OIR Approves New Multi-Peril Commercial Insurance Program For Citizens

The following information was just released by the Florida Office of Insurance Regulation (“OIR”):

 

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-NEWS FROM THE FLORIDA OFFICE OF INSURANCE REGULATION-

 

For Immediate Release:                 
Contact:  Ed Domansky/Tom Zutell/Jonathon Kees
850/ 413-2515

FLORIDA OFFICE OF INSURANCE REGULATION APPROVES NEW MULTI-PERIL COMMERCIAL INSURANCE PROGRAM FOR CITIZENS PROPERTY INSURANCE CORPORATION

TALLAHASSEE, Fla. (11/5/2007) – The Florida Office of Insurance Regulation (Office) announced today that it has approved a new multi-peril commercial non-residential insurance program for Citizens Property Insurance Corp. (Citizens).
 
Earlier this year, the Florida Legislature authorized Citizens to assume the policies of the Property and Casualty Joint Underwriting Association (PCJUA) and to create a plan to offer commercial insurance to businesses.

“Adding Citizens to the mix of companies writing commercial multi-peril insurance is good for the competitive market,” said Insurance Commissioner Kevin McCarty. “Everyone is familiar with Citizens, but this is an important step, because it is the company’s first coverage offering away from what had been its main niche of offering homeowners insurance statewide and commercial wind-only insurance only in the high-risk areas of the state.”

Citizens completed two parts of a three-part plan by June:  It assumed the policyholders of the PCJUA, and then it began to sell its temporary wind-only policy for businesses that are not located in the high-risk or “wind pool” area.

The third part of the plan was to develop a comprehensive program that offers multi-peril property coverage for businesses throughout the state. 

Citizens filed its forms and rates in September to accomplish the plan’s third step. The new multi-peril product provides up to $2.5 million in coverage. The policies will cover damage from wind as well as fire and other perils traditionally included in a commercial property insurance policy. The Office has approved the policy forms and rates for Citizens to proceed with its program no later than Jan. 1, 2008.
 
As Citizens begins selling its new commercial multi-peril policy state-wide, the Office also ordered it to stop selling its wind-only policies – business it had assumed from the PCJUA – in areas of the state outside the high-risk coastal areas. Citizens still offers wind-only coverage in the coastal “wind pool” area.

The Office’s Order also approved a 15 percent rate increase for commercial wind-only policies. Effective Jan. 1, the increase will bring the cost of Citizens’ wind coverage closer to the cost of the wind portion of the coverage offered by private insurers in the rest of the state. 

“Although no one likes to see a rate increase in our state’s current insurance climate, Citizens needs additional rate in order to better ensure its ability to pay commercial claims,” added McCarty. “I remain committed to doing everything within my power to bring property insurance rates under control and to ensure that Florida consumers are being offered the savings expected as a result of the law passed during January’s Special Session.”

In addition, the Office also ordered Citizens to make a rate filing for its commercial program every year so that any rate increases that are necessary in the future can be done in smaller increments to make them more affordable to policyholders.

The Office issued a 2004 order requiring Citizens to file for new rates, but it was not until the Florida Legislature stepped in and passed legislation tailored at improving Citizens that the Office was successful in getting Citizens to seek the necessary rate increase. The January legislation required Citizens to be more accountable for its actions.

Governor Crist and the Cabinet also aided the successful transition of Citizens by way of their Citizens for a Better Citizens campaign, which included meetings around the state that sought input from Floridians.    

About the Florida Office of Insurance Regulation
The Florida Office of Insurance Regulation (Office) has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. Business units within the Office are organized based on regulatory expertise and include the areas of life and health, property and casualty, specialty lines and other regulated insurance entities. It is within the Office that the mission of public protection is implemented through regulatory oversight of insurance company solvency, policy forms and rates, market conduct performance and new company entrants to the Florida market.
 
For more information about the Office, please visit www.floir.com. If you would like to review and compare homeowners insurance rates in Florida, go to www.shopandcomparerates.com.

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Should you have any questions or comments regarding this information, please feel free to contact this office.