On December 9, Citizens Property Insurance, Corp. released its official “Inspection & Outreach Program Update.” The inspection program, which launched earlier this year, has been gaining increased attention amid an already heated Florida property insurance debate.

On one side, there is the company, which maintains that the purpose of the inspections is to help policyholders receive proper wind mitigation credits. On the other side, policyholders are outraged over increased premiums due to findings in the inspections.

The Program Update statistics show that to date, the program has assigned 44,220 inspections. Of those, 33% are pending Underwriting Review, 15% of policies (commercial inspection) were cancelled, and 16% have been completed (fully processed by Underwriting).  The report also indicated that the estimate premium change to date is $5,343,553.

However, an increase in premium rates isn’t the only factor that has people fired up. The inspectors also drew criticism. Contractors were responsible for roughly 14,000 of the total inspections assigned.

Moving into 2011, Citizens has plans to “provide better quality controls and transparency in 2011 and beyond.”  The Program Update states that the Company has already “reduced assignment volume in November and December” and “the current Inspection Administrator will finish processing any pending assignments made prior to December 31, 2010 in the beginning of 2011.”

The nature of the inspections will also change. In an article by Julie Patel published in the SunSentinel, she states that, “Next year, the inspections, which aim to check discounts for features of a home that protect it from hurricanes, will include checking the home’s rebuilding cost.”

Additionally, the number of inspections will increase.  The Program Update also included a chart estimating the program outreach and expenses through 2012.  In 2011, Citizens estimates that the expenses will reach $11.1 million. Of this total estimate, $10.3 is estimated as the inspection expenses and $700,000 is estimated for project staffing. Categories “other expenses” and “systems” account for the remaining total estimate.

Perhaps most importantly for policyholders, the company estimates that it will complete 94,000 inspections in 2011 with an estimated premium impact of $19 million. The combination of these numbers will result in an estimated 45% return on investment for the company.

But, is this really so bad? Going back to one of my earlier blog articles on the state of the Florida property insurance industry, an increase in revenue for the property insurance company means increased funds to support its policyholders in the event of a major disaster.

In fact, as Patel writes in her article, “Inspections conducted this year by Citizens, the largest property insurer in the state, found that some policyholders have been receiving undeserved discounts for features that protect their homes from hurricanes.  If Citizens customers don’t pay enough, all property insurance policyholders in Florida could be on the hook, just as they’re paying to cover state-backed Citizens‘ deficits from the 2005 hurricane season.”

Ellsworth Buck is the vice president of GreatFlorida Insurance. Contact him for questions and comments.


Julie Patel. (2010, December 9).  Citizen’s Property Insurance revokes discounts. SunSentinel.

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