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CHICAGO—The Property Casualty Insurers Association of America (PCI) recommends that homeowners, businesses owners and renters take all the necessary steps to ensure that everyone is prepared for the potentially devastating effects of a major storm. There are many things that can be done to help protect people and structures prior to the start of hurricane season on June 1^st.

Leading weather researchers are forecasting an active hurricane season. The Colorado State University Department of Atmospheric Science and released its 2013 Extended Range Forecast of Atlantic Seasonal Hurricane Activity and Landfall Strike Probability on April 10^th. The forecast calls for 18 named storms, including nine hurricanes, four classified as major (Category 3, 4 or 5). CSU also projects a 72 percent chance of at least one major hurricane hitting the United States, as compared to a 52 percent average over the course of the last century. The east coast, including the Florida peninsula, is projected to have a 48 percent chance of a major hurricane, compared to a 31 percent average over the last century, and the Gulf coast, including the Florida panhandle, is projected to have a 47 percent chance of a major hurricane, compared to a 30 percent average for the century. For more information:http://tropical.atmos.colostate.edu/forecasts/2013/apr2013/apr2013.pdf.

Additionally, the North Carolina State University Coastal Fluid Dynamics Lab is forecasting 13-17 tropical storms, compared to a 63-year average of 10.8, and this includes 7-10 hurricanes, with 3-6 major hurricanes, as compared to averages since 1950 of 6.3 and 2.7, respectively. More on that forecast is available athttp://cfdl.meas.ncsu.edu/research/TCoutlook_2013.html.

 “To prevent the loss of life and minimize property damage, it is vital that coastal residents create a family disaster plan, maintain an emergency supply kit, and stay informed about approaching storms,” said Hackett. “In addition, the stormproofing of structures is one of the most effective ways to promote public safety and reduce the costs of homeowners insurance.”

Taking proactive steps to strengthen structures not only protects policyholders’ families and assets; it also strengthens the property insurance market, on both the state and federal levels, by reducing risk exposure.

Homeowners can take simple steps to help protect their property and assets from becoming a casualty of a storm. PCI has developed the following tips that will help consumers reduce exposure to losses and make certain that they have adequate insurance coverage to recover from the economic damage of a catastrophic event.

1. Inventory household items now to speed up claims processing after the storm. Inventory household items, and photograph or videotape them for further documentation. Keep this information and all insurance policies in a safe place, such as a safety deposit box.

2. Store important documents where they will stay safe and dry. Keep the name, address and claims-reporting telephone number of the insurance company and agent in a safe and easily accessible place. Property owners should keep a copy of their insurance policies and other important papers with them in a watertight package.

3. Develop an emergency plan before the emergency. Every family should have an emergency plan.  Emergency planners suggest that discussing the type of hazards that could affect policyholders’ families and consider the home’s vulnerability to storm surge, flooding and wind. Determine escape routes from the home and establish a meeting place. Stock non-perishable emergency supplies and a disaster supply kit with enough food and water for three to seven days. When severe weather is approaching, listen carefully to local authorities and take the necessary precautions to protect life, safety and property. If given an order to evacuate because of threatening weather conditions, do so. Contact a friend or family member and give that person your contact information. Remember to shut off the home’s water and electricity and to lock all doors and windows.

4. Perform routine home maintenance now to avoid major repairs later. Mitigation is a critical component in reducing the amount of damage that may occur when a hurricane or tropical storm makes landfall. Adding storm shutters and other retrofitting can help protect a home from strong winds. In addition, a well maintained home will help ensure that roofing, windows and doors are secure. Structural problems and weaknesses can also be identified and corrected before major damage occurs.

5. Don’t make the house a target for debris. Policyholders should protect their property by covering all windows with plywood or shutters, moving vehicles into the garage when possible and placing grills and patio furniture indoors. Make sure watercrafts are stored in a secure area, like a garage or covered boat dock. A typical homeowners policy will cover property damage in limited instances for small watercraft, and separate boat policies will provide broader, more extensive property and liability protection for larger, faster boats, yachts and jet skis.

13 May 2013 |By News-desk

RMS chief Shah urges rival to make modelled output available to new system

Risk modelling firm AIR Worldwide will not allow its models or model output to link with rival modeller RMS’s new risk and exposure management platform, RMS(one).

