florida homeownersflorida homeowners · 5/25/2011 2 the florida insurance market for personal...

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Florida HomeownersFlorida HomeownersA Study of Contrasts

Casualty Actuarial SocietyPalm Beach FloridaPalm Beach, Florida

Senator Locke BurtChairman and President

Security First Insurance Company

May 16, 2011

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The Florida Insurance Market for Personal Residential InsuranceThe Florida Insurance Market for Personal Residential Insurance

Type of Policy Market CitizensCitizens Market

ShareAllied Lines 319,106 248,328 77.8%

Condo Units 801,510 88,461 11.0%

Dwelling Fire 657,795 248,781 37.8%

Homeowners 3,550,631 488,407 13.8%

Farmowners 2,844 0 0%

Mobile Homes 411,063 166,613 40.5%

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Tenants 312,349 16,150 5.2%

Total 6,055,298 1,256,740

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Implementation of Wind Mit Credits Drove Rates Downp

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E ti t d Citiz n R t N d F ll 2010

Total In-force Premium at Current

Indicated Rate Level Change (Statewide

Estimated Citizens Rate Need Fall 2010(PLA and HRA combined)

Premium at Current Rate Level

Change (Statewide Weighted Average)

Homeowners $950,012,405 55.9%

Dwelling (excluding mobile homes)

$323,607,402 54.8%

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Condo Unit Owners $72,737,408 20.0%Source: Citizens Rate Filing

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Citizens Rate Advantage Continues to Grow

14.33%Top 22

Annualized Weighted Average

g

7.72%

15.64%

Citizens

Top 10

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0.00% 5.00% 10.00% 15.00% 20.00%

Source: Merlinos & Associates, Inc. All data from Office of Insurance Regulation’s Form and Rate Document Management Service (FREDMS)

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Security First Insurance CompanySecurity First Insurance CompanyStarted Fall 2004, privately held

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Harry BleiwiseChairman Emeritus

Locke BurtChairman and President

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Security First Insurance CompanySecurity First Insurance Company

Current In force Business March 31 2011

Multiple Sources of Production

Multiple Products Mostly HO3

Year Built Mostly Newer Homes

Current In-force Business – March 31, 2011119,205 policies, approximately 2.5% of Florida homeowners

51.3%

48.7%

71.5%

10.0%

18.5%

38.7%

19 8%

17.7%

23.8%

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Independent

Captives & DirectHO-3 HO-6 DP-3

19.8%

2002 and Newer 1995-2001

1975-1994 1974 and Older

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Statewide Spread of BusinessStatewide Spread of Business

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Security First Insurance CompanyExecutive TeamSecurity First Insurance CompanyExecutive Team

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Security First Insurance CompanySecurity First Insurance Company

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The Financial Metrics of a Successful Florida Homeowners Insurance CompanyThe Financial Metrics of a Successful Florida Homeowners Insurance Company

Cost of reinsurance 40.0%

Claims (excluding hurricanes) 35.0%

Local agents commission 10.0%

Premium tax 2.0%

Administrative expenses 8.0%

Total 95.0%

Pre-tax profit 5.0%

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Corporate Income Tax 0.30%

Underwriting Profit 4.70%

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The difference between the Winners and the LosersThe difference between the Winners and the Losers

Successful execution of a business strategy in an unfriendly environment that’s constantly changingthat s constantly changing.

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“It is not the strongest of the species that survives, nor the most intelligent that survivesmost intelligent that survives. It is the one that is the most adaptable to change.”

- Charles R. Darwin

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Reinsurance Purchasing StrategyReinsurance Purchasing Strategy

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Active Aggregate ManagementActive Aggregate Management

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DailyR i di t ib ti f b i b t d h l f di t ib ti


Review distribution of business by county and channel of distribution

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WeeklyIdentify and scrutinize areas with highest increase in TIV

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MonthlyReview changes from various month end reports

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Every Four MonthsUpdate the voluntary template and include rate changes new model results


Update the voluntary template and include rate changes, new model results, updated attritional loss and reinsurance costs

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ContinualUpdate the Aggregate Management System


Update the Aggregate Management System to maintain balance and profitability

MiamiMiamiFort MyersFort Myers

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Managing Catastrophe Model ChangesManaging Catastrophe Model Changes

Catastrophic Risk Model OverviewSecurity First Insurance In-force Policies as of 1/31/2011

Gross Losses, Including Demand Surge, Excluding Storm Surge

ModelAverage

Annual Loss 20 Year Event 50 Year Event 100 Year EventRMS v9 Hist $24,707,976 $106,625,357 $207,399,050 $327,824,865 RMS v11 Hist $31,989,161 $156,367,882 $309,117,494 $463,330,985 AIR v11 Std $25,641,099 $115,847,598 $232,255,370 $361,918,349 AIR v12 Std $32,663,948 $152,678,054 $286,012,853 $460,071,459 FL Public Model $31 062 770 $162 267 306 $248 310 476 $325 831 799

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FL Public Model $31,062,770 $162,267,306 $248,310,476 $325,831,799

