Citizens board approves legislative package

[John Shishilla]

Passed to us from Wayne Bertsch





CITIZENS BOARD APPROVES LEGISLATIVE PACKAGE

By MICHAEL PELTIER
THE NEWS SERVICE OF FLORIDA

THE CAPITAL, TALLAHASSEE, December 14, 2011.......Internal changes could reduce Citizens Property Insurance Corp. potential losses by up to $1.5 billion, but its governing board on Wednesday approved a legislative agenda that, if approved, would make further, more significant reductions in risk.

Meeting in Orlando, Citizens' board of governors said it would ask lawmakers to rein in what types of property the insurer must cover and speed up the process by which it can raise premiums, which company officials and many lawmakers believe are now artificially low.

Gov. Rick Scott has called on Citizens officials to push a legislative agenda aimed at shrinking the state-backed property insurance company, which now has about 1.5 million policies. Realistically, Citizen's officials would like to see its number of policyholders reduced to about 800,000 policies.

The governor and other policy makers generally want Citizens to shed risk because if the company can't pay claims, it could be financially – and politically – problematic. Once Citizens' cash and reinsurance is exhausted, private insurance customers would first pay assessments, raising their rates, and if that weren't enough to cover Citizens' losses or insurance customers balked, state taxpayers might have to pick up part of the tab.

Generally, the Citizens board on Wednesday approved the same provisions that were included last year in a proposal that failed to become law, including allowing Citizens to increase rates by up to 25 percent a year.

Earlier this month, Citizens chairman Carlos Lacasa outlined a series of proposals to help the company reduce its exposure. Among the changes Citizens can make without legislative approval is reducing coverage for ancillary buildings or reducing the liability insurance cap.

On Wednesday, Citizens staff estimated that in-house efforts to limit exposure could reduce the potential maximum loss by more than $1.5 billion, a 7 percent reduction. Of that, $1 billion would be saved in coastal areas, a 15 percent cut.

"It may not be a mile but it is certainly more than an inch," said Citizens board member John Rollins

But any major depopulation and reduction of risk cannot come without action from legislators, who have been reluctant to make drastic changes. In fact, lawmakers a few years ago capped rate increases for the state-backed insurer, which has allowed the gap between actuarially sound rates and premiums to widen.
On Wednesday, the board said it wants lawmakers to accelerate the path to bringing Citizens rates more in line with what company officials say is its risk. Lawmakers have capped residential policy increases at 10 percent. Citizens board members want the cap increased and also want to be able to pass on re-insurance costs on to customers over and above the cap.

Other proposals would revise eligibility requirements to reduce the number of residential and commercial properties eligible for coverage.

"In decisions at the previous board meeting, the point was made that efforts to return Citizens to an insurer of last resort would require both initiatives from Citizens itself and statutory changes," said Citizens President and CEO Scott Wallace.

-END-
12/14/11

[Dennis J. Bonner]

i guess well see what happens in the upcoming session. Im seeing more and more disgruntled home owners every year.

[Dennis J. Bonner]

Im anticipating alot of drama when they remove the Class-C discount soon. After Andrew in 92", all the shutter Co's sold all there inventory before testing requirements kicked in.. The only difference between a 93" 20guage panel and a 94" 20 guage panel is the NOA#..

[Eric C. Van De Ven]

This is one of those paybacks the gov is acting on.
The only properties Citizens will be insuring are new construction, not in the HWVZ and valued over 700K!

[Jay C. Murray]

Get ready for the pain.

It's going to bad up here. Many older retirees in 70's built homes that weathered back to back storms in 2004. They are going to see HUGE rate increase with the new 3 nail clip requirement.

You know the WCE and the underwriters are piling up a list to flood these people with reinspections as soon as possible. Then hit them with a HUGE rate increase.

That's why at the September OIR meeting the WCE and Underwriters were adamant about, new inspections replacing and invalidating any earlier inspection.