Florida’s Citizens Property Insurance Voluntary Premium Writings Program Deadlines Approaching

 

REMINDER

• The deadline to notify Citizens Property Insurance Corporation of Intent to Transfer Credits is December 31, 2012. 
• The deadline to report 2012 Voluntary Premium Writings for credit against potential 2013 assessments is February 15, 2013.

 

Citizens Property Insurance Corporation (“Citizens”) has issued a Memorandum to all assessable insurers regarding transfer procedures relating to its Voluntary Premium Writing Program (“Program”). 

A copy of the Memorandum is attached for review. 

 

Background

All revenues, assets, liabilities, losses and expenses of Citizens are divided into three separate accounts:

• Personal Lines Account
• Commercial Lines Account
• Coastal Account (formerly the High-Risk Account)

Deficits in any of Citizens’ accounts are assessed against assessable insurers and surplus lines insureds, as defined by Florida law, through either regular or emergency assessments.  All insurers authorized to write one or more subject lines of business in Florida are subject to assessment. 

For any deficit incurred on or after January 25, 2007, the term “subject lines of business” means insurance written by assessable insurers for all property and casualty lines of business in this state, but not including workers’ compensation or medical malpractice.  Each assessable insurer’s share of Citizens’ assessments is calculated based on the percentage that assessable insurer’s direct written premium for the subject lines of business for the year preceding the assessment bears to the aggregate statewide direct written premium for the subject lines of business for that year. 

In an effort to reduce both new and renewal writings in Citizens, the Florida Legislature made provision for Citizens to adopt programs that provide incentive for insurers to take and keep risks out of the State-run insurer by maintaining or increasing voluntary writings in areas in which its risks are highly concentrated.  Such programs may include the adoption of a credit against assessment liability.

 

Voluntary Premium Writings Program

Citizens developed the Program, through which insurers may reduce or eliminate their participation in assessments in the Coastal Account through credits for voluntarily writing windstorm and hail coverage in the Coastal Account “eligible insuring areas.”   

Assessable insurers writing “wind only” coverage are eligible to receive 100 percent voluntary premium credit based on the policy premium written.  For other types of policies that include a windstorm component, the premium credit is a lower percentage of the premium written.  This credit is only for the windstorm components of basic Extended Coverage, Homeowners, Farm Owners, Commercial Multi-Peril, Mobile Homes and Mobile Home Owner policies.

Voluntary credits are only available to offset an insurer’s liability in the event of a regular assessment.  They cannot be applied against an emergency assessment. 

Citizens has published the Coastal Account Voluntary Premium Manual (“Manual”) to assist assessable insurers in understanding the voluntary writings program and establish the procedures to be followed for program participants.  The Manual can be found by clicking the following hyperlink:  https://www.citizensfla.com/about/corpfinancials-participation.cfm?show=pdf&link=/shared/participation/volmanual-2011.pdf

Voluntary premium writings shall be submitted to Citizens electronically (via CD/DVD, email or uploaded to the Citizens’ Secure FTP Server) in the format specified and by the deadlines established in the Manual.  If an insurer fails to meet the established deadlines, the applicable voluntary premium writings shall be ineligible for voluntary credits in the participation year.  All annual voluntary premium writings reports must be received by Citizens at its Jacksonville, Florida office on or before February 15 of the year for which voluntary credits are sought.  For example, voluntary premiums written during 2012 must be reported to Citizens by February 15, 2013 in order to provide credit against assessments that may be levied as a result of a 2013 Coastal Account deficiency.

Voluntary premium writings may be reported on an annual or quarterly basis.  Voluntary premium writings reports shall be audited by Citizens and any requested audit material must also be submitted by the deadlines established in the Manual.  It is suggested that insurers submit their reports as soon as possible to avoid losing possible credits in the event that sufficient time is not available to respond to Citizens’ audit requests or other communications.

If an assessable insurer has multiple locations in Florida, each office may submit the information separately and Citizens will summarize credits at year-end.

The Manual provides a list of common problems that can be the basis for rejection of voluntary premium writings submissions, as well as some helpful suggestions for insurers participating in the program.

As previously mentioned, assessable insurers writing “wind only” coverage are eligible to receive 100 percent voluntary premium credit based on the policy premium written and a lower percentage for the wind portion of other types of policies.  Exhibit V-8 of the Manual lists the territory groupings and percentage selections of the Program.  Application of the information listed in this schedule to an insurer’s specific book of business could give an indication of the amount of credits available.  As noted, this data is subject to audit by Citizens.

 

Voluntary Premium Writings Transfer Procedure and Notice

Because assessable insurers are assessed as individual companies, the voluntary writing credit must also be determined on an individual company basis.  However, an individual insurer may transfer its excess voluntary premium writing credits, if any, to other individual insurers without restriction.  In order for the transfer to be effective, Citizens must receive the Transfer Notice prior to the start of the Participation Year in which the transfer applies.  Details of the transfer procedure and a copy of the Transfer Notice are included in the attached Memorandum.

 

Should you have any questions or require further clarification, please contact Colodny Fass or (954) 492-4010).