Florida House of Representatives’ Insurance and Banking Subcommittee Reviews Citizens Property Insurance, Florida Hurricane Catastrophe Fund Status
Jan 8, 2015
The Florida House of Representatives’ Insurance and Banking Subcommittee (“Subcommittee”) met yesterday, January 7, 2015.
As part of the agenda, Citizens Property Insurance Corporation (“Citizens”) President, CEO and Executive Director Barry Gilway gave legislators an overview of the State-run insurer and its current issues.
Focusing on the recent substantial reduction in Citizens’ exposure, Mr. Gilway recounted that, in 2012, Citizens had 1.5 million policies and, as of December 31, 2014, its policy count totaled approximately 661,000–representing a decrease of 55.6 percent.
Additionally, Citizens’ total insured value has been reduced by 60.9 percent since November 2011, at which time it was approximately $515 billion. Now, as of November 2014, Citizens’ total insured value is approximately $200 billion, Mr. Gilway reported. Also, Citizens’ potential assessment liability has been lowered from $11.61 billion in 2011 to approximately $1 billion in 2014.
Also in 2014, the Florida Office of Insurance Regulation approved 1.4 million Citizens policies for takeout, after which 416,723 policies were actually assumed.
Mr. Gilway related that Citizens has created a Depopulation Working Group that will focus on how to faciliate the depopulation process. In addition to the Florida Insurance Consumer Advocate, members of the insurance industry will participate in this effort.
He also pointed out that reinsurance costs are currently lower, and there is interest in removing polices from all of Citizens accounts, not just its Personal Lines Account.
Mr. Gilway reviewed the progress of Citizens’ new Clearinghouse. In 2014, 13,414 policies were diverted from Citizens as part of the Clearinghouse process. Since renewals became eligible for the Clearinghouse in September 2014, 872 existing Citizens policies have been deemed ineligible for renewal.
He also reviewed Citizens’ rate changes for 2015 and outlined the organization’s 2015 goals, which include replacing reinsurance coverage, expanding the Clearinghouse, continued exposure reduction, depopulation process improvements and litigation management.
Next on the agenda, Florida Hurricane Catastrophe Fund (“FHCF”) Chief Operating Officer Dr. Jack Nicholson reviewed the history of the FHCF and explained how it operates. He indicated interest in private market risk transfer for the 2015 Hurricane Season.
Dr. Nicholson noted that the FHCF’s bonding potential for its 2015-2016 Contract Year is $4.78 billion and that it has $14.22 billion in liquidity.
Meeting materials included a list of potential policy issues the Subcommittee may tackle during the upcoming 2015 Session, including adding commercial residential policies to Citizens’ Clearinghouse, assignment of benefits in property insurance and other issues such as workers’ compensation still pending in Florida courts that have yet to develop.
To access the proposed policy issue list, as well as both Mr. Gilway’s and Dr. Nicholson’s presentations, click here.
Should you have any comments or questions, please contact Colodny Fass.
To unsubscribe from this newsletter, please send an email to Brooke Ellis at firstname.lastname@example.org.