Florida Cabinet Hears Update on Citizens Property Insurance Depopulation Efforts from Outgoing President Scott Wallace
Jan 18, 2012
At a Florida Cabinet meeting today, January 18, 2012, outgoing Citizens Property Insurance Corporation (“Citizens”) President Scott Wallace told Cabinet members that depopulation efforts are progressing with 30 filings approved by the Florida Office of Insurance Regulation (“OIR”), and more scheduled to be filed in March and July. To view the meeting agenda, click here.
During his presentation, Mr. Wallace, who is resigning his position with Citizens in April 2012, repeatedly assured Cabinet members that Citizens’ Board of Governors (“Board”) is dedicated to reducing the state-run insurer’s policy count and exposure.
Highlights of coverage changes included in Citizens’ most recent rate filings include:
- A maximum $1 million coverage liability limit in the Coastal Account (formerly the High-Risk Account)
- A mandatory 10 percent sinkhole deductible
- Reduction of personal liability coverage from $200,000 to $100,000
“Citizens’ Board and staff truly recognize the challenge to shrink Citizens requires a dedicated and continuing effort to identify ways to reduce our exposure and policy count,” Mr. Wallace stated. “We are committed and have a strong sense of urgency to maintaining our efforts to achieve these goals.”
Specific initiatives that will be presented to the Board on February 23, 2012 include a recommendation to eliminate ceding commissions and evaluate ways to position segments of Citizens’ book of business so as to attract privatization opportunities by working with private investors and the OIR.
Citizens’ Board recently re-established its Depopulation Committee in hopes of providing a more focused approach to depopulation efforts, he noted, explaining that 17,000 Citizens’ policies are scheduled for depopulation in February.
He also said Citizens has partnered with the OIR to survey Florida insurers to better understand and address barriers to depopulation. Meanwhile, Citizens’ general counsel is researching Florida statutes to ensure the interpretation of how to “optimize” depopulation efforts is accurate, Mr. Wallace noted.
Further, he added, risk transfer is another way of reducing the amount and probability of assessment after a catastrophic event.
“Risk transfer provides a viable and immediate mechanism to transfer exposure from Citizens and Floridians to the private market,” Mr. Wallace said. This year, risk transfer will be accomplished through the use of traditional insurance and catastrophe bond mechanisms. He estimated risk transfer to the private market in 2012 to equal at least $1 billion in exposure.
He also stated that Citizens supports legislation that seeks to shrink its size and exposure. Bills related to depopulation include:
- HB 1127 by Representative Ben Albritton
- SB 1346 by Senator Steve Oelrich
- HB 245 by Representatives Jim Boyd, Doug Broxson and Fred Costello
- SB 578 by Senator Garrett Richter
In closing, Mr. Wallace stated, “Clearly, our work has just begun and there is much more to accomplish if we are to significantly reduce the size and exposure of Citizens. I think we are well on the way.”
In other business, the Cabinet:
- Unanimously reaffirmed Ash Williams as Executive Director of the State Board of Administration. Mr. Williams was appointed as Executive Director in 2008.
- Unanimously approved the appointment of Dr. Kurt Gurley as the engineer member of the Florida Hurricane Catastrophe Fund Advisory Council. The Council has nine members, who serve as the pleasure of the State Board of Administration.
This concluded the insurance-related items on the Cabinet’s agenda.
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