NU Online News Service, Dec. 13, 4:03 p.m. EST
The Florida insurer of last resort said inspections of the homes and commercial properties it insures have uncovered some unjustified mitigation discounts.
The state-run Citizens Property Insurance Corp. is expecting to net more than $101 million by the end of 2012 after policies are adjusted.
A report on the inspections given to Citizens' underwriting committee reveals that as of Nov. 19, about 6,775 personal lines inspections have been processed at a cost of about $819,115.
The net impact of these inspections is a $3.4 million gain. The average change per policy was about $623.60, with the largest increase being more than $63,000. The largest decrease was about $5,500.
More than 70 percent of homeowners saw a change in their premiums, with 64 percent seeing an increase and 8 percent getting a decrease, according to the report. Nearly 1,850 saw no change.
Counting commercial lines policies, about 7,200 total policies were inspected. More than 52 percent of commercial l policies were increases, with 8 percent getting a decrease.
Citizens is planning to spend about $41.4 million over the next two years inspecting 44,220 policies. About 16 percent have been fully processed by underwriters.
According to an outline in the report, Citizens expects a premium gain of $19 million in 2011 and $124 million in 2012 for a total of $143 million. Minus expenses, the net result is $101.6 million.
At the start of the year, Florida's Commission on Hurricane Loss Projection Methodology's Windstorm Mitigation Committee concluded that windstorm mitigation discounts have hurt the state's property insurance market, driven by unclear decisions on how mitigation credits are applied to the ratemaking process. The current system has failed to operate as it should, the committee said.
The Florida legislature in 2005 mandated that all property insurers give discounts to properties that take steps to mitigate wind loss.
Recently Insurance Commissioner Kevin McCarty listed mitigation discounts among a handful of non-hurricane-related cost drivers that insurers say have decreased underwriting profits for many of them.
Earlier this year language aimed at stopping inappropriate mitigation discounts was put into bill SB 2044, which was widely supported by state lawmakers and the industry but was vetoed by Gov. Charlie Crist.
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