Recaps – Citizens Meetings Held On October 24-25, 2007

Below please find the highlights from the Citizens Property Insurance Corporation (“Citizens”) meetings held on October 24-25, 2007. 

 

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Market Accountability Advisory Committee

The following is as of September 30, 2007:

• 1,379,847 policies in force–an increase of about 18,000 policies from the number of policies in force as of August 31, 2007;
• $506,036,875,038 in total exposure;
• $3,546,302,870 in total premium;
• 60,050 applications received; and
• 47,784 endorsements received.

The total number of claims received year to date is 28,266.

The Committee next discussed the Citizens website, which receives roughly 8,000-10,000 visits per day.  About 53% of the hits are from agents and 45% are from policyholders.  Although the website has historically been geared toward agents, it was upgraded last year and now contains two very popular sections for policyholders—the “Storm Season” and “Policyholder” sections.  Most importantly, the website is updated almost daily and portions of the website have been translated into Spanish.  However, it is not yet possible to submit claims online. 

As regards Citizens’ commercial lines underwriting, Citizens has made its filing with the Office of Insurance Regulation (“OIR”).  Also, with regard to take-out letters, Belinda Miller from the OIR confirmed that she would check on the status of the letters and whether the OIR has any influence as to their style or format.

For the next meeting, Citizens staff will prepare the following for the Committee to review and discuss:

• Take-out policies by county;
• Projected take-out activity for the remainder of calendar year 2007;
• Those who are opting out of the take-out; and
• Samples of carrier assumption letters.

Lastly, it was mentioned that Citizens’ Agency Commission Structure is in need of amendment and the Committee intends to request Board approval to do so.

 

Audit Committee

After the September Audit Committee meeting, the General Counsel continued the search for firms qualified to serve as Independent Counsel to the Committee.  The idea is to have Independent Counsel, on an on-going, as-needed basis, to support the General Counsel.  Although the General Counsel is hired by the Board and may also be fired by the Board, he/she is under executive management’s direct supervision and there is a need for outside counsel.

Following a thorough search, the General Counsel narrowed the candidates to three national firms and two Florida firms, recommending that a candidate be retained.  The Committee recommended that the General Counsel enter into negotiations with the candidate and return to the Committee with an update and/or proposal.

Consumer Services Committee

To date, Citizens has held three (3) Policyholder Forums.  The last one is scheduled for November 2007, in Daytona Beach, Florida.  For these Forums, Citizens partners up with the Legislative Affairs Office as well as local legislators.  Since the feedback has been positive, Citizens intends to conduct these Forums again in 2008.

The Citizens Consumer Services Department has seen an increase in complaints for the past three months.  This department handles all written complaints from policyholders.  There were 849 received in July, 904 received in August and 969 received in September.

The Committee is working hard to improve the website with items such as:  e-mail blasts to registered policyholders, additional Spanish language integration, podcasts and blogs.

On October 10, 2007, the Task Force on Citizens Property Insurance Claims Handling and Resolution submitted its second interim report, which is attached for your review.

Executive Committee

The solicitation process for consulting arrangements between Citizens and firms for a “Systematic Review and Evaluation of Service Levels and Operations” began in July 2007.  Citizens staff members prepared a Request for Proposal, and eight proposals were received.  Two of the eight proposals were eliminated because they failed to meet Citizens’ mandatory requirements, while the remaining six proposals were accepted.

Citizens conducted a thorough assessment of the six firms and their respective proposals, narrowing the selection to Protiviti Risk Consulting (“Protiviti”) and KPMG International (“KPMG”).  Protiviti and KPMG made presentations to the Executive Committee and the Committee thereafter adjourned in order to discuss and vote.  Non-Committee members were not privy to this discussion and vote.

Board of Governors

The Executive Committee unanimously voted to retain KPMG to perform the “Systematic Review and Evaluation of Service Levels and Operations” for Citizens.  The Board approved this recommendation.

Florida Deputy Commissioner of Insurance, Belinda Miller confirmed that the OIR would issue an Order relating to Citizens’ recent rate filings by Wednesday of next week.

It is anticipated that about 90,000 policies will be taken-out during November and December. 

The Board approved the following:

• The formation of an Investment Advisory Committee in order to make decisions regarding the investment of Citizens’ operating cash, pursuant to the existing investment guidelines;
• An increase in the operating cash allocated to the two existing external money managers from $250 million to $300 million each;
• The establishment of an additional amount of up to $200 million to manage internally; and
• With regard to bonds, the reallocating of monies by Raymond James based upon bond performance.

The Board again discussed whether the Audit Committee should obtain Independent Counsel.  Neither the Committee nor Board seem to be able to agree.

Lastly, the Board approved the Consent Agenda relating to Wind Cube Reports, which is attached for your review.   

Florida Market Assistance Plan Board of Governors

The Florida Market Assistance Plan (“FMAP”) was created by the Florida Legislature in 1985, in order to assist applicants who are unable to acquire property and casualty insurance from authorized insurers.  Accordingly, FMAP is responsible for aiding in the depopulation efforts of Citizens by assisting consumers with obtaining coverage in the private market.  It is funded by Citizens along with a $450 annual assessment of residential property insurers.

FMAP and Citizens share the same Board of Governors (“Board”), but FMAP’s Board is only required to meet at least once a year.  The Board last met on August 10, 2006.  Further, the Board must file an Annual Report with the OIR by December 1 of each year.

At today’s meeting, the Board reviewed and approved the 2006 Annual Report for submission to the OIR.  Moreover, it was noted that there was a significant increase in the number of consumers directly accessing FMAP’s services last year.

 

 

 

Please be advised that the foregoing is a brief summary of the discussions during the meetings and is not intended to be a comprehensive review of the items contained herein.  Should you have any questions, please feel free to contact this office.