Never a Week Goes By
When we issued our newsletter this past week, we thought we might have a quiet interlude over the next couple weeks prior to our next publication. No such luck as it seems that never a week goes by that there’s not something happening in yours (and our) world. As a matter of fact, one of our frequent guest authors and the quintessential actuary of actuaries, John Rollins, authored a recent article appearing in various Florida newspapers. Thank you, John, for your always superb industry and policyholder education efforts. We wanted to get this week’s happenings in your hands (read on) so you are in the loop – always!
OIR Issues Order Extending Forms Review Exemption
On June 24 the Office of Insurance Regulation issued an Order extending the personal lines forms review exemption until December 31, 2013. The Office stated the need to properly train new forms review personnel and diminish a forms review backlog as its reasoning for extending the exemption. In order for companies to utilize the forms review exemption they must meet six requirements/conditions. The requirements are described in an email communication to companies of June 24 from Property & Casualty Product Review Director, Sandra Starnes. The requirements are also contained within the Order. Please click blue links see Ms. Starnes’ email communication as well as the Order itself.
Monroe County Familiarization “Fam” Tour June 24, 2013
Lisa Miller & Associates was privileged to attend the first ever Monroe County Familiarization “Fam” Tour on Monday June 24 sponsored by Representative Holly Raschein (R-Monroe County). Rep. Raschein’s approach to seeking Monroe County property insurance solutions was a refreshing step in political circles because she ensured that all stakeholders (cat modelers, building officials, Citizens, reinsurer representatives, engineers, weather service representatives and elected officials) were invited to tour and get up close and personal when it comes to Monroe County building codes and construction. The aim is to raise the awareness of Monroe County’s unique structural design and wind worthiness. Videos will be made available of the construction tour of homes, so please contact us for more information and learn how you may be able to be a part of this exciting project. We will continue to work with Rep. Raschein so insurers, reinsurers and others can continue collaborating on finding a Monroe County private property insurance solution.
Citizens Holds Series of Early Week Meetings June 25-26, 2013
Our firm closely follows Citizens Property Insurance Corporation’s happenings because as we all know, “as goes Citizens, so goes the rest of the industry.”
Market Accountability Advisory Committee Meeting
On Tuesday and Wednesday of this week Citizens held several committee meetings in Miami addressing a number of important topics. During the Market Accountability Advisory Committee Meeting early Tuesday morning, Citizens released an executive summary of 2013 legislation that has now been signed in to law. Also made available was a detailed spreadsheet that highlights every facet of the law changes and what action steps Citizens must take to timely implement those changes which impact the corporation. Included in the executive legislative summary and implementation chart are of course steps which must be taken to implement SB 1770, the clearinghouse, as well as the statutory changes requiring the corporation to provide coverage for manufactured and mobile homes. To review these documents please click on Executive Summary and Implementation Spreadsheet. During this meeting corporation managers also provided a detailed update and summary on its catastrophe preparedness operations including discussion of lessons learned and changes which have been implemented to improve response time and operational efficiencies over that in prior storm events. Overall, Citizens appears well prepared for a CAT event and has implemented a “continually planning, preparing and testing”, approach to remaining ready to assist policyholders and other stakeholders in responding to potential disasters.
Consumer Services Committee Meeting
Later in the morning on Tuesday the Consumer Services Committee also met to review and discuss a number of items. One such issue was a memorandum from the Insurance Consumer Advocate requesting that Citizens consider and address several issues. While Citizens currently offers a quarterly payment plan, a growing number of consumers living on fixed incomes have requested that a monthly payment plan be implemented. The Consumer Advocate requested that Citizens research the practicality and cost of implementing a monthly payment plan. The Consumer Advocate also provided a reminder about the appropriate Hurricane Mitigation Inspection Forms to be used by agents and inspectors and raised a concern about policyholders receiving timely notice of take-out requests. Please click on Consumer Advocate to review the concerns further. Regarding Builder’s Risk Coverage, earlier this year the Board requested that Citizens offer such coverage under a CNRW policy for single family homes under $1 million in wind eligible territories. This project has been completed and Citizens began offering coverage on June 1.