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Managing Your Attritional Loss RatioManaging Your Attritional Loss Ratio

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NonCause of

LossHOUSE YEARS

Claim Count Freq SeverityPure

Premium

Non-Cat L/R

Cat L/R Total L/R

Wind 263,966.87 485 0.184 $5,957.11 $10.95 0.3 0.4 0.8

Water 263,966.87 5,206 1.972 $7,624.08 $150.36 10 0.4 10.4

Vandalism 263,966.87 192 0.073 $4,992.65 $3.63 0.3 0.3

Theft 263,966.87 1,772 0.671 $3,542.56 $23.78 1.6 0 1.6

Sinkhole 263,966.87 194 0.073 $78,342.65 $57.58 4 4

Other 263,966.87 1,471 0.557 $3,667.27 $20.44 1.3 0.1 1.4

Mold 263,966.87 329 0.125 $3,803.94 $4.74 0.3 0 0.3

Lightning 263,966.87 472 0.179 $2,756.22 $4.93 0.3 0 0.3

Liability 263,966.87 317 0.120 $8,721.47 $10.47 0.7 0 0.7

Hail 263 966 87 38 0 014 $6 134 61 $0 88 0 1 0 0 1

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Hail 263,966.87 38 0.014 $6,134.61 $0.88 0.1 0 0.1

Fire 263,966.87 412 0.156 $60,802.46 $94.90 6.4 0.1 6.5

Totals 263,966.87 10,888 4.125 $9,277.19 $382.66 25.3 1.1 26.4

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41.0%

42.0%

56.0%

Citizens Market Share By County(HO3 Owner Occupied Homes)

Hernando

Pasco

Miami-Dade

11.0%

12.0%

14.0%

24.0%

30.0%Pinellas

Broward

Palm Beach

Charlotte

Hillsborough

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2.5%

10.0%

-10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Sarasota

Remainder of the state (58 counties)

Source: QUASR December 31, 2010

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Get the Premium Your Entitled ToFirst in the state to re-inspect homes for windstorm loss mitigation credits

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Windstorm Loss Mitigation Re-inspection Results (as of 2009)Windstorm Loss Mitigation Re-inspection Results (as of 2009)

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Continuously review losses to identify potential problems

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Continuously review losses to identify potential problems

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What’s a sinkhole loss? What’s a sinkhole loss?

Catastrophic Ground Cover Collapse

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What’s a sinkhole loss?What’s a sinkhole loss?

Optional Sinkhole Loss Activity Coverage

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Sinkhole Activity Coverage The Real WorldSinkhole Activity Coverage The Real World

“Damage to the insured risk was minimal. There was some very light cracking on the rear elevation wall, separation in the pavers, light crack on the floor in the exterior entry and two small areas of cracking intwo small areas of cracking in the interior on the rear elevation wall.”

~ Security First Adjuster Claim File Note

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Security First Remediation Process

1.Stabilize subsurface soils: grout injection to compact and densify soils beneath structure.

a) 26 injection points spaced 10’ on center around thea) 26 injection points spaced 10 on center around the structure’s perimeter

b) Each injection 15’ deep

2.Stabilize and re-level the foundation of the structure by installing underpinning piles.

a) Depth of underpinning piles 40’.

b) 37 piles installed.

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Estimated Cost to Remediate(not including cosmetic repairs)

Install Grout Pipes: 37 @ 40 ft @ $17/ft $25 160Install Grout Pipes: 37 @ 40 ft @ $17/ft $25,160

Grouting: 350 cubic yards (cy) @ $170/cy $59,500

Install pin piles: 37 piles @ $1,475/each $54,575

Monitoring and Clarification: $15,100

Total $154 335Total $154,335

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R d t i kh l ti it l bReduce exposure to sinkhole activity losses by requiring inspections prior to binding coverage

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Monitor the Legislature for Threats and OpportunitiesMonitor the Legislature for Threats and Opportunities

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SB 408 – major change to loss reimbursementSB 408 – major change to loss reimbursement

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Other Elements of SFIC’s SuccessOther Elements of SFIC’s Success

Explaining Reinsurance to Agents and Customers

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T l i i d ti i i lti l k t

Building Brand AwarenessTelevision advertising in multiple markets

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iP d W b it

Staying on the forefront of technology– iPad Website

– iPhone App, Security First Mobile

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Develop innovative, new tools for our agents and customers to take control of the insurance purchasing processto take control of the insurance purchasing process

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Welcome to Florida

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ConclusionConclusion

• Location and Politics make this a very tough place to do business

• We’ve proven Florida-based companies can be successfulWe ve proven Florida based companies can be successful when they have a clear strategy and a dedicated team of insurance professionals

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Questions or comments?

Locke Burt

Chairman and PresidentSecurity First Insurance Company

140 S. Atlantic Avenue, Suite 200

Ormond Beach, FL 32176

(386) 523-2300

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[email protected]

florida homeownersflorida homeowners · 5/25/2011 2 the florida insurance market for personal...

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