Citizens Property Insurance Actuarial and Underwriting Committee Hears Clearinghouse, Other Program Updates
Aug 26, 2013
The Citizens Property Insurance Corporation (“Citizens”) Actuarial and Underwriting Committee (“Committee”) met today, August 26, 2013 to hear an update on various projects, including the new Consumer Choice Clearinghouse.
Authorized by the Florida Legislature earlier this year, the Clearinghouse will “shop” for comparable coverage offers from participating private market carriers before placing or renewing personal lines coverage with Citizens.
Steve Bitar, Citizens’ Senior Director of Consumer and Agent Services, updated the Committee on Clearinghouse implementation, reporting that between 5 and 15 insurance carriers are expected to participate in the Clearinghouse when the system goes live on January 1, 2014. Citizens staff members have met with 30 carriers to discuss participation in the Clearinghouse.
Citizens’ staff is working with Bolt Solutions Inc., the vendor awarded the contract to operate the Clearinghouse, to finalize participation agreements for carriers and a template for a limited servicing agreement for agents with whom Citizens has no existing agreement. The platform created by Bolt will link private insurers with consumers seeking to renew policies or purchase new coverage with Citizens. Participating carriers will have two days to submit an offer for coverage once a policy hits the Clearinghouse.
Citizens’ Director of Personal Lines Underwriting Thomas Popko updated the Committee on the personal lines portion of the agenda. Mr. Popko stated that Citizens has seen a drop in new business for 2013 due to rate increases, coverage restrictions and a more stable market for private insurers. Volume is down for new applications. Citizens did not see a spike in applications for new business during the spring and summer, which has been a trend in recent years.
Based on a combination of legislation and Florida Office of Insurance Regulation directives, Citizens is currently managing several personal lines underwriting programs, including Sinkhole Underwriting, Mobile Home Re-Evaluation Program, 25-Year-Old Roof Program and Renewal Multi-Loss Program. Mr. Popko said that each program is helping to drive improvements in the quality and profitability of business.
He reported that Citizens has seen a 26.8 percent drop in sinkhole exposure in 2013 due to rate increases and changes made by SB 408.
Citizens is required by law to limit coverage on mobile homes to a stated value basis (replacement cost minus depreciation) and to ensure existing policies are re-evaluated on a recurring basis to reflect the true depreciated value. Through the Mobile Home Re-Evaluation Program, all policies written prior to 2006 have been examined, and 2007 policies are currently being studied. Since the program’s January 2012 inception, there has been an 18 percent drop in policies in force and a 28 percent reduction in exposure from $6.666 billion to $4.796 billion, as of July 2013.
Under the 25-Year-Old Roof Program, Citizens aims to identify older roofs and confirm that they are still eligible for coverage. Mr. Popko said that, to date, Citizens has reviewed over 420,000 policies with approximately 30 percent updated or renewed, and 60 percent non-renewed.
Committee Chairman John Rollins said this is a very important program as roof leaks and related problems are the most common claims made by Citizens policyholders.
The Renewal Multi-Loss Program began in November 2012 and targets policies with three or more claims in the past three years. Mr. Popko said that of 2,556 policies reviewed, 44 percent were non-renewed.
Stephen Mostella, Citizens’ Director of Commercial Underwriting, presented the commercial lines update to the Committee. Mr. Mostella stated that applications for the first seven months of 2013 were 6 percent below the same period in 2012, and approximately 73 percent of new applications are for wind-only products.
He also reported that, due to workflow modification and coaching individual employees, the average time to respond to applications has been reduced by more than half since 2011.
As of June 1, 2012, Citizens offered Builders Risk and Building Renovations coverage on a consent-to-rate basis through the Commercial Non-Residential Wind-Only program. Mr. Mostella said that there have been 49 quotes requested from 18 coastal counties. Nine policies were issued, with 16 quotes provided and 24 quotes declined.
Reviewing key initiatives related to the CORE Insurance System Project, Mr. Mostella added that going forward, underwriters will be focused on risk evaluation, risk eligibility, accuracy of submission and renewal underwriting instead of manual entry work.
Chairman Rollins made a motion to move the CORE Implementation Update to the next meeting.
The Citizens Board of Governors is scheduled to meet September 20, 2013.
To view today’s meeting materials, click here.
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