Citizens Actuarial and Underwriting Committee Meeting Report: June 22
Jun 23, 2009
On Monday, June 22, 2009, Citizens Property Insurance Corporation’s (“Citizens”) Actuarial and Underwriting Committee (“Committee”) met to discuss the required filing by Citizens of an actuarially sound rate by July 15, 2009.
During its most recent meeting on June 2nd, the Committee had considered an original staff recommendation on the rate filing, but after discussion, generated both a substitute and alternate recommendation. Citizens Staff then was asked to seek legal opinions from both the Florida Office of Insurance Regulation (“OIR”) and Citizens’ General Counsel to determine whether the two new recommendations were consistent with the actuarial soundness provisions of House Bill 1495.
The legal opinions, which were presented at the June 22nd meeting, incorporate legislative history and analysis of HB 1495 to conclude that actuarially-sound rates for Citizens would translate into decreases for some policyholders and increases (capped at 10 percent) for others. Both opinions support the Staff recommendation made to the Committee on June 2nd. To view the executive summary of the recommendations, click here. To view a summary of the June 2nd meeting, click here.
OIR General Counsel Steve Parton, who attended the June 22nd meeting, indicated that a 10 percent increase for every policyholder, or a 10 percent increase for some policyholders with no rate decreases is contrary to the legislative intent of HB 1495. Mr. Parton further explained that levying increases on all policies would lead to excessive and unfairly discriminatory rates.
Committee members stated that certain legislators who had been contacted regarding HB 1495’s intent indicated that a 10 percent rate increase for all policyholders was anticipated when the bill was passed.
To view Citizens legal opinion, click here. To view the OIR’s opinion, click here.
Committee Chairman Earl Horton stated that Citizens’ rates are already actuarially unsound and unfairly discriminatory, and that offering further rate decreases would be fiscally irresponsible, and would create more policyholder assessments. Mr. Parton replied that Citizens is not authorized to create further rate discrimination by not providing discounts where appropriate, but that a 10 percent cap on any rate decreases may be permissible.
Citizens’ General Counsel Perry Cone indicated that once Citizens files its mandated actuarially-sound 2010 rates, the OIR may reject the initial filing. After a ruling by the OIR, any rate increases provided by Citizens’ initial filing would be capped at 10 percent.
According to Mr. Cone, the 10 percent cap on rate increases provided by HB 1495 does not mean that every policyholder’s rates may be increased by 10 percent, nor does it mean that certain policyholders can receive a drastic rate reduction, which would affect the actuarial soundness of Citizens rates. Mr. Cone stated that it would be reasonable to cap rate decreases at 10 percent, even though no cap on rate decreases is mentioned in HB 1495.
After discussion, the Committee decided to uphold its previous recommendation to the Board of a premium increase of up to 10 percent for all policyholders with a positive rate indication and no increase or decrease for those with a negative rate indication.
The next Board meeting has been rescheduled to July 8, 2009, at 9 a.m. To participate in the call, dial (888) 295-6211.
Should you have any questions or comments, please contact Colodny Fass.
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