RMS unveiled the new platform at its Exceedance 2013 client conference last week. The new system, which will be available from April 2014, will host third-party models and analytics as well as RMS’s own.

Rival risk modeller Eqecat has agreed to allow its models’ output to be fed into RMS(one). And three other modellers – Risk Frontiers, ERN and JBA Risk Management – will allow their models to run natively within RMS(one).

However AIR senior vice-president Bill Churney said in a statement to GR: “AIR acknowledges RMS’s efforts to propose new solutions for catastrophe risk management; however AIR models will not be allowed to run on the RMS platform.”

He added: “The healthy competition that has existed between AIR and RMS for more than two decades has been good news for the industry and for innovation. Therefore, in the interest of nurturing the innovation that has benefitted all of us, we will not allow our intellectual property—our models and model output—to be deployed on a platform or cloud that is operationally controlled by a competitor.”

Churney said that AIR is “in the middle of  the most ambitious programme of model development in the industry”. It launched its own risk and exposure management platform, Touchstone, in January this year.

Speaking to GR last week at Exceedance 2013, RMS chief executive Hemant Shah urged AIR to allow its model output to be used with RMS(one).

He said: “RMS(one) has been designed to be able to take in the output of models like AIR’s and we would encourage AIR to listen to its clients and make the output available to them.”

However he added: “AIR needs to make its own decisions about how it wants to compete and serve its customers.”

Shah is expecting more interest from other third party modelling in linking to RMS(one). “Over time more and more cat modellers will see that we are serious and sincere about opening our environment to be welcoming to all.

“Each will make a decision based on their own calculus about how they want to add value and whether to participate in that ecosystem or not.”

He added that what happens will be ultimately driven by customers. “It is up the marketplace to vote on how it wants to see various cat models delivered,” he said.

Companies including Aon, Munich Re and EQECAT will link to new RMS(one) system

Risk modelling firm RMS has unveiled a new risk and exposure management platform called RMS(one) at its Exceedance 2013 client conference in Boston.

The new platform will give users access to all RMS’s own risk models, data, applications and analytics, but will also be able to host those provided by third parties, including RMS’s competitors.

It will be generally available in spring 2014.

RMS has announced deals with a number of third parties to link to RMS(one), including reinsurance broker Aon Benfield, reinsurer Munich Re and rival risk modeller EQECAT.

The first three third-party risk modellers who will implement their models on RMS (one) are Australia’s firm Risk Frontiers, Mexico’s ERN and the UK’s JBA Risk Management.

RMS chief products officer Paul VanderMarck told delegates: “This is the first step to what we are building towards – ultimately having as broad as possible a catalogue of models from RMS and others available on RMS(one) and for the first time allow RMS and other models in  to be accessible from one environment without any of the operational and overhead obstacles that exist today to doing that.”

RMS has also struck a deal with EQECAT that will allow users to export data to run through EQECAT models and flow the modelled output back into RMS(one).

In addition, RMS clients Munich Re and Aspen Re will make their proprietary models available on the new platform and Aon has agreed to link its dynamic financial analysis tool ReMetrica to RMS(one) so clients will be able to download analysis performed on RMS(one) to ReMetrica.

RMS has also signed deals with European catastrophe exposure data firm PERILS and US wind measurement company WeatherFlow to make their data available on RMS(one).

In addition to being open, RMS says RMS(one) will allow users to get results in minutes that they would have previously had to wait months for.

Chief executive Hemant Shah said: “RMS(one) will dramatically crush latency form months to minutes, which will streamline a company’s modelling, underwriting and portfolio management processes, transforming their agility and responsiveness in an increasingly dynamic and competitive market.”

The company also said that RMS(one) will make output from risk models and analytics accessible to a wider audience within a company, including chief executives and other decision makers rather than just specialist risk analysts.

Underpinning RMS(one) is a proprietary analytical operating system, RMS AoS. Rather than having the new platform installed locally, clients will access RMS(one) through the purpose-built RMS Cloud. 

RMS(one) will eventually replace the current RiskLink platform, although Shah said clients will not be pressurised to move over to the new platform, and that RiskLink will continue to be supported until 2019.

