when you look at what Citizens offers versus what a free marketplace offers it is an actuarially unsound program. Thats why it\’s lost billions the last 2 years and will continue to loss billions if current weather patterns hold true. No one really knows if these patterns are a \”norm\” or an anomoly. However when unknown a prudent actuary will operate on an assumption that the last 2 years may be more inline with 2006 than the previous 20 years which may have just been an unusually quiet period.
In addition their wind deductibles and underwriting requirments are inadequate. All of these factors basically mean that its much too broad of coverage for the premium charged.
it may seem outrageous to Floridians but no prudent actuary would ever approve this filing or program if it were a volantary carrier. They get a pass because they are a political animal rather than an actual viable insurance carrier.
I\’m pretty sure that congress will approve some national cat fund and allow all US citizens to sudsidize Florida but until that happens Citizens is a bargain compared to what should be charged in Florida. Look for the DOI to start assessing all volantary carriers and not just property carriers in the next year or so.
Coach, I can only assume that you are not familiar with the way things are done in Florida, but guessing about it or telling us what you THINK it should be like.
The facts are this, assuming we are still talking about personal lines homeowners business and not commercial, Citizens is using an ISO form like most other companies in Florida, they have some endorsements of their own, but they further restrict coverages, such as no theft off premises, electronics limitation, etc. There were 18 new take out companies that were started in Florida last year that are using basically the same forms as Citizens and selling it for less money than Citizens.
I will agree that Citizens rates are not actuarilly sound, but they are NOT giving more coverage than admitted carriers are. All carriers need to raise rates to pay the increase in reinsurance and cat claims.
Citizens lost billions of dollars because of hidious management, poor claims handling, overpaying for a huge number of claims, and also the reported fraud, mismanagement and general tom foolery that went on in the corporation, and oh lets not forget that they insured the highest risk properties on the coast that admitted carriers won\’t touch because of the wind risk. They are more likely to have large losses and they are more expensive properties (this of course being the wind pool), they also insure the older homes that no one else wanted, some of those were more vulnerable due to older roofs, lower pitch roofs and general maintenance issues. If the risk is higher the cost to insure MUST be higher. The deductibles are legislated and can\’t change because mortgage companies won\’t accept high wind deductibles, the underwriting is stricker with Citizens than with any other carrier I have ever dealt with. Basically it is prove it to us or your cancelled, agent inspections, photos, contractor proof of updates, proof of prior, proof of cancellation, depreciated values only on Mobile homes, a lousy rating system, poor service, high rates and nothing to show for it. What ever you do don\’t try to convince anyone that Citizens is good, even they admit they suck. All companies need rate increases and Citizens needs a big one to encourage other carriers to take a second look at Florida instead of packing up and leaving. The DOI CAN\’T assess anything the statue does not allow, so this would require legislation to allow assessments to ALL voluntary markets, it would also create a huge public outcry. Dont look for anything to change until after elections, they all know what needs to be done but dont want to tell voters it will cost more money, Typical politicians, let is get worse before we fix it.
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JR
when you look at what Citizens offers versus what a free marketplace offers it is an actuarially unsound program. Thats why it\’s lost billions the last 2 years and will continue to loss billions if current weather patterns hold true. No one really knows if these patterns are a \”norm\” or an anomoly. However when unknown a prudent actuary will operate on an assumption that the last 2 years may be more inline with 2006 than the previous 20 years which may have just been an unusually quiet period.
In addition their wind deductibles and underwriting requirments are inadequate. All of these factors basically mean that its much too broad of coverage for the premium charged.
it may seem outrageous to Floridians but no prudent actuary would ever approve this filing or program if it were a volantary carrier. They get a pass because they are a political animal rather than an actual viable insurance carrier.
I\’m pretty sure that congress will approve some national cat fund and allow all US citizens to sudsidize Florida but until that happens Citizens is a bargain compared to what should be charged in Florida. Look for the DOI to start assessing all volantary carriers and not just property carriers in the next year or so.
Coach, I can only assume that you are not familiar with the way things are done in Florida, but guessing about it or telling us what you THINK it should be like.
The facts are this, assuming we are still talking about personal lines homeowners business and not commercial, Citizens is using an ISO form like most other companies in Florida, they have some endorsements of their own, but they further restrict coverages, such as no theft off premises, electronics limitation, etc. There were 18 new take out companies that were started in Florida last year that are using basically the same forms as Citizens and selling it for less money than Citizens.
I will agree that Citizens rates are not actuarilly sound, but they are NOT giving more coverage than admitted carriers are. All carriers need to raise rates to pay the increase in reinsurance and cat claims.
Citizens lost billions of dollars because of hidious management, poor claims handling, overpaying for a huge number of claims, and also the reported fraud, mismanagement and general tom foolery that went on in the corporation, and oh lets not forget that they insured the highest risk properties on the coast that admitted carriers won\’t touch because of the wind risk. They are more likely to have large losses and they are more expensive properties (this of course being the wind pool), they also insure the older homes that no one else wanted, some of those were more vulnerable due to older roofs, lower pitch roofs and general maintenance issues. If the risk is higher the cost to insure MUST be higher. The deductibles are legislated and can\’t change because mortgage companies won\’t accept high wind deductibles, the underwriting is stricker with Citizens than with any other carrier I have ever dealt with. Basically it is prove it to us or your cancelled, agent inspections, photos, contractor proof of updates, proof of prior, proof of cancellation, depreciated values only on Mobile homes, a lousy rating system, poor service, high rates and nothing to show for it. What ever you do don\’t try to convince anyone that Citizens is good, even they admit they suck. All companies need rate increases and Citizens needs a big one to encourage other carriers to take a second look at Florida instead of packing up and leaving. The DOI CAN\’T assess anything the statue does not allow, so this would require legislation to allow assessments to ALL voluntary markets, it would also create a huge public outcry. Dont look for anything to change until after elections, they all know what needs to be done but dont want to tell voters it will cost more money, Typical politicians, let is get worse before we fix it.