As Hurricane Irma cleanup efforts continue throughout South Florida, Florida property insurance policyholders continue to face another battle that has nothing to do with the devastating storm but will have a greater impact on their rates for years to come.
I’ve spoken a lot about out-of-control litigation and assignment of benefit abuse that surround a relatively recent spike in water loss claims not attributable to weather. While legislative action is critical for a long-term solution, Citizens has taken steps to address the issue, including creation of the Citizens Managed Repair Program, to provide quality customer service and help reduce costs.
A recent opinion piece, “Why should policyholders use an insurer’s contractor — or face a $10,000 cap?” (Business Monday, Oct. 16), paints a dark picture of the Managed Repair Program, contending that our customers will be forced to pay for major repairs out of pocket or participate in a program that offers them no choice from contractors beholden to us. Simply put, these contentions don’t hold water.
First a quick recap. Beginning next year, payments for permanent repairs on covered water losses will be limited to $10,000 on residential policies (commercial policies are not affected). These limits will be waived for policyholders who choose from a list of licensed and credentialed contractors participating in our managed repair program.
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We estimate the policy limit will come into play for about 25 percent of water claims that exceed $10,000.
Contrary to the author’s assertions, policyholders remain very much in control. In South Florida, for example, the program is expecting to include more than 100 participating local contractors to perform permanent repairs. Customers unhappy with a contractor assigned to their claim can choose someone else within the network.
Secondly, all permanent repairs must meet policyholder approval and adhere to local building codes and nationally recognized quality standards. To ensure this, Citizens will not consider repairs complete until a policyholder has signed an authorization of satisfaction that all covered repairs have been completed.
As a nonprofit, government-created insurer, our motive is pretty simple: Provide quality service quickly so costly and time-consuming litigation is unnecessary. Shoddy work and low-balling don’t fit into that equation and will not be tolerated from contractors participating in our program.
Why are we doing this? Water losses, particularly in Miami-Dade and Broward counties, are THE driver of higher rates. Water losses in Miami-Dade have exploded and last year consumed 92 cents of every premium dollar collected from Miami-Dade policyholders, up from an already-alarming 56 cents in 2014.
As a nonprofit entity, Citizens must pass on those increased costs to our policyholders. Losses incurred in Miami-Dade must be paid from premiums raised in Miami-Dade, where our 2018 proposal calls for a nearly 10 percent increase.
Make no mistake. We need legislative reform, including changes to Florida’s one-way attorney fee statute, or many of our policyholders will face rate increases for years to come. In the meantime, we owe it to all our customers to keep rates as low as possible while honoring our commitment when they need us most. The bottom line is that the Citizens Managed Repair Program helps accomplish both goals while leaving customers in control of their claim.
Barry Gilway is president, CEO and executive director at Citizens Property Insurance Corporation.
▪ This opinion piece was written for Business Monday in the Miami Herald. It represents the point of view of the writer and not necessarily that of the newspaper.
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