President/CEO Report

Transcription

1 Looking back over the past year it is clear that Citizens has made significant progress on every strategic and operational objective. During our June board meeting I spent considerable time highlighting and updating many of the 50+ major initiatives underway. Today I want to focus on four strategic initiatives and recognize a few of the hundreds of employees that are responsible for our success. Specifically, Depopulation, Clearinghouse, Core and Claims/Litigation Management, especially the results of our Global Settlement initiative. This was the ninth year no major hurricanes hit the U.S. making this our first time since records began in 1851 the U.S. has gone this long without a category 3 or stronger hurricane hitting Florida s 1,350 miles of coastline. The absence of hurricanes has improved investor and potential investor confidence in the Florida insurance market. Traditional insurers and major reinsurers are now far more interested in participating in the market with unprecedented competition occurring in both the Traditional Reinsurance market and the rapidly developing Catastrophe Bond market. Citizens has benefited greatly from these improved market conditions. An ancillary part of this objective established by statute is that we confirm eligibility of all current Citizens customers and those submitting an application to us. One of our primary objectives is to find and to identify private market coverage for Citizens customers who previously had no options other than a Citizens policy. Let me share with you briefly how we have responded to this objective through a review of a few select slides. This first slide shows that in August of 2012 we peaked at slightly more than 1.5 million policies. In a period of less than 30 months, as of November of this year, Barry Gilway December 10, 2014 Board of Governors Meeting Page 1

2 we have 727,000 policies in force. That is over a 50% reduction in Citizens policy count and while the depopulation of policies is slowing, as we begin to look more like the market of last resort we were created to be, we are still forecasting that we will reach 670,00 polices by year end The second slide shows that just three years ago Citizens had over a half a trillion dollars in exposure on our books. That s 510 billion dollars. Today we are showing $229 billion, a 55% reduction in exposure. The third and final slide shows the assessment potential in the event of a year storm. Just 3 years ago we had $11.6 billion that would have been assessed in the event of a major storm. As of June, through a combination of reduced exposure and increased risk transfer, taking advantage of highly favorable reinsurance and CAT Bond market conditions, we were down to 1.6 billion and will be well below that number by year end. Current estimates indicate $1billion by year end. The budget I will present today targets the elimination of any assessment in the event of a storm contingent upon continued improvement in the pricing, terms, and conditions in our 2015 Risk Transfer Program that we are expecting and meeting our significantly reduced written premium objectives. This depopulation just does not happen it takes dozens of highly motivated employees to handle literally millions of transactions. I credit the leadership of Steve Bitar and Jennifer Montero with this important initiative and dozens of their employees whose behind the scenes efforts, dedication and intellectual contributions deserve a lot of credit. For Depopulation I will mention just two: Bobbi Scott, Depopulation Manager oversees this highly visible area - the assumption process itself. This process effects hundreds of agents and dozens of insurers and despite the enormous volumes and tight deadlines Bobbi consistently led her team while moving policies to the private market. Barry Gilway December 10, 2014 Board of Governors Meeting Page 2

3 Judy Vick, Depopulation Program Administrator also plays a critical role in the compilation and exchange of the massive amounts of data required to make the assumption process work. Working simultaneously with multiple insurers across multiple product lines, she ensures that millions of data points exchanged every month are accurately distilled to ensure that each and every policy is correctly placed with the private market or retained by Citizens. It is highly encouraging that the private market place is getting stronger with more restrictive financial requirements established by OIR and Demotech, Florida s primary rating agency. I will take an opportunity to make a very key point. Demotech, as a rating agency, has to satisfy Fannie May, Freddie Mac and all mortgage agencies, that an insurer is able to meet its claim paying obligations. They only recognize AM Best and Demotech. Weiss ratings have their place in ratings and assessing financial stability but they have to meet no one s standard and because they do not recognize the $16 billion reinsurance capacity of the Florida market provided by AM Best rated reinsurers they do not accurately assess the claim paying capability of Demotech A rated companies. The two primary sources for this evaluation in Florida are the Office of Insurance Regulation and Demotech. Unless depopulation companies meet their standards they cannot participate in depopulation. We are hard at work considering process changes that will make depopulation even more transparent and customer friendly. With Steve Bitar s lead we have formed a work group that includes representatives from all parties to consider these changes. Clearinghouse is my second area of comment. Our Clearinghouse program was recently recognized by Insurance Networking News (INN) Citizens was awarded 1st place for implementing the most innovative IT solution and of our Property Barry Gilway December 10, 2014 Board of Governors Meeting Page 3