Shah stressed, however, that RMS(one) is more than an upgrade to RiskLink and instead represented a new category of platform.

TALLAHASSEE—G. Donovan Brown, state government relations counsel with the Property Casualty Insurers Association of America (PCI), today issued the following statement in response to the passage by the Florida House and Senate of legislation addressing Citizens Property Insurance Corporation:

“PCI commends the House and the Senate for arriving at a compromise in producing legislation intended to slow the growth of Citizens Property Insurance Corporation. We congratulate the legislature on its diligent work crafting a bill that lays the groundwork for continued Citizens reforms in the future. This bill is yet another step towards returning Citizens to its rightful place as Florida’s insurer of last resort.

“However, while the legislation is intended to impede the perpetual and rapid growth of Citizens, much work needs to be done to address the current exposure and rate inadequacy of Citizens. Citizens remains too large and still exposes Florida policyholders to a hurricane tax. We look forward to continuing our work with the House and the Senate, as well as all other stakeholders, in the future to return Citizens to its original concept and to ensure that consumers benefit from a viable and robust Florida private-sector insurance market.”

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $190 billion in annual premium, 40 percent of the nation’s property casualty insurance. Member companies write 46 percent of the U.S. automobile insurance market, 32 percent of the homeowners market, 38 percent of the commercial property and liability market, and 41 percent of the private workers compensation market.

Although the House unanimously passed HB 909 last week, which prevents homeowners being shopped in a “clearinghouse” from being taken over by an out-of-state surplus lines company with unregulated rates, a bill opening up the clearinghouse to surplus lines companies was voted down on the House floor Monday.

“I was surprised by the vote. I voted for it, apparently some of the members didn’t vote for it,” Weatherford said. “I think a lot of the members of the Dade County (delegation) particularly didn’t like that provision. And hey, we have a lot of bills that come up and sometimes they pass — most of the time they pass — but sometimes they don’t.”

A contingent of Republicans from the Tampa region and South Florida, as well as several freshman Republicans from inland areas of the state, joined a majority of Democrats voting against the bill.

The clearinghouse is designed to shop homeowners in the private market before entering state-backed Citizens Property Insurance Corp., which many lawmakers think has grown too large, having 1.2 million policies and taking up 24 percent of the property insurance market in Florida.

In a rarity for insurance companies and consumer advocates, both sides agree on the clearinghouse, but a Senate version of the Citizens bill, SB 1770, would have allowed surplus lines carriers to take over Citizens customers as well. After voting down HB 7093, the House inserted the text of HB 909 into SB 1770, which had already cleared the Senate.

“Why would we even take up that bill (HB 7093), when we’re amending SB 1770 that puts a language on there that passed unanimously?” said Rep. Mike Fasano, R-New Port Richey, who ran amendments to water down HB 909 when it passed the House on Friday. “Why even take up HB 7093 that has language on there that members were opposed to? After we did all those amendments on Friday, they still bring that bill up?”

In addition to the clearinghouse, HB 909 includes provisions to reduce the maximum level of coverage for Citizens from $1 million to $700,000 over three years. The Senate version goes down to $500,000 over five years.

The House version is weaker than SB 1770 and what insurance companies backing the bill had in mind at the beginning of the legislative session in other ways too.

HB 909 softens the 10 percent annual rate hike cap for new customers, but lets current customers taken over by private companies re-enter Citizens at normal Citizens rates within three years if the private company hikes rates, a provision the Senate version doesn’t have. The Senate plan also allows Citizens to use its surplus to provide low-interest loans to companies that take over its policies. Private companies would also be allowed to charge customers for additional reinsurance to make up for a potential shortfall in the Florida Hurricane Catastrophe Fund, the state’s reinsurance fund, in the Senate plan.

The House’s watered down version of SB 1770 will receive a vote on Tuesday in the House.

 April 30, 2013 – 3:51pm

Insurance executives express confidence that pricing for commercial lines will rise in the next six months, according to survey results released Tuesday by Munich Re.

The results, part of wide-ranging survey of 81 senior executives from property/casualty companies conducted in conjunction with Munich Re’s annual CEO Roundtable, indicate that while 15% of respondents expect commercial lines property pricing to be flat in six months, 42% of respondents expect it rise between 1% and 4%, and 39% of those surveyed expect prices to rise between 5% and 10%.

