Florida Regulator McCarty Offers Reform Map to Smaller Citizens Property Insurance

January 25, 2013Email ThisPrintNewslettersTweetArticle4 Comments

Florida’s insurance commissioner has proposed a set of reforms designed to return the state-back property insurer to being a residual market, while at the same time offering the private insurance market incentives to take on more property risks.

Insurance Commissioner Kevin McCarty unveiled his proposals as lawmakers, regulators, business groups and other stakeholders begin a process that they hope will shrink the size of Citizens Property Insurance Corp. with its 1.3 million customers.

At a recent Florida Senate and Banking Insurance Committee meeting, Chair David Simmons, R-Altamonte Springs, said he believes it is time to seriously change the dynamics in the market while at the same time acknowledging that the path ahead will not be easy.

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Florida’s Citizens, Regulators Agree to Restrict Eligibility for New HO-8 Policies

January 4, 2013Email ThisPrintNewslettersTweetArticleComments

Florida’s state-backed property insurer and state regulators have cleared the path for the insurer to begin issuing a new HO-8 policy by limiting it to low-value older homes, addressing concerns that the policies low rates could lead to a potential influx of policies into the insurer.

Citizens Property Insurance Corp. was required by law to start making the HO-8 policy available by January. As initially envisioned, the policy was intended to make Citizens less competitive with the private market by offering a more austere policy, although at a significant lower price.

An HO-8 policy typically provides less coverage than the popular HO-3 policy and pays actual cash value as opposed to replacement cost for damages. However, the HO-8 policy for Citizens became bogged down in controversy when the insurer and regulators could not agree on coverage details, underwriting criteria and rates.

Topping the list of concerns was that the policy would be offered to consumers who qualified for a standard HO-3 all-peril policy at rates roughly 20 percent cheaper, even though regulators required Citizens to offer full replacement coverage to make the policy acceptable to mortgage lenders.

Citizens Board Member Greg Rokeh said at a meeting in December that the policy would prove a draw, not a disincentive for consumers to choose Citizens.

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Louisiana Lawmakers Lower Costs for Citizens Customers Along Coast

June 7, 2012Email ThisPrintNewslettersTweetArticleComments

A last-minute provision added to legislation headed to the governor’s desk will give some relief to coastal property owners who get insurance through Louisiana’s state-run insurer of last resort.

The compromise language was devised by lawmakers seeking to lessen the blow of hefty rate increases on wind and hail policies for homeowners who are customers of the Louisiana Citizens Property Insurance Corp.

As sent to Gov. Bobby Jindal, the bill would lower insurance costs by 10 percent for Citizens customers in 12 parishes across south Louisiana.

Citizens is supposed to charge rates that are 10 percent higher than the private insurers in an area. The proposal backed by lawmakers on the final day of their just-ended regular session would scrap that requirement until August 2015 for the coastal parishes.

 

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Email ThisPrintNewslettersTweetCategories: Texas / South Central NewsTopics: legislation, louisiana Citizens Property Insurance Corp., RatesHave a hot lead? Email us at newsdesk

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Louisiana Citizens Personal Lines Rates Changes Effective June 1

May 10, 2012Email ThisPrintNewslettersTweetArticleComments

The Louisiana Department of Insurance has approved changes to the property insurance rate levels for personal lines policies written by Louisiana Citizens Property Insurance Corp. The approved rate changes are applicable to all new business and renewal policies effective June 1, 2012.

The approved revisions to the rates result in an overall increase of 10.8 percent for the FAIR Plan and 7.2 percent for the Coastal Plan policies.

The increase on a statewide basis is 10.5 percent.

An outline of the the rate level change by line of business and territory is available on the Louisiana Citizens website, http://www.lacitizens.com/RateLevelChanges.aspx.

The new rates were available for quoting April 2, 2012.

All policies effective on or after June 1, 2012 will be priced using the new rates, irrespective of when the quote was generated.

 

Email ThisPrintNewslettersTweetCategories: Texas / South Central NewsTopics: louisiana Citizens Property Insurance Corp., Personal Lines, RatesHave a hot lead? Email us at newsdesk

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Florida Citizens Eyes Cat Bonds for Hurricane Protection

By Reuters

April 27, 2012 • Reprints

LONDON – The state-backed Florida Citizens Property Insurance Corporation is set to raise $750 million of hurricane protection through a sale of catastrophe bonds, more than three times the original target, market sources said.

The bond, issued through Forida Citizens’ Everglades Re vehicle, had been expected to raise just $200 million. The bond is due to close on Monday, and ranks as the biggest ever placed in a single tranche, they said.

The dramatic increase in the bond’s size reflects strong investor demand for the notes, which may have made it cheaper for Florida Citizens to buy cover through the cat bond market than through traditional reinsurance.

“This programme runs side by side with the reinsurance placement that they were planning, and they got a cost advantage,” said one market participant.

Investor demand for catastrophe bonds is on the increase, driven by their higher yields relative to regular stocks and bonds, as well as their relative immunity to economic downturns.

Interest in the instruments also reflects pent-up demand after a spate of costly natural catastrophes choked off new issuance for much of last year.

Strong investor appetite for cat bonds fuelled a record $2 billion of issuance during the first quarter of 2012, and the Florida Citizens issue looks set to bring the total for the year to date close to $3 billion, sources said.

Catastrophe bonds allow insurers and reinsurers to pass on some of the natural disaster risk on their books to capital market investors, freeing up capital for alternative lines of business.

Buyers of cat bonds benefit from returns that are largely insulated from wider economic or financial market developments, but risk losing some or all of their money if a catastrophe occurs. (Reporting by Myles Neligan; editing by Ron Askew)

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