Florida Senate Banking and Insurance Committee Reviews Managed Repair Programs
Nov 7, 2017
The Florida Senate Committee on Banking and Insurance Committee (“Committee”) met today, November 7, 2017, to discuss property insurance-related managed repair programs, with the goal of better understanding the effects of these types of programs on insurers, as well as policyholders.
As part of its efforts, the Committee heard presentations from the Florida Office of Insurance Regulation (“OIR”) and Citizens Property Insurance Corporation (“Citizens”), instead of hosting a full panel discussion as had been done heretofore in regard to the issues of insurance assignment of benefits (“AOB”) and attorneys’ fees.
To view the meeting packet, click here. (The managed repair presentations begin on Page 28 of the PDF.)
According to Sandra Starnes, OIR Director of Property and Casualty Product Review, managed repair programs typically allow insurers to select a qualified pre-approved vendor or contractor to make covered repairs to an insured’s dwelling or other structures. The insurer provides its policyholders with incentives for using managed repair vendors, such as a premium discount, loan, deductible credit or increased coverage. Often, policy limits apply for the cost of repairs. Insurers usually guarantee a managed repair vendor’s work.
Ms. Starnes explained that an insured may elect not to use a managed repair vendor, but if this option is taken, he or she would forfeit any applicable incentives. She added that the OIR must review and approve the rates and forms used for any managed repair program that provides consumers with incentives for using a preferred contractor. Insurers must demonstrate that the incentives are actuarially supported and policy forms must contain clear, unambiguous language that is not arbitrary or unfairly discriminatory.
Ms. Starnes noted that insurers’ increased use of managed repair programs or an “Election to Repair” option is a reaction to a recent increase in losses associated with water damage claims and AOB.
Following the OIR’s presentation, Citizens President, CEO and Executive Director Barry Gilway explained the State-run insurer’s managed repair program to the Committee.
He said that Citizens has partnered with Crawford Contractor Connection to administrate a network of licensed, qualified, and credentialed contractors who perform permanent repairs based on nationally recognized estimates and quality standards that ensure the damage is repaired to pre-loss condition.
Citizen’s managed repair program was developed in direct response to what Mr. Gilway described as adverse development in non-weather water losses primarily caused by policyholders accepting alternative representation that ultimately filed suit on their claims.
According to Mr. Gilway, if no managed repair program policy changes had been effected, South Florida would be facing over a decade of 10 percent rate increases.
The intent of Citizens’ managed repair program and policy changes is to lower litigation rates, he said, adding that if the policy changes work as intended, actuarially sound rates will be achieved in a few years, yielding an overall lower rate.
Mr. Gilway assured that Citizens’ managed repair program ensures that larger repairs are completed by licensed, qualified, and credentialed contractors who afford a three-year warranty on their work.
To access today’s agenda, as well as audio and video replay from the meeting, click here.
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