Florida’s Citizens Property Insurance Board Meets, Hears 2016 Net Loss Report

 

During its meeting in Maitland, Florida this morning, Citizens Property Insurance Corporation’s (“Citizens'”) Board of Governors learned the State-run insurer will post a $27.1 million net loss for 2016–marking its first loss since 2005.  The loss comes despite minimal damage from Hurricane Matthew, the first major hurricane to impact Florida in 11 years, Citizens said.

In a news release issued this morning after the meeting, Citizens cited water loss claims, assignment of benefit (“AOB”) abuse and litigation costs increasingly impact the company’s bottom line.

To view the Board meeting materials, click here.

Without significant statutory reforms, Citizens will be forced to pass those higher costs on to its customers in the form of higher rates for the foreseeable future, Citizens Board Chairman Chris Gardner said.

“Every year, we rely on standardized, accepted actuarial principles to set our rates,” Chairman Gardner said.  “Last year, the same principles that provided rate decreases to our customers in recent years translated into hikes for 84 percent of our policyholders.  Without legislative changes, that trend will continue.”

The percentage of non-weather-related water claims – burst pipes, sudden dishwasher leaks, etc. – that move to litigation has skyrocketed.  Each litigated claim raises the average claim cost by $20,000 or more, it was explained.  AOB was also cited as a cost driver.

The Florida Office of Insurance Regulation has indicated that private insurance companies are facing similar trends. In February, the rating agency Demotech warned that AOB issues could adversely affect its ratings of Florida’s private insurance companies.

“The tragedy here is that the ultimate loser is the policyholder,” Chairman Gardner said. “Higher insurance costs simply make it more difficult for more Floridians to own a home.”

Citizens said it is doing what it can to control these costs by educating customers through its Call Citizens First campaign and working with other stakeholders, including the Consumer Protection Coalition, to advocate for statutory reforms.

The Florida Legislature currently is considering bills that address the AOB issue as part of the 2017 Legislative Session.  These include SB 1038 and HB 1421, which would bolster consumer protections and clarify attorney fee provisions.

The 2017 Legislative Session ends May 5, 2017.

Hyperlinks to this morning’s Board meeting materials are provided below.

• Agenda 03.29.17
• Action Item – Draft BOG Prior Meeting Minutes 12.07.16
• Action Item – Draft BOG Prior Meeting Minutes 03.15.17
• Chairman’s Report Placeholder
• President’s Report
• Finance Investment Committee Report Placeholder
• Financial Statements 12.31.16
• Quarterly Financial Analysis 12.31.16
• MDA 2016
• Water Loss Trends 12.31.16
• Loss Reserving March 2017
• ISAC Report
• Action Item – ISAC Charter
• ISAC Charter attachment
• Action Item – MultiFunction Copiers March 2017
• MAAC Report Placeholder
• Clearinghouse Update
• OIA Executive Summary Report March 2017
• OIA Dashboard March 2017
• ERM Framework
• Audit Committee Charter 2017
• 2016 OIA Annual Report
• Action Item – Internal Audit Consulting Services RFP 16-0005
• Action Item – Business Insurance Agent of Record
• Consumer Services Committee Report Placeholder
• Legislative Update Placeholder
• Consent Item – Investment Performance, Compliance & Risk Analytics
• Consent Item – Telecommunication Network and Services

 

 

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