Fla. Citizens Offers Commercial Multiperil

The Florida Office of Insurance Regulation announced yesterday that it has further expanded the activities of the state's insurer of last resort, Citizens Property Insurance Corp., by approving a new multiperil commercial nonresidential insurance program.

Action by the OIR follows authorization earlier this year by the Florida Legislature for Citizens to assume the policies of the Property and Casualty Joint Underwriting Association and to create a plan to offer commercial insurance to businesses.

"Adding Citizens to the mix of companies writing commercial multiperil insurance is good for the competitive market," said Insurance Commissioner Kevin McCarty.

Mr. McCarty said the move is "an important step, because it is the company's first coverage offering away from what had been its main niche of offering homeowners insurance statewide and commercial wind-only insurance only in the high-risk areas of the state."

Citizens completed two parts of a three-part plan by June: It assumed the policyholders of the Joint Underwriting Authority, and then it began to sell its temporary wind-only policy for businesses that are not located in the high-risk or "wind pool" area.

The third part of the plan was to develop a comprehensive program offering multiperil property coverage for businesses statewide.

Citizens filed its forms and rates in September to accomplish the plan's third step.

OIR said the new multiperil product provides up to $2.5 million in coverage. The policies will cover damage from wind as well as fire and other perils traditionally included in a commercial property insurance policy. OIR said it has approved the policy forms and rates for Citizens to proceed with its program no later than Jan. 1, 2008.

As Citizens begins selling its new commercial multiperil policy statewide, OIR said the insurer has been ordered to stop selling its wind-only policies--business it had assumed from the PCJUA--in areas of the state outside the high-risk coastal areas. Citizens still offers wind-only coverage in the coastal "wind pool" area.

The OIR also approved a 15 percent rate increase for commercial wind-only policies. Effective Jan. 1, 2008 the increase will bring the cost of Citizens' wind coverage closer to the cost of the wind portion of the coverage offered by private insurers in the rest of the state.

"Although no one likes to see a rate increase in our state's current insurance climate," Mr. McCarty said, "Citizens needs additional rates in order to better ensure its ability to pay commercial claims. I remain committed to doing everything within my power to bring property insurance rates under control and to ensure that Florida consumers are being offered the savings expected as a result of the law passed during January's special session."

OIR said it has also ordered Citizens to make a rate filing for its commercial program every year so that any rate increases that are necessary in the future can be done in smaller increments to make them more affordable to policyholders.

In 2004 OIR issued an order requiring Citizens to file for new rates; however, OIR said it was not until the Florida Legislature passed legislation requiring Citizens to be more accountable for its actions that it was successful in getting the insurer to seek a necessary rate increase.

OIR noted that Gov. Charlie Crist and his cabinet had waged a "Citizens for a Better Citizens" campaign, which included meetings around the state that sought input from Floridians.