After weeks of workshops, the Senate Banking & Insurance Committee has agreed to an  outline of Citizens Property Insurance Corporation reforms for 2014, including restrictions to reduce its residential exposure. The committee reached consensus on issues to pursue during the session beginning March 4 at a workshop February 18.

Banking & Insurance Chairman David Simmons, R-Altamonte Springs, said a proposed committee bill on Citizens will be filed soon. The committee has been working in pre-session meetings like all other legislative panels.

Here are the issues to be addressed at this point:


1. Citizens shall stop writing NEW multi-peril Commercial-Residential policies in the Costal Account and instead offer All Other Peril (AOP) policies along with Wind Only.

  • Addresses an inequity in rates that results in commercial-residential buildings covered by a multi-peril policy paying less than the same building insured by Citizens with a wind-only policy and an AOP policy at current rates.
  • Citizens' AOP coverage is comparable to the private market, allowing for more takeout opportunities.
  • This proposal will not affect current Citizens commercial-residential multi-peril policyholders, who are allowed to continue renewing their multi-peril policies.

2.  Apply a 15 percent limit on rate increases to all commercial non-residential policies.

  • A 15 percent glide-path on rate increases for commercial non-residential policies should, based on current projections, result in all of Citizens commercial nonresidential policies achieving close to actuarial soundness after 4 years.
  • There are 21,467 policies insuring 30,480 buildings with a total exposure of $14.27 billion and a 1-100 PML of $1.175 billion.
  • An average commercial non-residential wind-only policy is 24.3 percent below actuarially sound. The average commercial non-residential multi-peril policy in the Coastal account is 73.5 percent below actuarially sound.
  • An average commercial non-residential multi-peril policy in the Commercial Lines Account is near actuarial soundness.

3.  Allow Citizens 18 months to develop and establish a Citizens Clearinghouse for commercial residential policies.

  • A commercial clearinghouse would help enforce the 15 percent eligibility requirement for new Citizens applicants, and encourage private-market insurers to offer coverage to existing Citizens policyholders.
  • Private market insurers are actively writing commercial residential policies that insure newer buildings with a replacement cost greater than $10 million.
  • Citizens estimates 5-15 percent of its current commercial residential policies would be attractive to the private market.

4. Require Citizens to annually report their bonding capacity, claims paying capacity and their current cash balance as of December 31 of each year.

Additional issues may be considered later.

5. Requiring Citizens to offer a minimum deductible option for non-hurricane losses if $1,000 instead of the current $500.

The committee decided not to pursue for the moment these issues:

Shifting 5 percent of the Citizens policyholder surcharge from the Personal Lines Account to the Coastal Account;  and lowering the current statutory fee cap for public adjusters on non-disaster related claims from 20 percent to 15 percent.

Information from Lisa Miller & Associates was used in this report.