Citizens Property Insurance Market Accountability Advisory Committee Report: September 6, 2012

Sep 7, 2012


During the Citizens Market Accountability Advisory Committee (“Committee”) meeting yesterday, September 6, 2012, discussion focused on an array of updates, including the renewed need for Builders’ Risk Insurance and an ongoing problem with incomplete submissions from personal lines agents.

To view the meeting materials, click here.

Citizens Vice President of Underwriting Deborah Murphy said Citizens has received complaints from people in Monroe County and other areas regarding the unavailability of windstorm coverage in the private market.

She noted that Citizens ceased writing Builders’ Risk coverage on March 1, 2012 and stopped renewing policies on June 1, 2012.  Areas of particular concern are personal lines risk under $1 million, Ms. Murphy stated.

As a result, Citizens is reviewing alternatives to re-open the Builders’ Risk market for personal lines only and is working with a group that is considering offering a product to the market, she said, adding that if Builders’ Risk is offered, it would be done statewide.

A spokesman from the Florida Bankers Association (“FBA”) said the availability of Builders’ Risk insurance is key to the revitalization of Florida’s construction industry, because many banks will not lend money to finance new construction if the builder does not carry Builders’ Risk insurance.

“In our opinion it is not the best time, nor the appropriate time to make drastic changes to an already soft and delicate construction market,” the FBA spokesman said.  He noted that, in some coastal areas in Key West, such insurance is not available at any price.  Without Citizens, no such coverage exists, he said, adding that the time for such a dilemma is not in the current post-real estate boom and in the midst of the rebuilding of Florida’s construction industry.

Builders’ Risk insurance provides a “level of confidence” that will allow lenders to “open their doors and invest” in the construction industry, he said.

“It is economically the right thing to do,” he added.

One Committee member said he is concerned about advocating that Citizens again provide coverage that facilitates the construction of risk in areas that that the voluntary market perhaps might not insure.

It was also noted that Builders’ Risk insurance in the past had deductibles as high as 10 percent, which also proved a deterrent to lenders.   Renovation policies for $500,000 on older homes are also impossible to find in certain areas.

In other business, it was reported that Citizens received 3,767 claims stemming from Hurricane Isaac, of which 129 were commercial lines claims.  Hurricane deductibles are not being applied to losses from Isaac.

    Steve Bitar, senior director of consumer and agent services, reported that more than 50 percent of the submissions from personal lines agents are arriving incomplete, despite the issuance in April 2012 of a Personal Lines New Submission Checklist. Statistics showed that more than 51 percent were incomplete in April, 57 percent in May, 65 percent in June, and 54 percent in July.

      “I think you will find these numbers quite astounding,” Mr. Bitar said, adding that work is underway to perfect an automation enhancement that will require agents to upload required documents and identify them upon upload to ensure all are available for review at the time of underwriting.

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


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