Citizens Property Insurance Corp. provides a safety net for the ever-increasing number of Florida’s uninsurable property owners who can not find insurance, Bob Ricker, Citizens president, told members of the Florida Suncoast Chapter, Chartered Property Casualty Underwriters Society, at the group’s September meeting in Tampa, Fla.
Ricker said that if a homeowner or business owner wants Citizens, Florida’s insurer of last resort, to issue a policy, the customer must sign an affidavit certifying they were unable to find traditional insurance elsewhere.
“As long as the property isn’t on fire, we have to accept the policy,” Ricker quipped.
Ricker explained that legislators don’t grasp the magnitude of the losses, not even when a hurricane like Dennis hits a two-block area in Walton County and destroys $400,000 to $700,000 homes, and all the policyholders are with his company—he said that in that case Citizens’ liability was more than $60 million.
Ricker described why and how the Joint Underwriting Association Windpool was formed soon after Hurricane Andrew struck South Florida. JUA was established as a tax exempt entity that added $80 million to surplus every year. The JUA was dissolved in the late 1990s and Citizens took over for it.
“We were really in trouble in 2003 when the board members said out mandate is to put ourselves out of business,” Ricker said. “That is a dangerous, deadly public policy to live by.”
Today, with wind policies being harder and harder to find and companies dropping policyholders in Florida, Ricker said their goals have changed. “We are here to stay as an important safety valve,” he said. “We are now adding staff and trying to absorb the needs of the market.”
When Citizens got started, it had 1,012 policies in force in Tampa Bay and St. Petersburg. Ricker said that today, sinkholes have become a major concern and the company has more than 150,000 policies in the same area.
Ricker said mobile home policies are a major marked, indicating Citizens wrote 200 to 400 policies in 2004.
“Right now we are writing 4,000 to 5,000 mobile home policies per month,” Ricker said. “That’s because carriers are unwilling to write policies for mobile homes and everyone is getting out of the business.”
Ricker described Citizens as being a schizophrenic organization. “We are the largest property insurer in Florida, yet our mandate is not to grow!”
He said that while State Farm writes more policies, Citizens has more exposure.
Ricker described Citizens experiences last year with four hurricanes a case study in the perils of outsourcing. He said there were 11 firms handling 1.7 million claims filed and settled with Citizens policyholders.
“It all boils down to not having enough qualified adjusters,” Ricker said. “If you were breathing, you were an adjuster. Then down the road, when complaints started coming in we led in the complaint category, simply because we had to use less qualified claims adjusters.”
Ricker said he learned a lot from the 2004 hurricane season and hopes to establish an “adjust your own” program under which each of its agencies would do their own adjusting.
He explained that last year about 50 to 100 adjusters worked to settle Citizens claims, but at the same time worked for many firms. From now on Ricker will require adjusters to work exclusively for Citizens.
Citizens had more than 5,000 claims from Hurricane Dennis in the Panhandle, and many of the claims were from customers that had not fixed partial damages from 2004. Ricker said they were able to close out 80 percent of those claims within the first 60 days.
Dennis missed southwest Florida, and there were no claims there; but in Dade County they had more than 500 claims, which according to Ricker are still being settled using public adjusters. He said those claims will be the last ones closed.
Ricker said he expects Citizens to have 25,000 claims from Hurricane Katrina’s pass through South Florida. He said that due to the new state requirement of seasonal claims he anticipates a lot of paperwork from the 300,000 policyholders, but suspects due to Katrina’s low severity, while a lot of people will be more claims-conscious, most of the claims made will be below the deductible.
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