Citizens once again leading the message
This past week’s Citizens Property Insurance Board meeting had several educational and helpful agenda items including one that could eventually change the face of Florida’s backup homeowners insurance market. Meanwhile, Demotech continues its review of the Florida domestic scene and there’s news that we are among the top states for auto glass claims.
The Citizens Board approved $265,000 for an exposure reduction study by the Florida State University Catastrophic Storm Risk Management Center to examine Citizens’ operation and role in a changing homeowners insurance marketplace of double-digit rate increases.
“It would go well beyond looking at Citizens as a stand-alone entity and what changes could occur within Citizens and what the issues are within Citizens. It would also extend to the overall marketplace and determine if changes are needed for the overall market that could improve the competitive nature of the market,” said Citizens President & CEO Barry Gilway.
Citizens’ policy count has remained at the 440,000 level, which is about 4% of the market, for the past four years. But Mr. Gilway warned that Citizens is now seeing an increase in applications beyond the typical 7,000 per month average, as many private companies serving the market have filed for rate hikes, prompting some policy migration to Citizens.
Over the years, Barry Gilway has been the most effective voice in discussing “the view from the ground” when it comes to explaining to policymakers the current state of affairs in the property insurance market and what needs to be done to fix any of its challenges. So it is not surprising that Mr. Gilway is contracting with my alma mater, FSU, to study what Citizens could look like in the coming years. You can read more here from Mr. Gilway’s discussion about the study, expected by year’s end in time for the March 2021 legislative session.
Demotech has been reviewing the Florida domestic market scene and has reaffirmed financial stability ratings for a bunch of carriers and is reviewing the rest over the next few weeks. You can read more here.
Mr. Gilway also noted that the 2019 Assignment of Benefits (AOB) reform in Florida is having an expected positive impact. The number of AOB suits Citizens received in January 2020 was 44% less than those in January 2019. New first- and third-party lawsuits for 2019 totaled 9,559 (avg. 797 per month) down 27% from 2018 (avg. 1,094 monthly). Also helping: its managed repair program, which continues to grow in popularity.
Last year’s AOB reform by the Florida Legislature did not include AOB’s from automobile windshield repair and replacement. A report in Florida Trend notes that Florida is now second in the nation for auto glass claims. The National Crime Information Bureau says claims are up 52% over the last five years here, with indications there may be a corresponding rise in fraud.
Every legislative session has a rhythm. Unfortunately, this session had one that will be remembered for failing Floridians who need, and deserve, rate relief. (You can view our final Bill Watch from the last newsletter.)
LMA Newsletter of 3-30-20
