“CHOICES”… new site, old problems.

The OIR just announced a  “re-launch” of its homeowners rate comparison website penned CHOICES; for, Consumer Home Owners Insurance Comparison Electronic System. Like its predecessor, “Shop & Compare”, CHOICES displays premiums by county for “selected” companies including Citizens, then; ranks them from lowest to highest. Also, like its predecessor, CHOICES may cause even more shoppers to ask “where are my choices?” Or worse…”Why is Citizens my only choice?”

Before going further I should make crystalline; this isn’t a dig at OIR.  Fact is, the task is insurmountable, in my opinion.  As you’ll read below, you simply can’t construct a comprehensive rate comparison site that’s both cost effective and accurate. And, in fact, the whole idea is just an artifact of Charlie Crist’s lunge for Congress–his 2008 brouhaha with State Farm and, perhaps, to parade Citizens new found competitiveness in front of voters, or maybe discourage future rate hike requests. Who Knows? It was his idea and was never about providing real “CHOICES” to anybody! My 2 cents.

None the less, Commissioner McCarty has done the best he can.  He’s showing maximum wind credits, and providing context with numerous disclaimers including that it’s only “…to encourage Floridians to shop for a better rate” and it merely “… illustrates… the benefits of shopping for insurance.”   My unfortunate point is that, for regrettably far too many territories, he could’ve just said… “To save time shopping…call your agent for a Citizens quote.”

Indeed, this highlights one of the problems. Consumers fly right by the disclaimers demanding explanations from their agents; like, why does “CHOICES show one rate but you quoted another?” Agents explain over and over that carrier rates are tied to zip codes and the site is county based and the site doesn’t reflect proper credits, debits, coverage options  and much, much, more.

And… much is left unclear. Is there contents Replacement cost?  How about ordinance and law?  Both are valuable, especially when there’s a claim. What about  sinkhole coverage to those in sinkhole alley?  And, there are numerous undescribed rating and coverage variables: 10% Coverage B, no Coverage B, proof of prior insurance, no Coverage C, and more; so that the only person who can explain it all is an agent, but even then…not to hundreds of confused consumers.

And worst of all…consumers seeking answers from agents with no markets, i.e. State Farm agents, will likely hear the same answers– Citizens is cheaper, its coverage is just as good,  and why buy from a “thinly capitalized” carrier when you’ve got guaranteed solvency from Citizens?

This is the problem with CHOICES.  It makes it look like consumes should choose based only on the lowest price and the lowest price is often the state insurer…subsidized by assessments on those who choose the private market’s higher price!

Here, unedited, is what one agent told me regarding the sites first quote option: a $150,000, 1990,  masonry home, with deductibles of  2% for hurricanes and $500 AOP.

“Not many carriers are writing a 1990 home much less at a value of $150,000.  I can think of only Citizens at this time.  We represent some of the top ten carriers listed … and 4 of the 10, will not write this risk based on the aforementioned reasons.  The others we do not represent might do so but only on a takeout basis.  I have attached my quotes for this example and for the Max Wind Mit range, I have $1,090- $1,463.  For the No Wind Mit Credits, I have $1,824-$2,240.  Each depending on the endorsements chosen,  so I am not sure where they get their range from.  Add 10% if no proof of prior insurance coverage.  Also, notice on the quotes with the Wind Mits applied how they vary, no changes were made in the credits and they only vary due to the endorsements chosen.  Depending on the endorsements, Citizens should probably be more towards the top of the top ten list.  So, is the website attempting to show the public that Citizens is not as competitive as stated when in reality it is?”

And, to get a good sense of why I said OIR’s task is “insurmountable” check out what the same agent said about the second quote option:  A $300,000, 2005, masonry home, with deductibles of 2% for hurricanes and $500 AOP, “limited” wind mitigation features, but not a hip roof.

” An attractive house to most carriers.  Same arguments as closed Zip Codes, X-Wind not in the wind pool, and what endorsements are included.  Not sure what “minimum premium discounts” means.  I am not aware of a carrier at this value of house that will offer a $500 AOP deductible.   Also, again the Wind Mit Credits vary as the endorsements change, but notice the Tower Hill quote; the Wind Mit credits do not change as endorsements change. A note on the Tower Hill quote, the range is from $1,084 to $1,995.  Also, I only used the year built for the Tower Hill quote and NO other Wind Mit features were manually entered, but more could be applicable. 

Currently Tower Hill Prime is listed at $1,952 on the CHOICES website.  Take a hard look at the $1,995 quote with Tower Hill, it is two pages and offers one heck of a policy.  Why is the CHOICES website quoting them at the $1,952 when that is inaccurate if comparing “apples to apples” to Citizens and maybe Tower Hill Prime should be #1, since what could be a comparable quote is $1,492.  So, how many premiums are that inaccurate? 

Here’s what another agent from a completely different area of the state said.  

Simply put, the majority of the carriers listed are not writing new business in most of the areas that they are showing competitive (in the top 10). As I check Dade County today, Citizens is ranking 16th. But the 15 carriers that show lower rates than Citizens are either not writing with wind or have a very limit capacity or agent allocation. In Lee County Citizens is ranking 6th and only one of the carriers with lower rates is writing at all. As I go up the west coast it maintains the same pattern, that Citizens is cheaper out of the available carriers. The pan handle makes me chuckle. Citizens ranks in the high 20’s in the areas that have had more frequent storm hits.

The rates simply are not correct in most of these cases. I get different rates for the carriers (including Citizens) in my area than what is showing on this site, so I am not sure what other factors may be involved. Hernando and Pasco county show Citizens very high on rates, but good luck finding another carrier to write in these areas due to phantom sinkholes.

The simply logical answer is this, Citizens is not the largest carrier with the most policies because they are a good carrier or easy to do business with, they are CHEAP.

Congratulations on having read this far and my apologies for causing you to do so.

However…it’s important  for policymakers, consumer groups and the media to understand the limited benefit of the CHOICES site, the “insurmountable” task OIR faced in putting it together and the potential harm it could cause with respect to Citizens population.

Upon request I can send PDF’s of the two quote scenario’s described above comparing Citizens and Tower Hill.  If you are an agent with other quotes comparing Citizens and the private market, send ’em in.  I’ll pass it on to those who need to know.

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