Posted On: March 13, 2008, 11:16 am CDT

Posted By: Nathan

Actuary, I can not speak for other agents, but the business we place in Citizens is there because there is no other admitted carrier that will take it. It has nothing to do with pricing and certainly nothing to do with better coverage. The fact is that the take out companies do not look at the risk from an underwriting standpoint when they select them, they can't because they do not have the time to review 100,000 applications to see why they were placed in Citizens to begin with. I am not aware of another carrier that will take a risk that had a total fire loss 2 years ago, or that has 2 pit bulls (that of course will never bite) or a liability claim involving an accidental death. These are policies that are placed in Citizens, yet they are offered take outs and then cancelled because they do not fit underwriting guidelines. DUH. One of the problems facing agents is that Citizens clearly will never be in a financial crisis that will prevent it from paying claims, they simply will continue to fund losses post-event with assessments. Admitted carriers are subject to insolvency and have a max $500k FIGA protection per policy. We have take out carriers that are minimally funded with $5 or $6 million in surplus and they are taking out 30,000 policies. Sure they will dump another couple million in surplus or the next year but the number dont look so good. Citizens number are not so good either, but what politcian is going to let that be a problem??? And just how many take out carriers should an agent represent. These carriers do not service anything, many do not even have web sites, there is a promise that you will not be writting new voluntary business anytime in the near future, they are virtual companies that sub out all the processing to a vendor that does business with 15 or 20 other companies that all have different rules and underwriting guides and confusion is the norm. Are agency has 10 carriers that are accepting new business (not take outs) but we have been solicited by nearly 20 takeout companies that want to take 5-10 policies each. (that do not fit there underwriting guidelines) At some point an agent has to say no more. Our clients are not going to find coverage elsewhere because they do not fit the rules, we will certainly explain the financial status of an underfunded start up carrier and the protection of FIGA (within the limits of the law)and the fact that if the accept the offer they will likely be dumped within 60 days and have to go back to Citizens. Just more work for agents because the politicians will not let the industry fix itself. By the way, now that the state is looking at adjusting the reinsurance that it offers carriers (at reduced pricing) and adjusting the "Tickle" layer, the reinsurance companies are talking about a 10% increase in premiums. How is that lowerering the cost of insurance to consumers. I agree that the state needs to rethink the mess that we are in because of the cat fund and potential assessments, but the fact is that consumers are going to have to pay the price now or later.