Citizens Property Insurance Corporation Claims Committee Report: June 30

 

Citizens Property Insurance Corporation (“Citizens”) Claims Committee (“Committee”) met via teleconference yesterday, June 30, 2011, to review two consent agenda items and hear updates on other matters pertinent to Citizens’ operations.

To view the agenda and meeting materials, click here.

After approving the minutes from their March 4 meeting, Committee members heard the following reports:

Key Performance Indicators

Lance Malcolm, Senior Vice President of Citizens’ Claims Operations, discussed the status of Citizens’ key performance indicators.  The highlights include:

• New Assignments
  • Between December 31, 2010 and May 31, 2011, current policies in force have increased 31.9 percent, up from 32,283 last year to 42,693. Total non-catastrophe claims increased 43.7 percent, new litigation assignments increased 25.2 percent and new sinkhole-related assignments increased 104.3 percent.
• Cycle Times
  • The cycle time was stable through May 2011 for non-sinkhole claims, but cycle time for sinkhole-related claims fluctuated significantly, with new claims expected to climb through December 2011 as a result of the effects of SB 408.
• Closing Ratio
  • Total closed assignments increased by 19. 2 percent in the past year, up from 32,607 in 2010 to 38,871 in May 2011.
• Pending Assignments
  • SB 408 is expected to drive additional sinkhole claims through December 2011.
• Non-Catastrophe
  • Complaint incidents as a percentage of new claims reported dropped from 76 percent in 2010 to 58 percent in 2011.
• Subrogation Recoveries
  • Subrogation and salvage recovery assignments increased, with a monthly average of 237 this year compared with 219 in 2010.
• Vendor Relations
  • Catastrophe-approved independent adjusters are going through a re-credentialing process. Catastrophe-approved independent adjusters increased by 48 percent between May 2010 and May 2011.

Jay Adams, Citizens’ Senior Director of Claims Operations, gave the emerging trends update.  New assignments are up 25.3 percent, jumping from 1,051,373 during the first quarter of 2010 to 1,317,417 in 2011. 

The cause of loss breakdown for new claims includes:  Water damage, 50.9 percent; wind damage, 9.8 percent; sinkholes, 7.8 percent; burglary, 5 percent; and dropped objects, 4.2 percent.

Of those claims, 32 percent are from Miami-Dade County, 16.7 percent are from Broward County, 8 percent are from Pinellas County, 7.2 percent are from Pasco County, 6.7 percent are from Palm Beach County, and Hernando and Hillsboro Counties each represent 6.4 percent, Mr. Adams explained.

Sinkhole claims data continues to trend upwards, Mr. Adams stated.  The most recent six-month average is 350 claims per month, up from 251 claims per month for the previous period.  It is expected sinkhole claims will continue to rise in anticipation of the provisions of SB 408, he said.

Pre-season catastrophe testing was conducted during mock scenarios that used a 400,000-claims event as its target, it was noted.  More than 100 independent adjusters participated in the off-site mock catastrophe deployment.  The aim was to create a real-life situation and pinpoint potential weaknesses, Mr. Adams said. 

“We did a complete deployment, some mock testing.  Our plan for catastrophe is to continue to do testing all year,” he added.

Jeff Handy, Citizens’ Assistant Director of Claims Operations, said orientation, credentialing and commercial-specific training is underway for five firms hired to do commercial adjusting.

In the area of Shared Services, Claims Operation Director Dawn Sexton stated that gross recovery through May 2011 is $1,611,842.92, with $122,722 in deductibles through May 2011 being returned to policyholders.

A Sinkhole Industry Workgroup also was recently formed, and members are participating in a Claims Fraud Committee, an Underwriting Fraud Committee, a Public Awareness and Outreach Committee and a Joint Legislative Committee, Ms. Sexton noted.

Senior Claims Operations Director Eric Ordway gave an update on insurance operations, pointing out that Citizens has 4,593 approved independent adjuster resources.  An additional 965 independent adjusters remain in a “non-approved open” status because they are missing one or more credentialing items, Mr. Ordway stated.

Mr. Ordway then recommended the Committee approve two consent agenda items for the Board of Governors to consider at its next meeting. 

The first involved the purchase of a $500,000 automated phone dial out service, which was tested during a 2011 mock catastrophe deployment exercise.  The system, which would be paid for over five years, allows Citizens to call a pre-loaded phone list.  The system relies on a pre-recorded message and provides a means to directly transfer a caller to a Citizens call center for assistance.

The second consent agenda item sought to add one sinkhole geotechnical engineering firm’s name to a vendor list that was previously approved in March 2011.  Andreyev Engineering, Inc. was previously rejected as a potential vendor but the company appealed the decision and Citizens agreed to include the vendor.  The vendor’s name would be approved and added retroactively to a list of vendors approved last March, Mr. Ordway stated.

The Claims Committee then voted unanimously to recommend the Board of Governors approve the two consent agenda items.

Under Litigation and Disputed Claims, Assistant Claims Director Anne Olson said the average number of new monthly litigation assignments have increased by 25.2 percent, up from 320.4 per month in May 2010 to 330 per month in May 2011.

The primary causes for loss are water, 38.04 percent; wind, 36.2 percent; and sinkhole, 14.54 percent, Ms. Olson said.

Chief Insurance Officer Yong Gilroy concluded the meeting with several brief updates.  He noted that the Board of Governors on June 29 approved the new Core Strategy program by Guidewire, noting that the system will improve both claims and operations strategies.

He said there has been much discussion lately about the number of policies Citizens might get as an insurer of last resort.  Four types of policies – coastal account policies, sinkhole policies, older mobile home policies and policies for buildings 50 years or older will likely not decrease, he said.  He estimated that number of policies to be around 870,000.

“We are absolutely in a growth mode,” Mr. Gilroy said.  Citizens’ average personal lines policy count per week is 6,600, up from 3,600 prior to hurricane season, he said.  Those numbers may drop after hurricane season, he acknowledged.

However, if growth continues as is, Citizens expects to have as many as 1.48 million to $1.5 million policies by the end of the  year, he said.

With no further business before the Committee, the meeting was adjourned.

 

 

 

 

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