Citizens Property Insurance scrambles to offer new coverage option, chastises regulators

Nov 29, 2012

The following article was published in The Florida Current on November 29, 2012:

Citizens scrambles to offer new coverage option, chastises regulators

By Gray Rohrer

Citizens Property Insurance Corp. officials are irked at state insurance regulators and want them to extend the Friday deadline to respond to regulators’ stipulation that a new, limited homeowners’ policy contain more coverage at a lower price.

Members of Citizens’ Actuarial and Underwriting Committee criticized the Office of Insurance Regulation during their meeting Wednesday for pressuring the state-run company to offer the new limited coverage product on their terms.

“The OIR can say ‘Thanks for that response, here are your rates,’ ” Citizens board member John Rollins said.

As required by a provision in HB 1101, an omnibus insurance bill passed by lawmakers this year, Citizens must offer a limited coverage option, known as HO-8, to consumers by Jan. 1. The HO-8 policy covers fewer perils to a home than a standard multiperil homeowners’ policy, but costs significantly less. Another key difference is that the HO-8 policy pays actual cash value for a claim whereas the standard homeowner policy pays the replacement cost for a claim.

OIR officials, however, said Citizens’ original filing violated state statute by not offering replacement costs for claims.

Citizens’ initial rate filing for HO-8 policies was 7 percent less than the standard homeowners’ policy, but regulators are asking for more coverage at a lower cost. A spokeswoman from OIR stated they are working with Citizens to determine how best to calculate appropriate rates for HO-8 policies.

“The issues with the rating side are currently being worked out with Citizens. They plan on determining the HO-8 premium by applying a factor to the approved (standard homeowner policy) rate to reflect the coverage changes. The issue lies in determining the appropriate factor. The Office believes that the factor should be lower than what was filed by Citizens,” OIR spokeswoman Amy Bogner wrote in an email.

OIR will grant the extension requested by Citizens — which Bogner stated will be its second extension. The new deadline for a response from Citizens will be Dec. 17.

Citizens officials are nonetheless frustrated with regulators.

“(OIR) is doing a lot of things with this filing that are head scratchers,” Citizens general counsel Dan Sumner said during the Wednesday meeting. “Their motivation is to close this out and basically take it out of their hands and dump it in our lap.”

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