal residential multi-peril and wind-only products. Actuarial Services and Product Development Staff are working to align the algorithms, overall rate structure, policy language and product manuals with the strategic, as well as legislative changes expected to be incorporated in the 2010 filings.
To view Committee materials relating to Automated Underwriting, Citizens’ Commercial Non-Residential Multi-Peril Policy and Personal Residential Rating Algorithms for the 2010 Rate Filings, click here.
The meeting was then adjourned.
Should you have any questions or comments, please do not hesitate to contact Colodny Fass.
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