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One idea. Citizens could add a disclosure on the application (similiar to the one about assesments) that reads: “There is a good possibility that there are less expensive rate options and better coverage choices than your State Farm agent is offering you with this Citizens policy. We highly recommend you notify other agents for an alternate quote”.
We just hired an agent that worked for State Farm. The office she worked at wrote close to 100 policies with Citizens PER MONTH. And that was in an area where 90% of those could have been placed in the private market.
Gee…..how can we control Citizens growth…..hmmmmm.
Getting these captives that throw so much business to Citizens out of the business of doing that would be the best start. An aggressive takeout program for those customers who were thrown in by those agents would be a great next step. From there we can work on Citizens itself.
Good idea but your assumption is that clients actually will read the applications and that is a WRONG assumption. We all know most clients don’t read what they are signing.
The decision to stop SF agents from dropping so many policies onto Citizens has to come from the OIR, from the top down.
Too much beating around the bush. Allow private sector rates to increase to adequate levels and much more capacity will become available. Go to the OIR “Choices” website and see for your self. Citizens rates are higher than private company rates. Citizens gets the business by default….companies with low rates just won’t write the business at a loss. That’s what CEO’s are afraid to say in public in fear of anti trust violations.
The elephant in the room is that Citizens, ostensibly the insurer of last resort in Florida, is very often the cheapest price option out there. Thus insureds place coverage there when there are numerous other private insurer options available, albeit more expensive.
This isn’t an uncommon occurrence. The state of FL is subsidizing wind pricing.
The problem with the takeout program is the companies doing the takeout are turning around and non-renewing many policyholders saying they do not fit their underwriting guidelines. That is why most agents are advising consumers to opt out. If they want to depopulate Citizens, secure a greater committment from the takeout companies to keep the risks. Without doing this, the whole system is a farce.
This is true. I just received my non renewal from federated, so now we have to go back to citizens, after only one year. The reason given was “risk management.” I’ve been a carrier UW for years, and remember years ago working with a company who took many policies to depopulate the FRPCJUA. Each policy also came with a policy incentive in addition to the policy premium collected. I dont know if they still do that, but it was very profitable to take the risk for one year and drop. I will be opting out of any future take outs since they are considering new business surcharges. I am relatively close to the water, on the gulf side.
FREE MARKET! Ever wonder why we cannot draw insurer’s to Florida? One word…PROFITS. Personal Lines in the US has been a stellar profit bearer for the past 5 years. Why would insurer’s come to arguably the most volatile area in the world only to be told they cannot gather adequate rate for the exorbitant and almost unrateable exposure to their books? Hurricanes, Floods, Sinkholes, Tornadoes, Lightning, PIP Insurance Fraud.
This doesn’t even address the problem with the FL DOI which can take a year to approve a policy form for carriers backed by billions of assets when other states are reviewing and approving within weeks.
The Florida building code has been in place for almost 20 years in SE FL, and 10 years everywhere else in the wind pool. AMPLE TIME for homeowners to bring their homes up to code and take advantage of WInd Mitigation Credits. MAKE THIS A FREE MARKET AND END IT. Draw insurer’s back to the state and regulate just as you would in any other state. The government SHOULD NOT be in the insurance business. PERIOD.
The picture is bigger than this. Its called Cat reinsurance and it is very difficult to get the aggregates needed, even in the E & S markets. E & S runs at a “free market” level and yet writings are very limited. You can’t price the business higher than the markets can bear, and even then, profitability is questionable when you factor in hurricanes.
CC, that is a good point. I wonder what taking the masses from Citizen’s into the private sector would do to the overall complexion of the marketplace. Seems to me that many risks today in the E&S marketplace are difficult risks, and thus, why the capacity is limited. There is capacity out there today for “good” FL risks. How does intertwining “good” risks with the challenging risks effect the marketplace? Would reinsurers rather keep them on separate treaty’s, or combine them to offset some of the challenging risks with the better risks.
I do think that if we can draw more National carriers back into the picture, they will have negotiation leverage for Florida capacity with reinsurers…..to what degree is the question though? What do you think?
Could not agree more
Why is it that State Farm agents are allowed to drop so many policies onto Citizens anyways?
Simply put because Citizens allows them to have an appointment while their primary carrier isn’t writing new business.
first of all, why is the state that enfactuated in taking on this responsibility. the floridians need to take responsibility of their assets and make sure they are adequately covered by a proper private company. if a major hurricane hits again, they definately will not have any money to pay things out. why do you think, that on every policy sold, there is cat fund associated that is paid out. why are folks so blind, that eventually Citizens will fold and not have any money available. the feds will probably have to step in and cover the losses and then tell everyone, find proper insurance. you are correct, in stating that companies will not want to function in the red! and why should they? after all, a business is to make money, especially if i am owning a business. where will the state make that money up? i don’t see that happening unless they start getting property tax and personal income tax. — many will fret over that, because more money to the gov’t. Citizens should just go away…
In other markets the state pool is made up of people who have absolutely exhausted any other market including E&S. They also make it nasty by offering a basic policy, HO1 or HO8. Nowhere else can you find a state insurance pool offering coverage at competitive rates and forms.
Not all risks are insurable due to the state loss history and the ever increasing reinsurance premiums. Aggregates are fixed or dropping and rates are increasing. Underwriting parameters are tightening and “older” homes are not eligible. I am speaking of the E & S market, so where else are these people to go? People insured by citizens DO take responsibility for their assets by paying the premium.
Citizens should start to raise prem in the highest loss counties. If Miami is the most exposed area, then they will pay the higher prem for coverage.All costal areas should also pay for the coverage they have at the rate that matches the risk.They could become a cosatl insurance Co, providing the coverage only in that area. I am sick and tired of being charged a fee for all the scumbages in south florida who hire Punlic Adjusters who do not know how to adjust a claim, but just mark the proo fof loss undisputed and request appraisal for a higher settlement to cover their 20% fee. The state should clean house down there and then their cost would go down. By the way, that same way of settling claims is working into Central Florida as well.
And they are allowed to give an auto discount for having multiple policies with State Farm even if the risk is with Citizens. That has to end!!!!!!
Give me a market that writes wind only in the wind pool other than Citizens and I wont use Citizens.
Very simple but not politically correct is to charge appropriate market based prices for the risk.