Citizens Property Insurance CFO: Depopulation Efforts Making a Difference

 

The Citizens Property Insurance Corporation (“Citizens”) Depopulation Committee (“Committee”) met today, May 29, 2013, during which Citizens’ Chief Financial Officer Sharon Binnun advised the Committee that depopulation efforts over the past year and a half have reduced potential emergency assessments by approximately 50 percent.

To view the Committee meeting materials, click here.

A complete Colodny Fass& Webb report on today’s meeting is forthcoming.  A Citizens news release on the meeting is reprinted below.

 

Should you have any questions or comments, please contact Colodny Fass& Webb.    

 

CITIZENS DEPOPULATION EFFORTS CONTINUE TO REAP HUGE BENEFITS

TALLAHASSEE, FL – Citizens Property Insurance Corporation will enter the 2013 hurricane in the best financial shape it has been thanks to depopulation efforts that are transferring policies to the private market and cutting potential emergency assessments roughly in half, over 2012, to $3.8 billion.

Speaking to members of Citizens’ Depopulation Committee on Wednesday, Citizens’ Chief Financial Officer Sharon Binnun said risk transfer and depopulation programs going back to the beginning of 2012 have cut by 47.2 percent the potential assessments that would be paid by all Florida policyholders in the event of a catastrophic storm.

Depopulation agreements executed in anticipation of the 2012 and 2013 hurricane seasons have or will remove up to an estimated 445,000 policies when all takeouts are complete later this summer.  

“If we ask ourselves if depopulation efforts have made a difference…, I think those numbers speak for themselves,” Binnun said.

Over the year, Citizens’ probable maximum loss in a 1-in-100 year storm fell from $23.5 billion to $19.9 billion, a 15-percent decrease. The potential emergency assessment levied on all policyholders fell from $7.3 billion to $3.8 billion, a 47.2 percent reduction.

Much of that drop is due to depopulation efforts. In 2012, seven companies assumed a total of 277,002 policies and subsequently collected premiums of more than $304 million.

Along with traditional depopulation agreements, Citizens earlier this year signed a deal with Weston Insurance Co., which agreed to assume nearly 31,000 wind-only policies in some of the more hurricane prone regions of the state. Citizens will transfer up to $63 million in policyholder premium, associated with the risk removed, to Weston.

Last week, Citizens’ Board of Governors approved a similar arrangement with Heritage, which will take nearly 40 percent of its multiperil policies from Palm Beach, Broward and Miami-Dade counties. The agreement calls for Heritage to pay all claims and expenses going back to January 1, 2013. In exchange, Citizens later this year will transfer up to $52 million of policyholder premium associated with the policy risk removed. Neither agreement reduces Citizens $6.4 billion surplus.

Going forward, Citizens President and CEO Barry Gilway said depopulation efforts combined with the creation of a policy clearinghouse established by state lawmakers in May and approved by Governor Rick Scott Wednesday will result in a significant number of additional policies being transferred to the private sector later this year in anticipation of the 2014 hurricane season.

“At the end of the day, Citizens’ responsibility is to be the insurer of last resort,” Gilway said. “By definition, we should be the company that is retaining the business that other companies are unwilling to (carry.)”

 

 

Click here to follow Colodny Fass& Webb on Twitter (@CFTLAWcom)

   

 

To unsubscribe from this newsletter, please send an email to Brooke Ellis at bellis@cftlaw.com.