Citizens Property Insurance Corporation Claims Committee Meeting Report: April 19, 2010
Apr 20, 2010
Reports on new statistical tracking tools and other strategies to expedite claims service performance, the identification of inconsistent or fraudulent claims and the enhancement of training for independent adjusters was the focus of Citizens Property Insurance Corporation’s (“Citizens”) Claims Committee (“Committee”) agenda during its teleconference on April 19, 2010.
These goals, explained Citizens Senior Vice President of Claims Yong Gilroy, are designed to assist in correcting deficiencies exposed by the 2004 and 2005 hurricane seasons, as well as to assure that Citizens is prepared to respond to the next hurricane or other catastrophic event.
“The industry needs to understand more where Citizens is,” Mr. Gilroy said during the teleconference. “The memory they have is still of 2004 and 2005. We want to make sure [to use] any opportunity we have to raise Citizens’ brand, and that we do it comprehensively and educationally.”
Among other examples cited, Mr. Gilroy said that Citizens’ first Quarterly Performance Review in December 2009 showed an average dispatch service response time of 202 minutes among its 25 independent adjuster firms, which is more than double the target response time of 60 minutes. Mr. Gilroy related that the collective sharing of performance data among the adjuster firms spurred them to compete with each other, resulting in the improvement of average dispatch service time to 37 minutes by March 2010.
The Claims Committee’s staff presentation included the following reports:
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An analysis of key performance indicators revealed that the volume of new Citizens claims rose in March 2010 after declining during the previous two months. The number of closed assignments also rose in March, continuing a recent upward trend, while the ratio of closures of new cases dipped below 100 percent during the same time.
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Driven mostly by increased new litigation, the inventory of pending assignments has risen slowly since mid-year 2009.
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Overall cycle times – the average time a claim is open – have shortened, mostly due to a drop in the litigation and disputed claims cycle times from 142 days in December to 117 days in March. Mr. Gilroy attributed a rise in non-catastrophic cycle times from 39 to 48 days to a new policy of reviewing pending claims with adjusters on a weekly basis.
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The number of complaints relative to new claims has decreased. The most frequently cited reasons for complaints were the denial of claims (32 percent of all complaints) and claim delays (30 percent).
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Statistical tracking revealed that the average number of days to contact policyholders after a claim has been filed has been consistently less than half a day. The average number of days until a subsequent inspection is made has been 5.7 days or less since September 2009, while the average number of days for claim information to be uploaded has been consistently in the 10-14 day range.
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New assignments to the Special Investigative Unit (“SIU”) rose to 74 in March from an average of 63 during the previous three months.
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A slight increasing trend in new assignments for Citizens’ Shared Services Department has been noted.
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Independent adjusters have delivered 81 percent of their catastrophe case commitment, with the largest firms delivering 100 percent.
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The number of deployed non-catastrophic claims adjusters remained static in March.
It also was reported that Citizens’ catastrophe planning for 2010 is underway, with a related mock exercise planned for mid-May. Procedures are being created that can be scaled upward as needed, depending on the size of the catastrophe. Independent adjuster training exercises that include an “on-boarding” manual are also in progress.
To oversee adjusters in post-catastrophe events, a commercial claims specialist position has been created. Mr. Gilroy reminded that this role did not exist in 2004 and 2005.
Ms. Sexton noted that improved SIU and subrogation-related statistical data mining, such as using ZIP codes to identify claims reported from outside the path of a catastrophic storm, should improve Citizens’ ability to detect fraud.
Additional fraud detection measures that will be taken as a result of analysis on 2009 data include the development of an analytics-based report specific to subrogation that incorporates a scoring feature, along with text mining within the report to identify certain key words.
In regard to the Citizens’ Wind Mitigation Re-inspection Project, Ms. Sexton noted what she described as issues with the Florida Office of Insurance Regulation’s updated Uniform Mitigation Verification Inspection Form OIR-B1-1802 (“Form”). These include an implication that only policyholders, and not inspectors, are subject to criminal penalties that are minimal in nature; and that the Form allows inspections to be performed by staff members of a licensed inspector, which could allow what Ms. Sexton described as “inspections-by-proxy.” She said this could make it more difficult for Citizens or law enforcement to hold inspectors accountable for fraudulent reports.
Lance Malcolm, Citizens’ Director of Claims Operations, reported an increase in sinkhole claims in the first quarter of 2010, with a 15-month average of 143 claims per month and a six-month average of 183 claims per month. Nearly two-thirds of those claims are coming from Pasco and Hernando counties, he said.
Chinese drywall claims during the same time period slowed to just four.
New litigation assignments have been rising through the first quarter of 2010, Mr. Malcolm reported, with a 15-month average of 235 new lawsuits per month and a six-month average of 286 new suits per month. Forty-four percent of new litigation cases are related to losses caused by water.
Damage disputes and denial of claims are primary litigation drivers, with sinkhole-related cases account for 17 percent of the 400 litigation assignments reviewed.
Citizens’ “Best Practices” document, designed to bring consistency to claims handling across the organization, has been completed and is being reviewed internally. Also completed is a Claims Estimating Guidelines document, which is intended to assure consistency in file handling, while focusing on damage estimating.
After additional discussion, the meeting was concluded.
Meeting materials can be viewed by clicking on the following hyperlinks:
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