Actuarial and Underwriting Committee Meeting
Tuesday afternoon the Actuarial and Underwriting Committee convened for an in-depth meeting. As many of you will recall, during the March Board of Governors meeting, the Board gave its approval to proposed amendments to the existing Sinkhole Eligibility Rules. The Board also asked staff to develop new underwriting rules to expand eligibility for properties that have incurred sinkhole losses. Effective May 15, Citizens obtained OIR approval for an exception to provide sinkhole coverage under an HO3 form for properties that incurred a sinkhole loss resulting in a full policy limit claim payment, if the prior loss was fully remediated as recommended by the insurer’s engineer. Citizens has also been working on a proposed change that would allow issuance of a DP1 policy on properties that experienced a total or partial sinkhole claim but used alternate repair methods that were not in accordance with the insurer’s professional engineer’s recommendations. However, Citizens has received further feedback from Legislators and real estate industry representatives indicating that the proposed eligibility rule revisions may not go far enough and could cause harm to Florida’s real estate market. Based upon this feedback, staff recommended to the committee board additional changes to the Sinkhole Eligibility Rules for the committee’s consideration.
Those changes include:
1. Provide an HO3 and other available policy forms on properties that experienced a total or partial sinkhole loss but utilized alternate repair methods to repair the damage. While eligible for an HO3, these risks would not be
eligible for Sinkhole Loss Coverage. These properties would be subject to the same inspection and documentation requirements as properties where the sinkhole was fully remediated to ensure:
a. The property has been stabilized
b. No existing damage
c. No evidence of current sinkhole activity
2. Provide a DP1 (without Sinkhole loss Coverage) on properties with acknowledged prior sinkhole claim activity but no documentation of the repairs.
The committee board approved the above staff recommendations and moved the recommendations on to the full board. The board also approved the proposed sinkhole coverage rates for 2014 as presented by the actuarial staff and moved that they be adopted by the full board.
Board of Governors Meeting
The Citizens Board of Governors met on Wednesday to receive reports and recommendations from Tuesday’s committee meetings, consider and vote on proposed 2014 rates to be filed with the Office of Insurance Regulation, as well as to conduct other business. Two very important figures also said good-bye to board members, friends and other stakeholders as this was their last Board of Governors meeting. Both Citizens Chief Financial Officer Sharon Binnun and Board Chairman Carlos Lacasa were extremely gracious and complimentary as they made parting comments. As Chairman Lacasa’s tenure on the board comes to a close he was particularly thankful to former and current CFOs Tom Gallagher and Jeff Atwater for their appointments and for showing extreme confidence in his abilities to help lead the corporation. As many of you know, CFO Binnun has accepted a position in the private sector and was likewise extremely thankful and appreciative to her many friends, fellow leaders and wonderful experiences she gained while leading the financial helm at Citizens. CEO and Citizens President Barry Gilway also expressed his appreciation to both Chairman Lacasa and CFO Binnun for their support and many accomplishments during their tenure.
During its meeting the board also voted on proposed rates for 2014. Based on actuarial and staff recommendations the board approved an average state-wide (non-sinkhole) rate increase of 7.5%. The board also approved an average state-wide increase in rates for sinkhole coverage of 27.3%, however, engaged in lengthy discussion and decided to address sinkhole rates in Hillsborough, Pasco and Hernando Counties differently. For Hillsborough County the board approved a recommended average sinkhole rate increase of 50% but such an increase translates to a premium increase of about $185.00. The recommended average 25% rate increase for sinkhole coverage in Pasco and Hernando Counties caused concern among board members. Members were told by staff that due to existing average rates in those counties, a 25% rate increase would translate into an approximate premium increase of $450. After much discussion this resulted in a motion by member Rollins to approve an average 20% rate increase in 2014 for Pasco and Hernando Counties but to phase in the increases as has been done in the past. The board voted to approve the motion. Citizens will now proceed with making a formal filing of the rates as described above as it’s required to do by statute. Also of significance was the board’s vote to approve the additional changes to the proposed sinkhole eligibility rules as recommended on Tuesday by the Actuarial and Underwriting Committee. The board was assured that these further rule amendments had been thoroughly vetted with external stakeholders, such as the real estate industry, and that the amendments have considerable support.
Another important highlight was Citizens adoption of a resolution seeking the establishment of a Water & Fire Mitigation and Remediation Program. Much of the discussion centered on the Legislature’s interest in such a program to test its effectiveness on managing the escalating costs of fire and water losses. The resolution directs Citizens staff to conduct the necessary analysis and preparation to propose legislation during the 2014 Session establishing a pilot program. Given the cost drivers and other factors surrounding water and fire claims, the creation of a pilot and perhaps permanent mitigation and repair program for such losses would be an extremely positive step forward for Citizens. Please click on pilot program to read the entire resolution.
Headed into July 4th Holiday
We will circle back with you in a couple weeks unless we see some breaking news or better yet – YOU see/hear some breaking news!
Thanks for all you do every day and we will see you “on the trail.” Lisa
