Agents signing up for Florida’s new small business JUA

Florida’s residual market for commercial insurance began providing coverage for small businesses on Sept. 15.

More than 60 agents had signed up online for the program within hours of the official signing of a contract with a servicing carrier, according to Dan Sumner, interim director for the new Property Casualty Joint Underwriting Association (PCJUA).

“Any qualified insurance agent in Florida can be appointed,” Sumner said during a teleconference. “Agents can be appointed immediately in real time after completing an online application.”

The PCJUA has thus far hired one company to act as servicing carrier: International Catastrophe Insurance Managers LLC (ICAT), which opened ICAT Specialty Insurance Co. in Tampa in July. ICAT specializes in commercial catastrophe insurance coverage in catastrophe-exposed communities.

Agents may register at www.fmap.org/commercial.html. Agents must register with FMAP’s Commercial Program before registering with ICAT.

The PCJUA is being offered as a short-term solution to the current property insurance shortage caused by eight storms inflicting $38 billion in insured losses.

Under the PCJUA program, ICAT will qualify and provide quotes to Florida agents through its proprietary Internet-based platform. Once agents enter risk information into ICAT’s online system, the risks will be submitted by ICAT to the Florida Market Assistance Program (FMAP). In the event the voluntary market does not bind coverage through FMAP, ICAT will bind coverage, conduct physical inspections, and administer the policies and claims on behalf of the PCJUA.

ICAT said it actually began processing agent appointments on Sept. 1, and accepting applications on Sept. 15.

The program is designed to provide coverage for small businesses — those with property valued under $1 million — that can’t obtain coverage in the private insurance market. In addition to property coverage, coverages for contents and business interruption are also available.

The risk must have been turned down by three licensed insurance companies and one surplus lines company.

Bob Lotane, communication director for the Florida Office of Insurance Regulation (OIR), said ICAT is not an exclusive service provider for the program.

“We can retain as many servicing carriers as necessary,” Lotane said. “ICAT was the only company licensed in Florida that could meet the desired timeframe.”

Under the conditions of the agreement, ICAT will write the policies and perform site inspections while the PCJUA retains responsibility for funding of the policies.

ICAT, which is based in Colorado, got the PCJUA contract after outlining its proposal before officials on Aug. 25, according to Jonathon Kees, assistant director of communication for the Florida OIR.

ICAT’s minimum monthly compensation will be the greater of 11 percent of the gross written premiums or $100,000. In addition, it will collect a policy fee ($175), inspection fee ($100), claims filing fee ($450) and a producer appointment fee ($125).

Coverage available
The PCJUA policies will cover only losses caused by wind and hail. In total, there is $2 million in coverage available per insured including structure ($1 million limit), business personal property and tenants’ improvements and betterments ($750,000 limit), and business income (up to $250,000).

There is a minimum five percent deductible but “significant premium savings” are available with 10 percent and 15 percent deductibles.

Property inspections are to be ordered at binding, with underwriting action taken within 60 days.

Each policy will be non-renewed at the end of the policy period and insureds are advised to secure coverage in the standard market prior to expiration.

The average base rate for the PCJUA policies is $1.49 per $100 of coverage. This rate is further affected by the number of stories in the building, distance to coast and other factors.

Producers who register are given passwords to gain access ICAT’s automated system where they must complete and submit the risk application online. Agents must verify that a “good faith effort has been made to find coverage and coverage is not available in the private market.”

Agents are to receive a 5 percent commission. ICAT’s procedures call for agents to be able to bind quotes after a 10-day waiting period and for policies to be issued within 10 days of the effective date.

While the PCJUA is out of the starting gate, whether and how it might operate beyond this year remain uncertain. Gov. Jeb Bush and his cabinet approved the PCJUA as a short-term way to ease insurance availability problems for small businesses.

“Our concern was to get the thing off the ground and get policies in place for a year,” Lotane said. “The new governor and cabinet will decide whether or not to continue.”

Topics Florida Agencies Commercial Lines Business Insurance Property