Citizens Property Insurance Corporation Information Systems and Claims Committees Provide Operational Updates, Recommend Items for Purchase

 

The Citizens Property Insurance Corporation (“Citizens”) Information Systems Advisory Committee (“ISAC”) and Claims Committee met today, July 13, 2012, to hear updates on various operations and review several procurement items that will require Board of Governors (“Board”) approval. 

The Committee reports follow:

 

Information Systems Advisory Committee Meeting

During the ISAC meeting, committee members heard updates on the progress of the Long-Term Data Center and Guidewire/Core system implementation and recommended approval of several information technologies (“IT”) related purchases.

To view the meeting materials, click here.

Robert Sellers, Citizens’ Vice President of Information Technology Strategy and Architecture, said progress for the Long-Term Data Center is on track and progressing as planned.  Citizens is planning to consolidate its Data Center operations from three sites to two, with one for production in Jacksonville, Florida, and another dedicated to disaster recovery in Tampa.  The implementation involves the consolidation of equipment and services from multiple existing data centers to one site supporting production and test-development and one disaster recovery site.

Mr. Sellers recommended that the Committee consider and then recommend that the Board approve the purchase of a Migration Planning tool for the Long-Term Data Center program, with a 12-month contract from BMC and Value Added Resellers.  Cost for the Migration Planning tool, including supportive hardware and configuration services includes the following:

• $250,000 for application software
• $220,000 for IT hardware required for support
• $67,200 for professional services for application set up and configuration
• $625,000 for goods and services required to increase Citizens’ data storage capabilities and capacity
• $327,000 for HP LoadRunner Licenses to enable the renewal of existing licenses so concurrent load testing of existing operational systems, catastrophe event modeling and Core systems can continue

After reviewing the proposed purchases, the Committee unanimously recommended Board approval of the items.

Kelly Booten, Citizens’ Vice President of Enterprise Planning and Project Portfolio Management, then gave an update on the Guidewire/Core System Implementation project.  She said on a scale of 1 to 10, they are running at about a “7” as far as where they stand in regard to progress.

She said tremendous progress has been made in the past two and a half months and, from a project perspective, the project stands where it should.  The biggest challenge so far is making sure they have quality staffing for the program.

During a review of primary accomplishments, it was noted that a successful disaster recovery exercise was completed in January for Citizens’ major policy and claims systems, associated applications and the telephony system, which were successfully migrated from the Jacksonville Production Data Center to the Tampa Disaster Recovery Data Center.  Key catastrophe preparations for storm season 2012 were also completed, it was noted.

Significant initiatives were completed by IT staff in support of the Core insurance solution, and several initiatives were effected in regard to the Florida Cabinet’s initiative to reduce Citizens’ exposure, Citizens’ Chief Information Officer Curt Overpeck pointed out.

“It has taken very deliberate consideration of Citizens’ staff,” he said.

“The big items ahead have to do with implementing a 2013 rate plan and dealing with very critical issues related to a bifurcation of rates,” Mr. Overpeck said, referring to new business versus old business.  “I think the heavy lifting is ahead of us.”

With no other business before the ISAC, the meeting was adjourned.

 

Claims Committee

Citizens’ Claims Committee convened a short time later with most discussion focusing on a review of claims reporting in the areas of sinkholes, litigation and disputed claims, and general operations updates.

To view the meeting materials, click here.

Lance Malcolm, Citizens’ Vice President of Claims Operations, noted that sinkhole claims are down over 20 percent as of May 31, 2012, compared with the same date a year ago.  He said the average sinkhole claim severity remains consistent at approximately $85,000 per claim.  Average sinkhole loss adjustment expenses remain consistent at about $10,000 per claim.

As of May 2012, approximately 1,200 sinkhole claims are being stabilized, up from 150 claims in May of 2011.  Citizens is currently investigating 47 sinkhole claims under its 2012 policy language, which incorporates the Senate Bill 408 initiatives.  Citizens’ sinkhole team closed 2,693 claims through May 31, 2012 compared with 880 through May 31, 2011, it was noted.

Sinkhole lawsuits are up:  Citizens received 571 sinkhole suits through May 31, 2012 compared with 226 through May 31, 2011.

It also was noted that Citizens’ sinkhole claims organization is underway to change from a desk-based adjustment model to a predominantly field-based adjustment model.

The Committee also unanimously voted to recommend the Board approve the hiring of a law firm to serve as coordinating counsel on sinkhole claims.  The firm’s job would be to evaluate and look for ways to optimize sinkhole litigation outcomes and control cost savings with regard to sinkhole claims, it was explained.

Given the projected three-year cost for the project at $1.5 million, Citizens’ General Counsel Dan Sumner said the cost is pricey, but that the contract is terminable at any time.

“This has tremendous potential,” Mr. Sumner said.

With no further business, the meeting was adjourned.

 

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