Citizens Property Insurance committee tiptoes around coverage changes

Nov 29, 2012

The following article was published in The Florida Current on November 28, 2012:

Citizens committee tiptoes around coverage changes

By Gray Rohrer

Citizens Property Insurance Corp.’s Actuarial and Underwriting Committee on Wednesday shied away from reinstating some coverage options for customers who  were phased out this year.

The committee decided to delay a recommendation to begin writing wind-only coverage for buildings under construction in Monroe County in the hope the private sector will be able to provide alternative coverage and out of fear the backtracking would lead to the reinstatement of builders’ risk coverage in the rest of the state.

“In this case I do think Monroe County may deserve special consideration but I’m concerned we could be creating some other dire consequences,” Citizens board member John Rollins said “We need to be absolutely sure there’s no market.”

The committee also reviewed Citizens’ decision to withdraw coverage of carports, screened enclosures and other secondary structures near mobile homes, but decided to follow staffers’ recommendation not to reinstate the coverage. Mobile home groups have complained that the coverage is a requirement of mortgage agreements and is not available in the private market.

Board member Carol Everheart expressed concern about the lack of coverage for mobile home secondary structures, but other board members were more focused on the possibility of adding $1 billion more risk to Citizens.

“We are the market of last resort. These people do not have another market to go to,” Everheart said.

Committee members did accede to a staff recommendation to put off reunderwriting sinkhole business until 2014. The process of adjusting the underwriting of sinkhole coverage, starting in sinkhole-prone Hillsborough County, was to begin this year. Staff members suggested delaying the reassessment of sinkhole underwriting, which could lead to premium increases, to allow SB 408 more time to take effect.

Passed in 2011, SB 408 removes traditional sinkhole coverage from basic policies but leaves it as an option for homeowners. So far this year, sinkhole policies have declined 15 percent as rates rose 40 percent statewide (although much higher in Hillsborough and Pasco counties) this year, and are poised to rise 25 percent again in 2013 in “Sinkhole Alley” — Hillsborough, Hernando and Pasco counties.

Rep. Mike Fasano, R-New Port Richey, who fought against SB 408 as a senator in 2011, welcomed the delay of the reunderwriting program but bemoaned the reasoning behind it — that more homeowners are expected to opt out of sinkhole coverage.

“They just increased the deductible to 10 percent, and not 10 percent on the claim but 10 percent on the replacement value of the home,” Fasano said. “How would a senior citizen — why would they bother to get sinkhole coverage if they had to pay $25,000 to get it replaced?”

Citizens board members decided to reduce or eliminate coverage for liability, personal property, secondary structures and older and expensive homes last year in response to a push from Gov. Rick Scott to reduce the risk of assessments on all policyholders — including non-Citizens customers — in the wake of a cataclysmic hurricane.

Those changes, though, raised the ire of consumer groups, some lawmakers and eventually, the consumers themselves as their coverage was dropped through the renewal process this year. The backlash has prompted Citizens to soften its stance somewhat, but it’s not backing down from programs that have drawn criticism.

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