The executives’ bullish predictions for pricing coincide with an optimistic outlook for combined ratio as 56% of the representatives polled from publicly traded insurers predicted their company’s combined ratio would be below 95% for the year, compared with only 33% who did so in the same survey a year ago.

Nonetheless, when asked what were the three most critical issues facing their company, maintaining underwriting discipline topped the list at 56%, followed by maintaining or growing business at 51% and retaining and attracting talent at 32%. When asked what are the most critical issues facing the primary insurance industry in general, low interest rates was the top issue cited by 64%, followed by natural catastrophes by 51% and price competition by 43%.

Elsewhere, the respondents split on the potential of predictive analytic technologies to underwriters. While 25.9% viewed it as a survivability factor for the future and 33.3% said it provides a competitive advantage, 38.3% said in provides a slight competitive advantage and 2.5% said it does not provide an competitive advantage.

TALLAHASSEE — A contentious overhaul of Citizens Property Insurance Corp. passed the Florida Senate on Thursday, after the bill’s sponsor made key changes to protect hundreds of thousands of current policyholders from large rate hikes.

SB 1770 would drastically reform the state-run insurance company, mostly by pushing up rates for new policyholders and steering current policyholders into the private market.

The 24-15 vote followed more than two hours of testy debate, and two weeks of delay as concerns over huge rate hikes threatened to torpedo the bill.

“Members, this bill does not raise rates,” said Sen. David Simmons, R-Altamonte Springs, trying to garner support on the Senate floor, where controversial insurance proposals often die in tight votes.

Simmons was able to corral a slim majority by filing a 101-page amendment Wednesday night, drafting language to soften some of the bill’s rate impact. SB 1770 now goes to the House, where lawmakers have pushed a much less aggressive insurance reform package.

If the Senate bill passes both chambers and is signed into law, it would force new policyholders to pay insurance rates that are “actuarially sound,” while protecting current homeowners with a 10 percent cap on increases. In some parts of the state — mostly areas near the coast with “wind-only” coverage — rates would have to double to be “actuarially sound.”

Simmons said market-level rates for new customers were necessary because a massive hurricane could lead to “hurricane taxes” on consumers if Citizens ran out of money.

Thursday’s vote broke down along geographical — rather than party — lines. Democrats and Republicans from inland areas supported the bill, while most lawmakers from coastal areas like Tampa Bay and South Florida voted against it. Most of Citizens policies are in coastal counties, and insurance rates are highest in areas closer to the ocean.

Homeowners in those areas have already seen their property insurance costs shoot up in the past few years. Annual hikes of 10 percent and canceled discounts have cost consumers hundreds of millions of dollars.

While Simmons tried to convince his colleagues that the bill would not raise rates further, opponents accused him of “dancing” around the true impact of SB 1770.

“This is a vote about people who want to raise rates versus those who don’t,” said Sen. Jeff Clemens, D-Lake Worth. “If you want to raise rates, vote for this bill.”

Rates for wind-only policies in places like Tampa Bay and South Florida could go up 70 percent for new homeowners. The cost of a new policy in a non-coastal area could also increase faster than the current 10 percent cap.

In addition to “actuarially sound” rates, the bill creates a “clearinghouse” program to steer homeowners away from Citizens and into the private market, reduces Citizens’ coverage limits from $1 million to $500,000 over five years.

An amendment to the bill also limits rate hikes for some new homeowners who can’t find private coverage.

SB 1770 also allows Citizens to loan out a portion of its $6 billion surplus to smaller private insurers and creates an inspector general at the company, which has become infamous after several scandals last year embarrassed top company executives and angered Gov. Rick Scott.

The bill was amended more than 35 times as Simmons tried to gain support. Lawmakers and Scott have weighed in on the bill over the past few weeks, forcing Simmons to scale back the reform effort.

Stripped from the bill: Proposals that would require Citizens to charge rates that were higher than the top 20 private insurers, allow insurance companies to charge unlimited rates to consenting customers and boost the 10 percent rate cap to 13 percent. “The only problem with this bill is that it does not move fast enough,” said Simmons, acknowledging the tricky politics of insurance reform in Florida.

