Citizens Property Insurance Information Systems Advisory Committee and Claims Committee provide summaries, updates

 

During a February 8, 2012  meeting of  Citizens Property Insurance Corporation’s (“Citizens”) Information System Advisory Committee (“ISAC”), updates were given on an array of technology initiatives designed to support Citizens’ efforts to reduce exposure, manage inspections, and conduct ongoing policy systems improvements.

Most of ISAC’s attention focused on Citizens’ new Core Insurance Systems Strategy and Core Solution Implementation Program.

Kelly Booten, vice president of Enterprise Planning and Project Portfolio Management, gave the following cost highlights for the system, which has already been approved by the Board:

• Guidewire System — 15-year total expenditures:  $47 million
• Project Staff Augmentation – 10-year total:  $12 million
• Technical Infrastructure — production/development, testing/training:  $20 million
• Software:  $2.3 million

Costs not included in the estimates for the next 10 years are operating expenses, including infrastructure floor space and electricity, user training costs, security, backup and recovery process, audit, corporate level management time, business unit personnel, supporting systems such as document repository, project facilities, supplies, and travel.  Staffing considerations regarding growth also are not included.

Between July 2011 and January 2012, the following were completed:

• Finalized Guidewire contract
• Project teams identified and resources acquired
• Rating engine solicitation completed
• Document production software solicitation complete, in contract negotiations
• Temporary facilities in Tallahassee and Jacksonville procured and built out

Ms. Booten called the accomplishments to date a “major block of work.”

In 2011, a new capability for geographic information supporting underwriting usage and replacement cost estimating software was also implemented, Ms. Booten added.  A formal vendor management program was put in place, which is something that will result in more than $233,000 savings, she said.

Advances also were made in the computer access program, improving information security, she added.

Robert Sellers, Citizens’ vice president of Information Technology Strategy and Architecture, gave an update on the Long-Term Data Center Program, saying it was in a critical state.  The purpose of the program is to consolidate Citizens data center operations into a specially-built and protected environment.  Currently, Citizens’ staff is reviewing existing facilities and preparing for the movement of the data centers from their leased facilities to the newly-built locations.

A search was conducted to hire a migration project manager to coordinate the project.  That person was hired in December, Mr. Sellers said.

 

Presidential Search Committee

During a February 7, 2012 meeting of Citizens’ Presidential Search Committee, it was recommended that a sixth recruiting firm be added to a list of five such firms that specialize in recruiting for chief executive officers.  The six firms being considered are:

• Korn/Ferry International
• SpencerStuart
• Heidrick & Struggles
• The Jacobson Group
• IPS Search
• Lear & Associates, Inc.

The firms would each be given one week to submit a proposal outlining how they would conduct an Executive Search for a new Citizens president.  The responses will be provided to the Search Committee for review and consideration.

 

Claims Committee

Citizens Claims Committee heard an overview and summary of major accomplishments in 2011, as well as 2012 initiatives.  No Committee action was taken.

Lance Malcolm, vice president of Claims Operations, said Citizens’ overall 2011 First Notice of Loss claim volume increased 39 percent over year-end 2010.

• Water claims increased 36.6 percent
• Weather-related claims increased 57.2 percent
• Burglary and theft claims increased 35.1 percent
• 89 percent of all claim assignments were handled by independent adjusters in 2011

Mr. Malcolm noted that Citizens’ claim cycle times remain stable.

In regard to independent adjuster inventory, 996 are already deployed inside Citizens, or in the field as of January 20, 2012, it was noted.  An additional 2,722 independent adjusters have been approved, and another 1,019 need to be re-credentialed.

Work to implement a new litigation management system is underway and a solicitation is expected to be ready for Board approval in April 2012, it was noted.  In 2010, Citizens spent approximately $29 million on outside defense counsel to support litigation and disputed claims.  More than six thousand new matters enter the system annually.

 Jimmy Johnson, Citizens’ assistant director of Catastrophe Operations, discussed catastrophe preparedness using “then and now” comparisons, in which he compared 2004-2005 preparations to the present.

Then:   Insufficient claims operation infrastructure, ineffective scalability, unclear source of resources, no understanding of resource credentials, insufficient planning and preparation, absence of quality assurance, damaged brand, and minimum understanding of commercial exposure.

Now:   Claims operations infrastructure and enterprise-wide response planning, specialized commercial claims operation, Managed Claim Model designed to scale, performance-based relationships with independent adjuster firms, credentialing of independent adjusters, comprehensive quality assurance program, and year-round planning, preparation and testing.

“Looking back at 2004 and 2005 . . . we had a very, very basic claims infrastructure in place.  We didn’t really understand the resources that were going to be needed,” Mr. Johnson explained.   “The preparation and planning we had in place were not sufficient to deliver consistent claims service to our customers.”

Since then, the system has evolved enterprise-wide, he said.

“We are better prepared today,” he stated.

In a disaster, a three-pronged system would be used by Citizens to address claims:

• Phone and Desk Adjustment Model that would handle claims by phone
• Residential Managed Claims Model that would handle claims using independent adjusters
• Task Assignment Model that would address commercial and personal lines large claims

Another improvement is call center capacity.  Call centers today can handle up to 25,000 calls a day, a considerable change from the 9,000 daily calls from a few years ago, Mr. Johnson pointed out.

Among the most interesting changes:  To better identify and quantify the type of resources that might be needed after a storm, Citizens has two modeling and projection tools to make the job more accurate:

A Geographic Information System is available to model the storm’s impact.  With this tool, Citizens can take the projected path of a storm and overlay it over imported policies to help project and estimate the claims support that might be needed.  After the storm, the actual storm path can be laid over the imported polices, along with measurements of wind strength, storm size to better determine the affected areas, Mr. Johnson stated.

 A Resource Calculator provides an estimated number of needed independent adjusters after the number of claims are entered, he added.

 “It helps determine how many claims-handling people we will need, so Citizens will know how many resources should be deployed,” Mr. Johnson said.  It is essential to request help from independent adjusters quickly because Citizens would be competing with other insurers for the same resources, he added.

 “On the front end, it’s going to be an estimate but it’s going to be an educated estimate,” he continued.

 He also reviewed the different preparation phases if a hurricane is predicted, and summarized the expected actions.

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

 

 

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