Citizens Property Insurance Actuarial and Underwriting Committee Approves New Notice with Surcharge Notation

Feb 9, 2012


During its February 7, 2012 meeting, Citizens Property Insurance Corporation (“Citizens”) Actuarial and Underwriting Committee (“Committee”) recommended that Citizens’ Board of Governors (“Board”) approve a new notice form that will include a notation regarding potential policyholder assessments.

The Board will consider the recommendation at its February 23, 2012 meeting.

The intent of the notice is to ensure that policyholders understand the individual financial impact of an assessment.  The sample form reviewed was based on average annual premium and calculated using the highest potential assessment.  The notice, if approved by the Board, will be provided to new policyholders, as well as to existing policyholders at renewal.  The sample included a side-by-side comparison with potential costs from private insurance.

After some discussion, Committee members approved the sample notice, which includes an acknowledgement of the potential surcharge and assessment liability that could result if Citizens sustains a deficit as a result of hurricane losses.  The policyholder example Committee members reviewed was based on an annual premium of $2,000 and listed potential assessments in three scenarios:

  • A potential policyholder surcharge (one-time assessment up to 45 percent of premium – $900)
  • A potential regular assessment (one-time assessment up to 18 percent of premium)
  • A potential emergency assessment (up to 30 percent of premium annually, may apply for multiple years – $600)
  • Total potential assessment – $1,500

The Committee also voted to recommend that the Board update Citizens’ Underwriting Manual to revise the definitions of wind-resistant features to be consistent with Florida Office of Insurance Regulation (“OIR”) definitions.  With Board approval, updated rules will then be filed with the OIR.  Upon OIR approval, the updated rules would then be implemented.

Key changes in the Underwriting Manual include: 

  • Largest perceived impact on Roof-to-Wall connection
    • Historic 3+1 nail pattern requirement now reduced to 2+1 nail pattern
  • Policyholders are able to submit to Citizens any documentation they believe supports issuing wind mitigation credits as a result of this OIR change, previous OIR changes, or for any other reason.

The Committee also heard status reports on Citizens’ Commercial Underwriting program, Florida Cabinet initiatives to reduce Citizens’ exposure status, and data on short-term rentals inspections.  Much of the information was explained with background in order to inform new Committee members about the programs’ missions, components and goals.

With no further business before the Committee, the meeting was adjourned.

To access the meeting materials, click here.


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