Citizens Property Insurance Corporation’s top executive warned the company’s Board of Governors Wednesday that water loss claims will continue to hamper efforts to reduce rates for many Florida policyholders.
“In claims the critical issue that has surfaced in the past two years is ‘water damage’ claims and this issue is severely impacting the loss picture in South Florida and the rates paid by tri-county constituents,” said President, CEO and Executive Director Barry Gilway.
Gilway updated Citizens Board of Governors on the water damage loss issue, as well on the legislatively created depopulation program that has helped Citizens return to its role as the state’s insurer of last resort, saying the company will continue to shrink in the months ahead.
Since January, 141,680 Citizens customers have found coverage from private companies in the state, the company said in a statement, which has allowed Citizens to shrink to under 586,000 policies from a peak of nearly 1.5 million in 2012. Additionally, Citizens has been able to provide more information to policyholders regarding the takeout process, including estimates on renewal rates.
Coupled with Citizens’ reinsurance program, which has transferred $3.9 billion in risk from policyholders to global investors, depopulation efforts have helped Citizens eliminate the risk of assessments on Florida policyholders following a 1-in-100 year storm while covering policyholders who cannot find coverage in the private market, according to the company.
Still, water loss remains a challenge for Citizens, with 50 percent of all reported new reported claims in 2013 being water damage related. It is especially a problem in Miami-Dade County where water loss claims now account for more than half of every premium dollar collected. If water claims there mirrored trends in other parts of the state, Citizens said, more than nine out of 10 Miami-Dade policyholders would see rate reductions for 2016. Instead, the Office of Insurance Regulation last month approved rates that call for an average 8.1 percent increase for Miami-Dade customers.
“With all this success, leading Citizens is almost like playing whack-a-mole,” Gilway said. “When you knock down one issue another one takes its place. In claims, the critical issue that has surfaced in the past two years is water damage.”
Gilway said Citizens is ramping up efforts to educate policyholders on how to effectively identify and report legitimate water claims while bolstering efforts to ferret out fraudulent claims that are preventing Citizens from reducing rates in South Florida.
Among the efforts is a voluntary program to link customers with qualified remediation and repair companies to provide fast, fair and guaranteed repairs while reducing costs for all policyholders.
“The people who benefit most from this are consumers,” Gilway said.
In 2002, the Florida Legislature created Citizens Property Insurance Corporation (Citizens), a not-for-profit alternative insurer, whose public purpose is to provide insurance to, and serve the needs of, property owners who cannot find coverage in the private insurance market.
- Florida Issues Citizens’ 2016 Commercial Lines Rate Order
- Florida Approves Citizens’ 2016 Rates With Minor Adjustments
- Citizens Highlights ‘Disturbing’ Water Loss Trend at FLOIR Rate Hearing
- Florida Approves Removal of Up to 280,857 Policies From Citizens
- Citizens Board Approves 2015 Reinsurance Package, Ends 1-100 Assessment Risk
- Citizens: Florida Policyholder Count Lowest Since Company Creation
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