Citizens Market Accountability Advisory Committee Meeting Report: October 22

On Wednesday, October 22, 2008, Citizens Property Insurance Corporation (“Citizens”) Market Accountability Advisory Committee (“Committee”) held a meeting to receive updates on the Operations and Underwriting Departments, Mission Review Task Force, and Policyholder Forums.   To view the complete agenda, click here.

The meeting was called to order by the Chairman James Malone, with a quorum of Committee members in attendance.

Paul Palumbo, Citizens’ Senior Vice-President of Underwriting, reported on Operations and Underwriting production totals and gave combined month-end reports for September, 2008.

Citizens receives approximately 50,000 new applications per month.   The following types of policies were written during September:

• 44,022 new Personal Residential Multi-Peril
• 4,386 Personal Residential Wind-Only
• 183 Commercial Residential Multi-Peril
• 1,596 Commercial Wind-Only

To view the Operations and Underwriting Production Totals data table, click here.

As detailed in the Policy Summary Report, as of September 30, 2008, Citizens had a total of 1,192,122 policies in force, representing approximately $437 billion in exposed risk.  After September, approximately 1.13 million policies were assumed.  To view the Policy Summary Report, click here.

Susanne Murphy from Citizens gave Committee members an introduction to the newly-formed Citizens Mission Review Task Force (“Task Force”).   To view the rules governing the Task Force, click here.   To view a summary of the inaugural Task Force meeting, click here.

Mr. Palumbo gave an update on recent Agent Roundtable meetings that are designed to give Citizens’ staff members a chance to interact directly with agents, and receive input they might not get otherwise. 

At the most recent meeting, topics from operational issues like declarations pages, to how agents and policyholders interact with depopulation companies, were discussed.

Ms. Murphy updated Committee members on recent Policyholder Forums held in Miami-Dade, Broward and Palm Beach Counties.   Issues raised during these meetings concerned:

• The availability of multi-peril policies through Citizens
• Claims handling/public adjuster issues
• The depopulation process
• The wind-only policy expiration and roof requirements

Ms. Murphy stated that feedback received from policyholders during the forums was overwhelmingly positive.   To view the Policyholder Forum Update, click here.

Mr. Palumbo reported on the Underwriting Department and two of its major projects.

Single Personal Lines Policies

Citizens is working toward the goal of having a single personal lines policy administration system in order to streamline internal underwriting processes.   As such, Citizens has developed a new wind-only coverage type delineated by property type, with supporting forms, underwriting manuals, and eligibility requirements.

Citizens will begin writing wind-only policies on the same system used for multi-peril policies, beginning with new business effective on, or after December 1, 2008.  These policies will be written in accordance with the new program rules and forms that have been approved by the Florida Office of Insurance Regulation (“OIR”). 

One specific area of concern agents have with the new wind-only product surrounds new eligibility requirements for roofs.   In the new wind-only product, the OIR approved Citizens to exclude those risks with increased exposure due to the condition and/or age of the roof.   Currently, if the roof does not have a minimum three years of estimated remaining life, the following guidelines apply:

• Asphalt, Fiberglass and Composition Shingles: Not Insurable Over 25 Years Old
• Tile, Slate, Clay, Concrete or Other: Not Insurable Over 50 Years Old

Because roofs that have exceeded life expectancy represent increased exposure risk, they are not provided for in the design on the new wind-only policy.   To address this matter, Citizens has developed an alternative approach that will limit exposure while providing some insurance protection to consumers.

Citizens’ staff proposed that Citizens offer reduced coverage for homes that do not meet the new roofing guidelines.   If there is some useful life remaining on a roof, but the remaining years until it reaches the uninsurable limit is less than three, it was also proposed that consumers be allowed to elect a policy that only covers the roof and contents inside the dwelling for their actual cash value (“ACV”).

In order to qualify for this coverage, a licensed roofing contractor or inspector must certify that the roof has more than three years of useful life.   Properties with roofs that have no remaining useful life will continue to be ineligible for a Citizens wind-only policy.

Citizens’ staff recommends that the appropriate filings for ACV coverage be submitted to the OIR.

Committee members inquired if policyholders would have the option to buy an ACV policy even if their roof is new in order to reduce their premium payments.   Mr. Palumbo stated that will not be offered as a coverage option.

Belinda Miller, Deputy Commissioner of Property and Casualty Insurance, from the OIR reminded Committee members that only the eligibility guideline has been approved by the OIR, not the ACV portion of the wind-only plan.   Ms. Miller added that any policies written for the ACV may not end up being more affordable.   Ms. Miller also reminded Committee members that there is a 30-day waiting period before any wind-only policies take effect.

Committee members inquired whether there was any type of guarantee that roofing contractors or inspectors supplying certification that a roof has more than three years of useful life are being truthful and unbiased.

Mr. Palumbo stated that the reliability of the contractor or inspector might come down to a judgment call.   The policy provision is designed to only use a licensed, experienced level of professional with proper training.   Concern was raised by Committee members about trusting contractors/inspectors on their word.   Agents have encountered problems with that in the past, even in relation to new homes, and are concerned about the possibility of fraud.

Commercial Nonresidential Multi-Peril Product Update

Citizens’ staff is preparing for the release of the Commercial Nonresidential Multi-Peril program.   System testing is currently underway, and final operational preparations are being made for the quoting and issuance of policies.   The official launch date is expected to be in early November.

Policy highlights include:

• Coverage for commercial building owners and tenants
• ISO-based policy covering the basic causes of loss
• Coverage availability for buildings, business personal property, loss of business income, and extra expense
• No appraisals will be required; Citizens will inspect all risks
• Multiple deductible options
• Eligibility for applicants unable to procure commercial nonresidential property insurance from an authorized insurer at its filed and approved rates

Ms. Miller informed Committee members that the OIR has received numerous calls regarding new laws governing condominium associations that require a unit owner to name the Association as a loss payee on its insurance policy.  The OIR has crafted an endorsement that companies can use to clarify what the condominium association is entitled to under this provision, and what powers it has in the event of a catastrophe.  To view the OIR’s endorsement, click here.

The meeting was then adjourned.

 

Should you have any questions or comments, please do not hesitate to contact Colodny Fass.

 

To unsubscribe from this newsletter, please send an e-mail to ccochran@cftlaw.com