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Citizens delays expansion of clearinghouse

 

TALLAHASSEE, Fla. – June 26, 2014 – Citizens Property Insurance Corp., which moved forward Wednesday in reducing rates for most customers, has delayed putting existing policies into a clearinghouse that was designed to shift property owners into the hands of private companies.

Citizens President and CEO Barry Gilway announced Wednesday that policies up for renewal with the state-backed company won't be run through the electronic clearinghouse until around Nov. 1, rather than in August or September, as most recently planned.

"There were a few areas we felt needed to be improved," Gilway told the company's Board of Governors during a meeting in Winter Park. "But very clearly we'll be ready by the end of the year."

The delay comes at the request of contractor Bolt Solutions Inc., which received a five-year contract last year to design the software for the clearinghouse. Bolt's contract includes an option for an additional five years, which could bring the payment total to $44.9 million over the decade. Citizens spokesman Michael Peltier said the New York-based Bolt requested the extra time to ensure the functions of the clearinghouse work with the participating private carriers.

Peltier says the clearinghouse delay "should not be a big issue, in that renewals in that period are relatively light because we are in the middle of hurricane season."

Since the clearinghouse went live in January, nearly 3,300 first-time policies submitted to Citizens have been placed with private vendors, Gilway said.

In the same time period, the number of vendors eligible to have rates compared to Citizens has grown from four to 11. Gilway expects 20 by the time renewal policies enter the system, when the clearinghouse is expected to have a bigger impact.

Gilway has projected that Citizens would have around 925,000 policies when the 2014 hurricane season started June 1 and 725,000 policies by the end of 2015. As of May 31, Citizens had 928,546 policies. Most are located in six counties: Miami-Dade, Pinellas, Broward, Hillsborough, Palm Beach and Pasco.

The overall number of policies is down from 1.26 million on May 31, 2013. A year earlier, the state-backed insurer topped 1.43 million policies.

For existing Citizens customers, renewals will have to go to the private market if comparable coverage is found at or below the state-backed insurer's rates. Peltier said policyholders should expect a notice in September regarding the clearinghouse.

The announcement comes as the Citizens board approved a plan that is expected to reduce base rates for about 70 percent of policyholders, with the other 30 percent having their base rates go up. The Office of Insurance Regulation must still approve the 2015 rates.

As part of the proposed rate changes, homeowner policies are projected to decrease on average 3.2 percent, while mobile-home rates will go down 3.9 percent on average.

Overall, personal and commercial rates will decrease by 1 percent.

There is no change projected in sinkhole rates outside Hernando County, where the rates are projected to go up 10 percent.

Citizens pointed to a number of factors for the changes, from "increasingly reasonable rates" for reinsurance to a reduction in the number of policies under Citizens that has decreased the overall exposure for the agency.

The reduced rates vary across the state. And a drop in rates doesn't preclude the overall cost of a customer's premium – the total amount that a policyholder pays for coverage – from going up.

Source: News Service of Florida, Jim Turner

 

Related Topics: Property insurance