The Market Accountability Advisory Committee of Citizens Property InsuranceCorp. heard a presentation in Naples today from Citizens'Senior Director of Insurance Operations Eric Ordway regarding thecarrier’s revamped mitigation inspection program. The validity ofthe inspections came under fire last year after reports surfacedthat some policyholders were receiving undeserved discounts ontheir homeowners‘ premiums. That led to a revamping of theprogram.

In November, Citizens distributed an agent bulletin stating, inpart, “Citizens will broaden the Inspection and Outreach Programwith three inspection management firms overseeing the inspectionprocess. In addition to wind mitigation inspections, the programalso will be expanded to include other inspection types such assinkhole, four-point, roof certification, general condition, andmobile home tie-down.”

The new program began on April 7, as scheduled, and Ordway’spresentation today included information current as of May 31.

The committee learned that of the 73,969 inspection assignmentsmade:

• 32,628 were fully processed by underwriting
• 32,051 were completed
• 577 (1.7 percent) were unable to be scheduled, and thosecredits were removed.

The resulting impact of the inspection assignments on rates andpremium was:

• 68 percent of the policies had a change to premium
• 60 percent saw increases (removal of credits) totaling $16.26million
• 8 percent saw decreases (granting of new credits) totaling$1.04 million.

Factoring in the increases and decreases, the program saw a netincrease of $15.53 million in estimated premium at renewal. Theaverage dollar change to premium was $476.13, or 17.9 percent.

Ordway’s report notes that, “Based on these results and theestimated volumes that Citizens believes we can operationallyprocess, the 2-year net return is estimated at $72 million.”

The analysis also showed that of the 17,365 total policies withcompleted inspections that renewed as of May 31, 85 percent wererenewed and 15 percent were no longer in force. Citizens writesboth commercial and personal lines coverage; 45 percent ofcommercial lines and 14 percent of personal lines policies were nolonger in force as of May 31. These total non-renewalsresulted in a reduction of $3 billion in indemnity exposure, ofwhich $2 billion was commercial lines and $1 billion was personallines.

Citizens has been drawing heat for the non-renewals, with someattributing it to the change in the mitigation program proceduresand a backhanded effort at depopulation. At 1.38 millionpolicyholders, the state-created carrier is by far the largesthomeowners’ property insurer in the state.

Citing the negative media, committee member Skip Boylan askedOrdway if he could identify the reasons for the non-renewals.Ordway said his detail did not reveal cause-and-effect forindividual non-renewals, but added that, “The inspection program isnot designed to depopulate, but rather to underwrite properly.”That drew a heartfelt “thank you, that’s just what I needed tohear,” from Boylan.