Meeting Packet — Commerce Committee, The Florida House of Representatives (January 14, 2021)
Summary
Meeting packet for the Commerce Committee of The Florida House of Representatives, Thursday, January 14, 2021, 9:00 AM – 10:00 AM, Webster Hall (212 Knott), with Blaise Ingoglia as Chair. The agenda lists Overview of Property Insurance Cost Drivers in Florida, with topics on cost drivers in recent private insurer rate filings, in Citizens Property Insurance rates and as reported by insurance agents. The packet includes slides by Barry Gilway, President/CEO and Executive Director of Citizens Property Insurance Corporation, for the House Commerce Committee, including a History of Policies In-Force chart with yearly figures and tables by close year of severity and loss figures.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Meeting Packet — Commerce Committee, The Florida House of Representatives (January 14, 2021).”
Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2021-01-14-3098-commerce-committee-meeting-packets-fn-com-1-14-21-fe8415f6fd/
, SHA-256 464401d75dc3f606860f6b4cd1fdcfb86abb8124b04ff53bb719966a3bfceea6.Full text
Commerce Committee
Thursday, January 14, 2021
9:00 AM – 10:00 AM
Webster Hall (212 Knott)
Meeting Packet
Chris Sprowls Blaise Ingoglia
Speaker Chair
The Florida House of Representatives
Commerce Committee
Chris Sprowls Blaise Ingoglia
Speaker Chair
Meeting Agenda
Thursday, January14, 2021
9:00 AM – 10:00 AM
Webster Hall (212 Knott)
I. Call to Order
II. Roll Call
III. Welcome and Opening Remarks
IV. Overview of Property Insurance Cost Drivers in Florida:
• Cost Drivers in Recent Private Insurer Rate Filings
• Cost Drivers in Citizens Property Insurance Rates
• Cost Drivers as Reported by Insurance Agents
V. Closing Remarks
VI. Adjournment
303 House Office Building, 402 South Monroe Street, Tallahassee, FL 32399-1300
(850) 717-4870
Citizens Property Insurance Corporation
Barry Gilway, President/CEO and Executive Director
House Commerce Committee
January 14, 2021
~ ITIZ"~~
PftOPERTY INSURAN
Risk and Assessment Reductions
Notes:
1. Storm Risk is as measured by 1-in-100 year probable maximum loss (PML) plus estimated loss adjustment expenses using the Florida Hurricane VALUES ARE NOT DRAWN TO
Catastrophe Fund (FHCF) account allocation where PLA and CLA are combined. PLA/CLA combined PMLs are added to the Coastal PMLs to be SCALE
consistent for surplus distribution. In general, the PMLs presented are as projected at the beginning of storm season; with the exception of 2017 which is
as of August 31, 2017.
2. Surplus and Assessments are as projected at beginning of storm season. Not all PLA/CLA surplus is needed to fund storm risk in 2014. In 2015 - 2020,
not all surplus in PLA/CLA and the Coastal Account is needed to fund storm risk. Remaining surplus is available to fund a second event.
3. Florida Hurricane Catastrophe Fund (FHCF) is as projected at beginning of storm season; with the exception of 2017 and 2018 which are Citizens' initial
data submission to the FHCF.
4. Depopulation PMLs are not included in storm risk totals and are presented as year end totals. PMLs from 2011-2014 use a weighted average of 1/3
Standard Sea Surface Temperature (SSST) and 2/3 Warm Sea Surface Temperature (WSST). 2015 - 2019 PMLs reflect only SSST event catalog. 2020
Depopulation PMLs are not yet available for inclusion in this exhibit.
History of Policies In-Force
1,200,000
Liquidation of 3 FL domestic
carriers and partial withdrawal
Liquidation of Poe from la rge carrier High volume of
Personal Lines Account
Financial Group depopulr on a ctivity
1,000,000
Coastal Account
\
D 800,000
C:
:,
0
• Commercial Lines Account
I High volume of
depopulafon activity
u
High volume of
.~ 600,000 depopulation activity
0
Q. I
400,000 ,..
