PIA of Fla. Clarifies Status of Citizens Property Insurance’s Commissions

The Citizens Property Insurance Corp. Board of Governors met in May and agreed to change the amount of commissions it paid to agents, but Professional Insurance Agents of Florida members complained to the association that the new commissions were not being paid.

Surprisingly, it was not easy finding out what happened,” Mark O’Connell, PIA of Florida’s CEO reported in an update to members. “What became obvious after several phone calls to Citizens was that the commission change had not been implemented and Citizens had made no effort to communicate this in any way.”

O’Connell said that in early October Susanne Murphy from Citizens finally explained to us why the commission corrections had not been implemented. O’Connell asked her to issue a formal statement so that agents would know what was happening and what to expect.

“It is still puzzling to us how this change could have happened without any prior notice from Citizens,” O’Connell said in the PIAFL update. “It was clear to all parties that this issue was critically important to the agents involved. We didn’t create, nor did we force any implementation schedule for this change. The original schedule was provided by Citizens. It appears that this schedule was invalidated several months ago, but has been inexplicably kept a secret.

“For many of you the revenues you receive from Citizens accounts for the bulk of your agency income. I can assure you that we are extremely sensitive to that. There has not been one second since this issue first surfaced that we even considered doing anything that would put your livelihood in jeopardy. Despite self-serving accusations from one group that PIA “acquiesced” to the commission freeze, I can assure you that it simply never happened.

“They continue to say it, and it’s no more accurate today than it was the day they fabricated it. If agents are going to have ‘One Voice,’ it ought to be an honest one.”

Murphy provided PIA of Florida with the following information:

“We wanted to share with all of the agent associations our timeline for implementing the commission changes adopted by the board earlier this year.

“As you will recall, at its meeting in May 2005, the Citizens Board of Governors adopted commission changes for both personal and commercial lines business. The effect of the changes is to establish a 10 percent commission rate for personal residential business, both wind-only and multi-peril, and a 12 percent commission rate for commercial business, both wind only and commercial multi-peril. For all lines of business, there are still some portions of the premium that are non-commissionable, so that the effective commission rate is not exactly 10 percent and 12 percent. But when these changes are implemented, commissions will be payable on the total commissionable premium, which will include any rate increases.

Citizens filed its revised commission schedules with the Florida Office of Insurance Regulation in May. OIR requested that the filing be withdrawn and resubmitted with the next Citizens base rate filing. We are asking the board, at its November 17, 2005 meeting, to approve the implementation of a Top 20 base rate filing for our personal residential business (wind-only and multi-peril). That filing will be implemented and notice provided to OIR immediately following approval by the board. When that filing is made with OIR, it will include our revised commission schedule for our personal residential and commercial lines of business.

Citizens released the following revised commission rates: New and renewal personal residential and wind-only accounts will be implemented March 1, 2006, this means that on Jan. 1, 2006, renewals effective March 1 and later will be generated at the new premium and commission rates. New and renewal commercial multi-peril, commercial and commercial residential wind only accounts will be implemented March 1, 2006, this means that on Jan. 1, 2006, renewals effective March 1 will be generated at the new commission rate. New and renewal personal residential multi-peril will be implemented April 1, 2006, this means that on Feb. 1, 2006, renewals effective April 1, 2006 and later will be generated at the new premium and commission rates.

The commission rates, approved May 3, 2005, were: Personal lines multi-peril, new commission, 7 percent, old commission was 5.8 percent; personal lines, wind-only, new commission 10 percent, old commission was 8.9 percent; commercial residential, new commission 12 percent, old commission was 10 percent; and commercial, wind-only, new commission is 12 percent, old commission was 10 percent.