The Market Accountability Advisory Committee of Citizens Property Insurance Corp. heard a presentation in Naples today from Citizens' Senior Director of Insurance Operations Eric Ordway regarding the carrier’s revamped mitigation inspection program. The validity of the inspections came under fire last year after reports surfaced that some policyholders were receiving undeserved discounts on their homeowners‘ premiums. That led to a revamping of the program.
In November, Citizens distributed an agent bulletin stating, in part, “Citizens will broaden the Inspection and Outreach Program with three inspection management firms overseeing the inspection process. In addition to wind mitigation inspections, the program also will be expanded to include other inspection types such as sinkhole, four-point, roof certification, general condition, and mobile home tie-down.”
The new program began on April 7, as scheduled, and Ordway’s presentation today included information current as of May 31.
The committee learned that of the 73,969 inspection assignments made:
- 32,628 were fully processed by underwriting
- 32,051 were completed
- 577 (1.7 percent) were unable to be scheduled, and those credits were removed.
The resulting impact of the inspection assignments on rates and premium was:
- 68 percent of the policies had a change to premium
- 60 percent saw increases (removal of credits) totaling $16.26 million
- 8 percent saw decreases (granting of new credits) totaling $1.04 million.
Factoring in the increases and decreases, the program saw a net increase of $15.53 million in estimated premium at renewal. The average dollar change to premium was $476.13, or 17.9 percent.
Ordway’s report notes that, “Based on these results and the estimated volumes that Citizens believes we can operationally process, the 2-year net return is estimated at $72 million.”
The analysis also showed that of the 17,365 total policies with completed inspections that renewed as of May 31, 85 percent were renewed and 15 percent were no longer in force. Citizens writes both commercial and personal lines coverage; 45 percent of commercial lines and 14 percent of personal lines policies were no longer in force as of May 31. These total non-renewals resulted in a reduction of $3 billion in indemnity exposure, of which $2 billion was commercial lines and $1 billion was personal lines.
Citizens has been drawing heat for the non-renewals, with some attributing it to the change in the mitigation program procedures and a backhanded effort at depopulation. At 1.38 million policyholders, the state-created carrier is by far the largest homeowners’ property insurer in the state.
Citing the negative media, committee member Skip Boylan asked Ordway if he could identify the reasons for the non-renewals. Ordway said his detail did not reveal cause-and-effect for individual non-renewals, but added that, “The inspection program is not designed to depopulate, but rather to underwrite properly.” That drew a heartfelt “thank you, that’s just what I needed to hear,” from Boylan.
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