200,000
0
1996 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201 1 2012 2013 2014 2015 2016 2017 2018 2019 Nov 2020
PeBonal Lines Commercial PeBonal Lines Commercial
Coastal Account Total Coastal Account Total
Account Lines Account Account Lines Account
1996 936,837 465,739 0 1,402,576 2011 1,003,856 460,161 8,374 1,472,391
2001 102,792 414,123 198 517,113 2012 860,502 446,163 8,146 1,314,811
2002 164,274 397,676 2,157 564,107 2013 627,391 386,688 7,615 1,021,694
2003 383,283 433,077 3,863 820,223 2014 ,- 373,6 17 282,863 4,681 661,161
2004 416,521 453,765 3,650 873,936 2016 ,~ 299,902 200,842 3,121 503,865
2006 407,387 399,417 3,145 809,949 2016 293,118 160,834 1,891 455,843
2006C2J 743,592 403,509 8,347 1,298,428 2017 300,507 138,591 1,308 440,406
2007 845,857 446,184 12,908 1,304,949 2018 304,507 121,971 91 9 427,397
2008 629,467 445,200 9,570 1,084,237 2019 322,792 118,673 738 442,203
2009 609,652 41 0,436 9,126 1,029,214 Nov 2020 398,462 133,603 723 532,788
2010 829,406 445,679 8,453 1,283,538
Notes:
1) Excludes takeout policies
2) In 2006, there were 142,980 policies assumed from the Poe Financial Group included in Citizens' total policy count. As these policies remained on the Poe system at the end of that calendar ~ ITIZENS
year, they are not allocated at the account level.
Policy Count Trend
Citizens' Policy Count Trend
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2013 2014 2015 2016 2017 2018 2019 2020 2021
Proje cted Proj ected
Citizens' Policy Count 1,021 ,694 661 ,161 503,865 455,843 440,406 427,397 442,203 532,135 630,257
I
Page 4
~ ITIZENS
Depopulation Policy Count Trend
Depopulation Policy Count Trend
450,000
400,000
350 ,000
300 ,000
250,000
200 ,000
150 ,000
100 ,000
50,000
2013 2014 2015 201 6 2017 2018 2019 2020 (Oct.)
I Depopulation Policy Count 365,833 416,453 272,596 88,000 34,008 17,902 10,084 4,653
Page 5
~ ITIZENS
Clearinghouse Submission and Outcome (Jan – Sept 2020)
Submission Results by Carrier (Volume)
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
Carrier A Carrier B Carrier C Carrier D Carrier E Carrier F Carrier G Carrier H Carrier I Carrier J Carrier K
Successful Offers No Offers Due to Underwriting Issues No Offers Due to Geographical Location Blocked Due to Agent Appointment (ONLY)
Page 6
Financial Trends for Florida Domestic Insurers
Financial Trends for Florida Domestics
($000's Omitted)
$1 ,000,000
$750,000 • Net Income/Loss
• Net Underwriting Gain/Loss
11 II II --
$500,000
$250,000
$0
($250,000)
($500,000)
($750,000)
($1,000,000)
•1 I
($1,250,000)
($1,500,000)
2013 2014 2015 2016 2017 2018 2019 2020YTD
Net Income/Loss $347,337 $447,159 $462,668 ($1 3,772) ($142,445) ($150,696) ($372,269) ($727,361)
Net Underwriting Gain/Loss $416,01 0 $577,643 $532,630 ($194,112) ($426,472) ($414,266) ($725,099) ($1,260,208)
Page 7
~ ITIZENS
Citizens Homeowners Rates Compared to Industry
91% of Citizens’ HO‐3
policies are charged
LESS than the
average
competitor’s rate.
Page 8
Citizens Rates
Prior to 2007, rates were required to be non-competitive with the private market.
Rates for personal and commercial residential policies were frozen by statute from January 1,
2007 through December 31, 2009.
Rates are now required to be actuarily sound, but not to exceed 10% increase annually per
policy, excluding the Florida Hurricane Catastrophe Fund Rapid Cash Build-Up Factor.
