Citizens Property Insurance Corporation Claims Committee Meeting Report: March 2011

 

At its March 4, 2011 meeting, the Citizens Property Insurance Corporation (“Citizens”) Claims Committee (“Committee”) approved multiple firm contracts for sinkhole geotechnical engineering services, as well as contracts with appraisal service providers for litigated and disputed claims.  Citizens’ Board of Governors must approve the contracts in order to finalize them.   

As part of its regular agenda, the Committee also was updated on Citizens’ catastrophe, non-catastrophe and commercial claims activity.  To view the complete meeting materials, click here.

Citizens Vice President of Claims Operations Lance Malcolm reported on key performance indicators, noting that new litigation assignments increased significantly from December 2009 to December 2010.  Statistics he quoted included:

• Non-catastrophe new claims increased to 47,517 from 40,039, representing an 18.7 percent upswing.
• Policies in force increased 24 percent.
• Sinkhole claims monthly average increased to 275 new claims per month at year-end 2010.
• New litigation assignments rose 63 percent.
• Re-opened claims decreased to 21,335 in December 2010, compared with 22,305 in December 2009, equating to a 4.4 percent drop.
• Total closed litigation assignments increased by 8.5 percent from 76,622 in 2009 to 83,170 in 2010.

In his update of non-catastrophe metrics, Mr. Malcolm said that the December 2010 year-to-date overall file adequacy quality score was 87 percent–just above the target range of 85 percent.  Statistics show that two closed file reviews per month are being completed for every claims adjuster.   During the 2010 audit cycle, Citizens reviewed 1,500 claims, he added.

Of particular interest to the Committee was the sinkhole component of the non-catastrophe report, which showed a continued upward trend in claim volume based on data from January 2009 to December 2010:

• Citizens’ 24-month average for sinkhole claims is 177 per month, up from 167 claims during the prior reporting period.
• The most recent six-month average for sinkhole claims is 251 per month, up from 229 claims during the prior reporting period.
• Sinkhole volume is driven by new Personal Lines Account claims.

Meanwhile, Citizens’ Tampa-based inside claims manager is focusing on sinkhole claims by dedicating two additional supervisors and 12 staff members to adjust them.

It was noted that emphasis is being placed on adjuster and claims handling training.  Focus is on the most difficult claims that involve the most exposure.

Nineteen independent adjuster firms have participated in training, with 326 independent adjusters currently having been trained.  Of those trained, 108 are field trained adjusters and 218 are inside trained adjusters.  One of the training objectives described to the Committee involves deploying independent adjusters to work claims in a simulated disaster situation.

The training theme continued in Citizens Assistant Director of Commercial Claims Jeff Handy’s report, in which he said that 54 independent adjusters and 20 general adjusters  from 15 firms have completed Citizens’ five-week long field training sessions.

“Much of our collective team energy for the commercial team remains with the ongoing preparation for catastrophe response.  In commercial claims, that is our primary initiative,” Mr. Handy said.   “We continue to strengthen our working relationship with our internal business partners to make sure that following a catastrophe our respective unit plans are consistent, complimentary and most of all responsive to the needs we will encounter.  We continue to refine and develop our workflows.”

A key initiative is the “team adjusting program,” which will handle losses that cannot be handled by a single adjuster, such as condominium complexes that may have multiple exposures and would require multiple adjustment resources in order for Citizens to be responsive, he added.

He explained that Citizens’ non-catastrophe initiatives include providing oversight of the daily claims operation, as well as providing field inspection support for commercial underwriting and Citizens’ inspection and outreach programs.

Citizens Shared Services Department Claims Director Dawn Sexton summarized activities in her area, which included the following highlights:

• Citizens returned $253,636 in policyholder deductibles during 2010.
• Florida Division of Insurance Fraud (“DIF”) referrals indicated a sharp increase in open and/or active cases from 23 percent in December 2009 to 47 percent in December 2010.
• DIF referrals that were closed due to insufficient evidence dropped from 32 percent in December 2009 to 12 percent in December 2010.
• DIF cases closed due to resource limitations fell from 44 percent in 2009 to 24 percent in 2010.

Ms. Sexton also noted certain Citizens Special Investigative Unit and subrogation cases of interest.  To view a summary of each case as detailed in her report, click here.

As of January 31, 2011, it was noted that 712 qualified independent adjusters are committed for non-catastrophe claims and 871 have been approved and deployed.  Additionally, 2,513 qualified independent adjusters have been committed for catastrophe claims and 2,665 have been approved and deployed.  Dispatch service, assignment cycles and quality assurance file reviews have all shown improvement.

In the area of litigation and disputed claims, water, wind and sinkholes were identified as the three top drivers for loss.  Coverage denials, scope and pricing, and causation were identified as the three primary causes of litigation.

In his report, Citizens Chief Insurance Officer Yong Gilroy emphasized how continued training is key to the integration of claims and underwriting operations.  He also added that Citizens is conducting a search to fill a vice president of underwriting position. 

The Committee was also advised that, due to Citizens significant commercial exposure of approximately $140 billion, a competitive solicitation is being planned to expand the number commercial general and executive general adjusting firms to provide non-catastrophe and catastrophe-related commercial adjusting services to Citizens on large commercial losses.  To support its catastrophe response planning appropriately, Citizens must implement these vendors prior to 2011 hurricane season.  To view the Request for Proposal and related documents for this solicitation, click here.

To view details of the aforementioned consent agenda items, click here (pages 2-4).

With no further business to conduct, the meeting was adjourned.

 

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