Florida’s Citizens Property Insurance Selects Bolt Solutions as Clearinghouse Software Platform

 

At its meeting today, August 22, 2013, Florida’s Citizens Property Insurance Corporation’s (“Citizens”) Board of Governors (“Board”) unanimously selected Bolt Solutions Inc. (“Bolt”) to provide the new clearinghouse software platform that will link private insurers with consumers seeking to renew policies or purchase new coverage with Citizens.

Authorized by the Florida Legislature earlier this year, the clearinghouse will “shop” for comparable coverage offers from participating private market carriers before placing or renewing personal lines coverage with Citizens.

Based in Farmington, Connecticut, Bolt has offices in Sarasota and is prepared to service policyholders and agents when the clearinghouse program begins on January 1, 2014.  Established in 2001, Bolt provides online insurance placement to small businesses and consumers in 50 states and similar clearinghouse services to major national carriers.  Under the terms of today’s Board approval, Bolt’s 10-year agreement may not exceed $44.9 million and includes an initial five-year contract period and a five-year renewal option.

Citizens’ President and CEO Barry Gilway stated that the development of the clearinghouse to this point has required a great deal of effort and resources.  Today’s selection of a vendor to operate the clearinghouse represents the next hurdle for the project, he said.

“In many cases, the clearinghouse will offer policyholders the opportunity to obtain better coverage at comparable or better rates,” said Mr. Gilway.  “At the same time, it will help Citizens return to its core mission as Florida’s insurer of last resort.”

In 2012, Citizens received 375,904 new business applications.  Approximately 53 percent (199,229) of those applications came from captive agents and approximately 47 percent (176,675) from independent agents.   Citizens’ staff estimates that as many as 240,000 of those policies could have been placed in the private market under the clearinghouse.  Mr. Gilway said he believes the combination of the clearinghouse and Citizens’ depopulation efforts will significantly reduce Citizens’ Personal Lines Account over the next 24 months. 

It was explained that the clearinghouse goals are:

• Ensure that all Citizens applicants have access to every possible private insurance option, including better policy coverage, before choosing Citizens;
• Ensure that all Citizens renewal customers have expanded access to every possible private insurance option, including better policy coverage, before choosing to renew with Citizens;
• Provide all Citizens agents expanded market access;
• Provide private carriers expanded market distribution;
• Ensure that only policies meeting statutory eligibility requirements are placed with Citizens.

Clearinghouse benefits to the State of Florida were described as: 

• Enabling applicants to receive a clear understanding of their private market options;
• A reduction of homeowners’ assessment liability by shrinking Citizens;
• Expansion of private carrier access to potential policyholders;
• The ability to provide Citizens’ agents with expanded market access;
• Creation of a mechanism for shrinking Citizens and returning it to a true market-of-last resort.

Citizens will rely on the clearinghouse to:

• Provide consumers expanded access to private insurance options, including better policy coverage for property owners of the State of Florida;
• Expand agent access to private carriers, thereby improving coverage options for their policyholders;
• Support private insurers in gaining additional market distribution;
• Ensure that only policies meeting statutory eligibility requirements are placed with Citizens;
• Become a mechanism to assist Citizens in achieving its statutory purpose of being a residual market carrier. 
• Become a mechanism to assist Citizens in achieving its statutory purpose of being a residual market carrier.

Placement of the clearinghouse business will be guided by statutory rules and consumers’ choice.  For new business, if the rate is less than 115 percent of Citizens’ quote for comparable coverage, the offer renders the applicant ineligible for Citizens’ coverage. 

If the rate is greater than 115 percent of Citizens’ rate, the consumer makes the choice.  If there is no private market offer of coverage rendering the applicant ineligible, the business is placed with Citizens. 

For renewal business, if the rate is equal to or less than Citizens quote for comparable coverage, the offer renders the applicant ineligible for Citizens coverage.  Citizens’ staff indicated there is high interest from private carriers to participate in the Clearinghouse. 

In selecting Bolt, Citizens had initially issued a Request for Information (“RFI”) to obtain current market information, gain a better understanding of vendor capabilities and provide a basis for developing the solicitation.  Citizens received four responses to the RFI and then issued an Invitation to Negotiate, which drew six vendor responses. 

Citizens’ staff identified Bolt as providing the offer with the best value to Citizens due to Bolt’s ability to implement the clearinghouse by January 1, 2014, as well as its multiple integration platforms enabling broad carrier participation.  Bolt was also judged to have demonstrated the required functionality and ease of use; along with its competitive pricing.  Citizens’ staff recommended that the Board approve a contract with Bolt for a term of five years (with a five-year renewal option) with a total value not to exceed $44.9 million.   

Board Member Juan Cocuy had questions about the consequences if the clearinghouse platform is not operational on January 1, 2014, the statutory deadline.  Mr. Gilway responded that he believes the greater risk is that there will be no carrier prepared to participate in the clearinghouse.  Citizens’ staff stated that if Bolt failed to have the platform operation by January 1, 2014, Bolt would be subject to $200,000 in liquidated damages and a $20,000 daily penalty.

Additional information on the clearinghouse can be found on the Citizens’ Website: https://www.citizensfla.com/policyholder/obtaininsurance.cfm.  Materials from today’s Board meeting are available at https://www.citizensfla.com/about/future_boardmtgs.cfm.

 

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