4 Insurance Clearinghouse was recognized as one of the best IT solutions in the insurance industry nationally. Citizens was also among four companies recognized for their excellence in the growing importance of analytics for the insurance industry. The clearinghouse implementation was an amazing accomplishment the team delivered a brand-new technology and built all of the necessary integrations to Citizens other systems, along with Bolt Technologies, built the integrations to multiple companies in only five months with a virtually flawless launch. Today we have 20 insurance partners participating with us providing private market options to Citizens customers. I would like to recognize four of the many excellent employees who developed this solution. Sarah Harrell, Enterprise Program Director was responsible for the overall Clearinghouse program implementation. Kyle Brown, Clearinghouse Manager was responsible for establishing the brand new Clearinghouse Business Unit, defining all related operational functions and processes. Laura Lawson, Senior Business Analyst lead the business analysts responsible for developing Clearinghouse requirements and business needs, our policy system requirements, data analysis and testing. And finally Ravi (Rah-vee) Tadiparthi (Ta-deh-par-thee), Enterprise IT Architect IT s single point of contact for Clearinghouse technical architecture and systems impacts. I am entering my 45 th year in this fascinating business and have participated in the development and implementation of at least a half dozen major technology implementations; with the launch this past weekend of the Personal Lines module, it has brought a formal close to a program under development for 7 years involving Barry Gilway December 10, 2014 Board of Governors Meeting Page 4

5 literally hundreds of employees and contractors that accomplished nothing less than the replacement of our entire customer facing technology. I have never experienced an initiative of this size and scope delivered on time and on budget. Core Insurance Solution Implementation Program is Citizens next generation insurance operating system that combines current policy, billing, and claims systems into one integrated user-friendly platform. In addition to real and significant cost savings, implementation of this package software solution will allow Citizens to: Increase its flexibility to adapt as the Florida marketplace changes; Quickly implement rate and coverage changes; Achieve staffing efficiencies and increase productivity; Gain operational efficiencies for staff, agents and outsourced vendors from the use of one system platform; Facilitate depopulation through automation and improved data; Outsource additional functions, where appropriate; Improve data quality; and Provide better claims and policy service to policyholders and agents. In addition to Kelly Booten, our executive in charge of systems and operations, I would like to recognize just a few of the individuals responsible for this success: Constance Josef, Enterprise Program Director was responsible for the overall Core program implementation ensuring timely completion and co-ordination of all program components. Constance has been with this program from the very beginning through strategy development, solicitation of services and vendors, and implementation. Chris Jobczynski, Director IT Planning and Delivery was responsible for IT delivery of the new technology working with IT leadership, ensuring compliance with architectural standard and ultimately achieving program goals. Suzanne Cricks, Gary Watson, and Kelly Gudmunson are IT Managers who were with the program through the entire implementation working thousands of hours to ensure systems were developed, tested, and supported. And finally, Barry Gilway December 10, 2014 Board of Governors Meeting Page 5

6 systems this complex cannot be accomplished without the support of product owners who represented their business units and external customer needs: Angela Lockwood, Accounting, Sarai Roszelle, Product Development, Barbara Arnold, Consumer and Agent Services, Jan Klocko, Personal Lines Underwriting, Greg Rowe, Claims, Stephen Mostella, Commercial Underwriting, Clint Roszelle, Enterprise, and Dennis Royer, Document Management. We would also like to recognize our vendor partners who walked by our side and enabled us to reach our goals. Guidewire Software and Capqemeni. Citizens customers, agents, and employees will benefit from this platform for years to come. The last component of this initiative Personal Lines PolicyCenter and BillingCenter for the most complex was launched this weekend with over 8,000 policies, 4,000 per hour going through the system, with a 99.71% success rate. Absolutely incredible results! Over 560 agents went on line the first day of operation with no significant issues. Kelly and our Core Team has just done a fantastic job! And finally you cannot look back on 2014 without recognizing the enormous progress we have made in Litigation Management. Scott Link, Coordinating Counsel in partnership with Dwane Tyson, Director Assistant General Counsel Claims, have worked closely with Plaintiff Counsel representing policyholders that have litigation disputes for sinkhole claims to attempt resolution without further legal proceedings to insure our policyholder s homes are repaired in a timely manner. Citizens entered settlement agreements with multiple Plaintiff Attorney firms which represented 2,451 litigated claims. Through November 2014, 1,516 settlement agreements have been entered which will provide Barry Gilway December 10, 2014 Board of Governors Meeting Page 6

7 stabilization services and cosmetic repairs and in turn settle the pending litigation. We are expecting additional positive results before this program is complete. Jeff Lambert, Assistant Director of Claims, has provided the leadership required from Claims in order to satisfy the settlement agreements as they are received and was key to helping to establish the Sinkhole Stabilization Managed Repair program that is utilized for conducting the stabilization repairs utilizing fully credentialed vendors that provide performance and payment bonding as well as a 5 year warranty to our policyholders. Kyle DeBoer, Claims Manager, has managed the actual repair process and scheduling of work assignments. Kyle s team is responsible for working with the policyholder until all repairs are completed and the final warranty is issued. Needless to say I am extremely proud of our Citizens employees and Executive staff that are delivering truly extraordinary results for Citizens customers and, in fact, all Floridians. Now as we begin to close the books on 2014 we are already hard at work planning for the 2015 Annual Planning initiatives you have supported (included in your board book). So if you have no questions I would propose that we move to the annual plan and budget proposed for Barry Gilway December 10, 2014 Board of Governors Meeting Page 7