Citizens Property Insurance Corporation

Transcription

1 Citizens Property Insurance Corporation Barry Gilway, President / CEO November 29,

2 AGENDA 1. Market of Last Resort 2. Sinkhole 3. PLA Loss Ratios 4. Strategic Focus 2

3 Market of Last Resort The Goal Returning Citizens to the Insurer of Last Resort What properties would Citizens likely need to cover as the Insurer of Last Resort? Coastal Properties Older Homes Older Mobile Homes A Portion of Policies in Sinkhole Prone Areas Older Condominium Associations 1) Personal Residential exposure includes Coverages A D, except DP1/MDP1, which exclude Coverages B and D. 2) Commercial exposure includes Building, Other Structures, and Business Personal Property. Commercial non residential multi peril policy exposure also includes Business Income. 3

4 2012 Initiatives of Board of Governors Aggressively Transfer Risk to Private Markets Final placements reduced potential assessments after a large storm* by $1.5B Reduce Exposure In total, t 31 separate initiativesiti have been filed by the Board Coverage excluded for pool cages Coverage excluded for personal residential homes $1M+ Coverage excluded for some special class risk items Combined changes reduced 1 in 100 year PML by approximately 5% Increase Depopulation Activity *Large storm is considered a 1 in 50 year PML or greater 4 3

5 2013 Strategic Direction Exposure Reduction Organizational Effectiveness & Cost Management Sinkhole Strategy Adequate Rate for Eposre Exposure Agency Management Comprehensive Communications 5

6 Focus on Depopulation Reinstated Depopulation Committee Conducted d survey tounderstand t dbarriers to Depopulation Held Depopulation Summit Solicited ideas from industry Standard 16% ceding commission eliminated Additional depopulation initiatives are under consideration 6

7 Historical Depopulation Activity 7

8 Legislative Concepts Which Could Help Return Citizens to the Insurer of Last Resort Limit the Glide Path for multiperil policies to no more than a 3 year period Revise Citizens Eligibility Requirements Amend Citizens statutory rating language to require the inclusion of a market expense equalization factor AllowCitizens to pass through the actualcostcost of private reinsurance, when purchased, above the glide path with the inclusion of a not to exceed limit. Consider eliminating Citizens ability to write coverage for commercial nonresidential risks. Consider permitting surplus lines companies, under certain circumstances, to participate in takeouts. 8

9 Sinkhole Developing a Comprehensive Sinkhole Strategy Citizens sinkhole loss experience is not sustainable. ti Since 2007, Citizens has collected $206 million in sinkhole premiums while paying $1.2B in losses and allocated loss adjustment expenses. Citizensnow requires inspections for newbusiness requesting sinkhole coverage, in 16 counties and will implement a sinkhole re underwriting program for existing business in Centered around six key components: coverage, claims handling, fraud prevention, litigation, i i managed repair program and legislation. 9

10 Sinkhole Developing a Comprehensive Sinkhole Strategy Citizens sinkhole loss experience is not sustainable. ti Since 2007, Citizens has collected $206 million in sinkhole premiums while paying $1.2B in losses and allocated loss adjustment expenses. Citizensnow requires inspections for newbusiness requesting sinkhole coverage, in 16 counties and will implement a sinkhole re underwriting program for existing business in Centered around six key components: coverage, claims handling, fraud prevention, litigation, i i managed repair program and legislation. 10

11 Sinkhole Premium and Losses plus Allocated Loss Adjustment Expenses 11

12 PLA Loss Ratios Layer Personal Chart Lines - PLA Account Homeowner (HO-3) Accident Year Loss Ratios (data as of 03/31/2012) 12

13 Personal Lines Account Homeowner (HO-3) (HO-3) Average g Cost Per Per Policy Policy This shows the expected cost, in dollars, per policy. Costs for loss adjustment, risk load, and reinsurance are included. 13

14 HO3 Indicated Rate Change Historical Depopulation Activity Counties with Significant Inadequacies es and Exposure 14

15 HO3 Indicated Rate Change Historical Depopulation Activity Counties with Significant Inadequacies es and Exposure 15

16 Personal Residential Statewide Average Premium 16 Notes: Excludes risks tagged for takeout. Data for wind mitigation credits were not readily available in the 12/31/06 inforce data extracts. Increase in Wind Mitigation credits effective in 2008; Completed with policy renewals 4/1/09.

17 Strategic Focus Public Education Campaign Policyholders in Florida need to know the whole story about Citizens. We are developing a comprehensive education campaign focused on funding and coverage differences. Survey Floridians to see whether or not they know about assessment potential Schedule editorial board visits throughout the state Hold town hall meetings Create educational materials for companies and agents to use when discussing insurance choices Revised assessment acknowledgement form to include an example. 17