Citizens Property Insurance Corporation Committee Meeting Reports: November 2011
Nov 14, 2011
Citizens’ Actuarial and Underwriting Committee recommends 19 percent rate increase for some South Florida condominiums
At its November 9, 2011 meeting, Citizens Property Insurance Corporation (“Citizens”) Actuarial and Underwriting Committee (“Committee”) approved an average 19.1 percent rate increase for condominiums covered by its Commercial Residential Multi-Peril (“CRM”) insurance policies of $10 million or more.
Click here to view the meeting materials.
No increase was recommended for condominiums covered by Commercial Residential Wind-Only (“CRW”) policies. The proposed rate hike would affect properties in Broward, Miami-Dade, Palm Beach, Indian River and St. Lucie counties. The last time Citizens raised rates for condominiums covered by CRM and CRW was in November 2009 for new business and January 2010 for renewals.
Citizens Chief Financial Officer Sharon Binnun told Committee members that the rate hike would create actuarially-sound rates, bring CRM accounts more in line with CRW accounts and cause Citizens to be less of a competitor in the private sector through higher rates.
“The CRM rates have been cheaper than Wind-Only. This will try to balance that which is good for us,” said Committee member John Rollins.
Added Committee Chairman John Wortman: “We are asking for a 19 percent increase for CRM and zero increase for CRW. This makes tons of sense because there are instances where the CRM rate is lower than the CRW rate. I can’t see any logic for charging less than Wind-Only. This is in the right direction.”
Committee member Tom Lynch suggested that the rates should be reviewed annually to prevent such large one-time increases.
“The rate increases are fairly substantial, which is obviously going to affect the public. Hopefully we will look at these on an annual basis,” he said.
Proposed rate changes range from a low of 18 percent in parts of Broward County to a high of 24.5 percent in areas of Broward and Miami-Dade Counties. Rate increases for Palm Beach County range from 22.7 percent to 23.3 percent; Indian River County, 22.7 percent; and St. Lucie County, 19.3 percent.
Statistics show there were 925 individually-rated risks with a total exposure value of $28.6 billion and a premium of $141.9 million.
Of those, 91 percent of the individually-rated risks are in the Coastal Account (formerly the High-Risk Account), and 56 percent of the individually-rated risks are CRW policies.
The proposed rate hike will be reviewed by Citizens Board of Governors (“Board”) on November 14, 2011 and if approved, sent to the Florida Office of Insurance Regulation for review and approval.
In other business, Committee members discussed a tentative timeline for assembling information in time for the December 6, 2011 Florida Cabinet meeting, the agenda of which includes a discussion on ways Citizens might reduce its size.
It was noted that an outline of ideas likely will be discussed during the November 14, 2011 Board meeting, and also at the November 30, 2011 Actuarial and Underwriting Committee meeting.
With no other business before the Committee, the meeting was adjourned.
Citizens’ Information Advisory Committee
During its November 8, 2011 meeting, Citizens’ Information Systems Advisory Committee recommended Board approval of the following:
- A $24.9 million 2012 budget for Citizens’ Core Systems Implementation project. The budget breaks down as: 85 percent for professional consulting and staff augmentation, 10 percent for software maintenance and licensing, five percent for travel and meals.
- A $49.3 million 2012 budget for Citizens’ Information Technology Department. The budget breaks down as: 46 percent for staffing costs, 23 percent for staff augmentation, 18 percent for software maintenance and licensing, eight percent for telecommunications, two percent for computer expenses and supplies, two percent for “other,” and one percent for maintenance and repairs.
- $2.1 million in contracts to purchase various goods and services, including software acquisitions, equipment, software maintenance and other licenses, and professional services required as part of software and hardware acquisitions in support of Citizens’ Core insurance project
- A $3.3 million, three-year contract for a Microsoft Enterprise agreement and software assurance. The contract agreement includes Microsoft goods and services, updates and other licenses.
- A $180,000 contract for professional services for Enterprise Content management and Web portal strategy. It includes document management, Web, social and transactional content management.
To view the meeting materials, click here.
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