Scott, who is up for re-election in 2014 (when most of the bill’s impact will take place), said he wanted homeowners to be protected from huge rate hikes.

“The governor wants to keep the cost of living low for Florida families while reducing the risk of all home and auto insurance policyholders paying a hurricane tax in the event of a major storm,” said John Tupps, the governor’s spokesman.

House Speaker Will Weatherford, R-Wesley Chapel, said the House would take an “incremental” approach to reforming Citizens, so the bill may be scaled back further before the legislative session ends next Friday.

Opponents of the bill questioned the need for any major reform, citing Citizens’ record surplus. The state-run insurer of 1.2 million policies has saved up billions of dollars since the last hurricane struck the state in 2005 and the private insurance market is expanding rapidly. Citizens has reduced its potential liability by more than 42 percent in the last year alone, and the risk of hurricane taxes has plummeted. Under the state’s 10 percent “glidepath,” annual rate increases have brought Citizens’ prices closer to the private market.

“It’s working,” Clemens said, borrowing a slogan from Scott. “The glidepath is working. For us to come in and say that it’s not, and there’s a catastrophe around the corner, is disingenuous to our citizens.”

Changes softened Citizens bill, helped it pass

Stripped from the bill:

• Citizens must charge rates that are higher than the top 20 private insurers

• Some insurance companies can charge unregulated rates to customers who consent

• Annual rate increases of 13 percent, up from the current 10 percent rate cap

• Homeowners must leave Citizens if a private insurance company offers a rate up to 15 percent higher.

Kept in the bill:

• New policyholders must pay “actuarially sound” rates.

• Homeowners must go through a “clearinghouse,” before joining or renewing at Citizens, and would be forced out if a private company offers a comparable rate.

• Reduces Citizens’ coverage limits from $1 million to $500,000 over five years.

• Allows Citizens to loan out a portion of its $6 billion surplus to smaller private insurers.

BY TOLUSE OLORUNNIPA

TALLAHASSEE – A scheduled vote on a major insurance overhaul was again postponed Wednesday, indicating that fear of skyrocketing rates is weighing down the bill in the Florida Senate.

Bill sponsor Sen. David Simmons, R-Altamonte Springs, said last week that he has enough support for the bill but wanted more time to make amendments and build more consensus.

The 100-page bill seeks to shrink the level of risk carried by Citizens Property Insurance Corp. by raising its rates and forcing its policyholders into the private market. The rate hikes are mostly focused on new policyholders at the state-run Citizens and those who have high-risk “wind-only” coverage.

Simmons pulled the bill from the agenda right before its first scheduled vote last week. The same thing happened Wednesday, when the bill was “temporarily postponed.” After cruising through the committee process, the bill has been delayed on the floor of the Senate three times in the last two weeks. It has been amended nearly 40 times.

Simmons said he would amend the bill in order to address concerns of lawmakers who are worried about the pocketbook impact on their constituents.

Citizens president Barry Gilway said earlier this month that the bill could lead to rate hikes of 60 percent or more in 11 counties across the state. Many of those large increases would be for the wind-only homeowners.

Homeowners, who have already seen insurance costs increase in recent years, generally oppose additional rate hikes. Lawmakers, including the Senate’s 14 Democrats and at least 10 Republicans in districts where Citizens is a top insurer, are also wary of rate hikes. To pass, the bill (SB 1770) must garner at least 21 votes in the 40-seat chamber.

Simmons said last week that he would remove a provision of the bill that forces Citizens to charge rates that are higher than the top 20 private companies in a particular area. That concession could soften some of the rate hikes included in the bill. Gov. Rick Scott has already weighed in by stating that the bill should protect current homeowners from rate hikes greater than 10 percent per year.

A less aggressive House version of the insurance reform bill is scheduled to reach the floor soon.

Published: Sunday, April 21, 2013 at 1:00 a.m.

Any discussion about reforming state-run Citizens Property Insurance should begin with two questions: Why does Citizens exist? Why has it become Florida’s largest property insurer?

The answer to both questions is the same: because of a lack of reliable and affordable private insurance.