Citizens Board makes annual recommended rate changes to the Office of Insurance Regulation
(OIR) and they establish rates for Citizens.
Citizens is not required to purchase reinsurance at the same level as the private market is
required. Citizens provision for reinsurance is much lower than the private market, thus leading
to a lower rate need for Citizens. If Citizens needed the same level of reinsurance as a typical
private insurer then its Homeowners multiperil and wind-only indication would nearly triple.
Page 9
Citizens’ Premium Drivers for Homeowners and Homeowners
Wind-Only
Projected HO3/HW2 Cost Categories for 2021
Projected Dollar Amount % of Total
Fund Future Hurricanes $208,989,500 31.7%
Cost of Litigated Water Claims $133,918,208 20.3%
Cost of Non-Litigated Water Claims $60,251,336 9.1%
Cost of Sinkhole Claims $5,547,127 0.8%
Cost of All Other Perils (Fire, Liability, etc) $33,191,728 5.0%
Commission to Agents $47,550,602 7.2%
Administration Costs $102,081,294 15.5%
Premium Taxes $11,245,075 1.7%
Net Cost of Reinsurance (including FHCF BU) $57,128,463 8.7%
Total Needed HO3/HW2 Premium $659,903,332 100.0%
Projected premium need for each cost driver of HO3/HW2 policy forms
for 2021
Page 10
Carrier Litigation Experience 2013 – 2020
2019 vs 2020 Notes:
1. Citizens AOB Litigation decreased by 48% (3,886 to 2,007)
2. Citizens Overall Litigation decreased by 20% (9,877 to 7,853)
3. All Other Carriers AOB Litigation decreased by 37% (24,694 to 15,676)
4. All Other Carriers Overall Litigation increased by less than 1% (84,087 to 85,007)
Data source – DFS LSOP 2013 – 2020
Page 11
Citizens Litigated vs Non-Litigated Water Claim Costs
HO3* HO3* HO3*
Closed Water Claims as of Closed Water Claims as of Closed Water Claims as of
3/31/2020 3/31/2020 3/31/2020
Non - Litigated Total - Litigated and Non-
Litigated
Claims Litigated
Claims
Loss ALAE** Loss ALAE** Loss ALAE**
Close Year Severity Severity Loss/ALAE Close Year Severity Severity Loss/ALAE Close Year Severity Severity Loss/ALAE
2012 $18,904 $4,941 $23,845 2012 $7,016 $860 $7,876 2012 $7,670 $1,084 $8,754
2013 $20,174 $6,787 $26,961 2013 $8,391 $1,032 $9,423 2013 $10,270 $1,950 $12,220
2014 $22,609 $6,348 $28,956 2014 $8,684 $1,087 $9,771 2014 $14,075 $3,123 $17,198
2015 $25,892 $6,182 $32,073 2015 $8,705 $928 $9,633 2015 $16,538 $3,322 $19,860
2016 $29,157 $7,034 $36,191 2016 $5,143 $866 $6,009 2016 $17,429 $4,021 $21,450
2017 $27,547 $9,439 $36,986 2017 $6,167 $1,245 $7,412 2017 $14,024 $4,256 $18,280
2018 $29,089 $12,255 $41,343 2018 $7,504 $1,640 $9,144 2018 $17,942 $6,773 $24,715
2019 $31,653 $14,338 $45,990 2019 $10,169 $1,933 $12,102 2019 $17,872 $6,381 $24,254
2020 $33,591 $15,223 $48,814 2020 $8,281 $1,816 $10,097 2020 $15,540 $5,662 $21,202
Grand Total $26,281 $8,687 $34,969 Grand Total $7,833 $1,116 $8,950 Grand Total $13,029 $3,248 $16,277
*Homeowners
**Allocated Loss Adjustment Expense
Page 12
File and source
- File
- 2021-01-14_3098_commerce-committee_meeting-packets_fn-com-1-14-21.pdf
- Size
- 994,649 bytes
- SHA-256
- 464401d75dc3f606860f6b4cd1fdcfb86abb8124b04ff53bb719966a3bfceea6
- Original
- No public link identified.