Lawmakers went home doing nothing (again) to derail Citizens exploding population! Their intent is clear–leave the problem with the Citizens board which they’ve already authorized to implement a long list of initiatives that “might”, to varying degrees, reduce Citizens policy count or at least give the impression of doing so.
The question is…of all options at its disposal, what initiatives has the board chosen to implement and what impact, if any, will each have in the face of a growing rate disparity between Citizens and the private market?
Example; does it really make any difference to a price-only buyer that Citizens will no longer offer $300k in liability limits–especially considering that at least one E&S carrier already offers umbrella coverage that drops down to $100K? How much will a price-only buyer care when/if Citizens changes the default for Coverage-C to $25k, or implements a mandatory sinkhole deductible or eliminates coverage for losses due to “dropped objects”?
Will consumers care that Citizens cuts coverage on items they never knew were covered in the first place; especially if Citizens premiums are dramatically lower and they receive a discounted auto policy to boot?
Meanwhile, some things are indisputable. For instance; the Citizens board isn’t even debating initiatives (which the legislature specifically authorized) that could eliminate all new applications, and renewals, from areas where private carriers are willing to write; price disparity be damned!
Here’s what both the law and Citizens plan of operation (Section 8(E)) authorize the board to do:
“…establish, subject to approval by the office, different eligibility requirements and operational procedures for any line or type of coverage for any specified county or area if the board determines that such changes are justified due to the voluntary market being sufficiently stable and competitive in such area or for such line or type of coverage…”
Pretty simple–if the board determines a territory, a county or part of a county, has a private market that is stable and competitive, it can “decertify” that area as eligible for Citizens. It could also select specific coverages (wind, sinkhole, etc) or lines of business (Homeowners, DP’s, etc) to decertify as eligible and could apply it to new applications, renewals or both.
My recollection is this language was placed in the law when Citizens predecessor, the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA), was seeking to implement a decertification program. It’s logical to assume it remains in the law so the FRPCJUA’s successor could do likewise.
With a policy count nearing 1.5 million, the need is indisputable. So…assuming it was serious about depopulation and, assuming there are areas of the state which qualify, what would Citizens board have to do to implement a “decertification” plan?
Seems clear to me:
1) Define what is meant by “stable and competitive” (or request the OIR to do so);
2) Determine which, if any, areas of the state meet that definition, and;
3) Submit a plan of implementation to the OIR.
Fact is, there is no other initiative that Citizens is statutorily authorized to consider that could be more impacting on policy count than this one.
As a minimum, Citizens newest President, Tom Grady, should ask his board why “decertification” has remained so conspicuously off the table?
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