The failure to adequately address this fundamental problem may be why the Florida Senate’s latest attempt to reform Citizens has run into trouble — first with outraged Citizens policyholders, then with Gov. Rick Scott, now with Republican senators from coastal communities.

The Senate bill (SB 1770) seeks to limit Citizens’ growth, primarily by jacking up rates for new customers.

In several coastal counties, those rates would rise by 60 percent or more; in some they would double. In Sarasota County, new rates would rise by an estimated 37 percent; in Manatee it would be 27 percent.

Growing concern among some Senate Republicans about the proposed increases — and their potential impact on Florida’s critical real-estate economy — forced the bill’s sponsor to pull it from consideration Tuesday just before a scheduled floor vote.

The sponsor, Republican Sen. David Simmons, promised to further change his already heavily amended legislation and try to build “consensus” before putting the bill to a full vote this week.

The real weaknesses

But the flaws in Simmons’ bill can’t be fixed in a few days. And the break in the legislative action gives lawmakers, the governor and the public time to consider why Citizens was created in the first place and why this bill fails to address the real weaknesses in the state’s property insurance market.

The Legislature created Citizens in 2002 to serve homeowners in high-risk areas and others who couldn’t find affordable private coverage.

Major insurers like Allstate and State Farm had been pulling out of Florida’s coastal counties or reducing their exposure since 1992, when Hurricane Andrew struck. The pullout accelerated after multiple hurricanes hit Florida in 2004 and 2005.

These top insurers have shown no inclination to return to Florida’s coastal areas, where most of the state’s population lives, even though insurance premiums have increased substantially in recent years.

Instead, the private market is dominated by small, often undercapitalized insurers.

Last year, the state’s own Office of the Insurance Consumer Advocate said these insurers would be “as much or more of a financial risk” than Citizens if a hurricane hit.

The risk is largely self-inflicted. As the Herald-Tribune’s 2011 Pulitzer Prize-winning series showed, Florida’s property insurance regulators not only permitted small insurers to carry dangerously low reserves but encouraged them to take on more policies than they could safely cover.

Citizens, on the other hand, has built up its reserves during Florida’s current seven-year streak without hurricanes.

On April 9, Citizens CEO Barry Gilray told legislators that the corporation had enough funds to pay for a 1-in-50-year storm — basically a Category 5 hurricane like Andrew, which caused $26.5 billion in damage.

Is it any surprise that many Florida homeowners prefer Citizens over its undercapitalized private competitors?

Other assessments ignored

Yet, Simmons and the other Senate Republicans — including Sarasota County’s Nancy Detert and Manatee’s Bill Galvano — who have backed SB 1770 apparently feel that the free market doesn’t apply in this case.

The proponents argue that rate increases for new customers — beyond the 10 percent annual increases already imposed on all Citizens policies — are needed to force property owners into private insurance. They warn that if a hurricane hits and Citizens can’t pay its claims, all Florida policyholders — whether Citizens clients or not — will be assessed to make up the difference.

But what the rate-hikers neglect to say is that assessments are also imposed when a private insurer fails to pay its claims. And, based on the Insurance Consumer Advocate’s analysis, bailouts of private companies are much more likely than a “hurricane tax” for Citizens.

Of course, any proposal to raise property insurance rates is political dynamite. Floridians already pay some of the highest rates in the country, and Simmons’ plan to boost them higher has generated public outrage.

Gov. Scott, worried about his chances for re-election, advised Simmons to drop a provision in the bill that would have raised the statutory cap on the yearly Citizens rate increase from 10 percent to 13 percent.

But that change might be enough.

“The governor wants to keep the cost of living low for Florida families while reducing the risk of … policy holders paying a hurricane tax in the event of a major storm,” Scott spokesman John Tupps told Herald-Tribune reporter Zac Anderson. “Any final legislation the governor signs must meet both of these goals.”

Contact your local senators

If Scott, a longtime critic of Citizens, has doubts about Simmons’ bill, will Republican senators in coastal communities — such as Detert and Galvano — feel free to opt out?

In any case, it’s a good time for those who hold some of the 90,000 Citizens policies in Sarasota and Manatee counties to offer their senators some advice: Stop trying to force people into private insurance; instead, demand that private insurers provide affordable, reliable policies that Floridians will purchase by choice.