New Citizens bent on fixing service flaws

Article Courtesy of The Palm Beach Post

By Randy Diamond
Published  January 29, 2007

JACKSONVILLE Love may be too much to ask, so the new Citizens Property Insurance Corp. will settle for your admiration.

"They're not going to love us because the premiums are so high, but hopefully they'll respect our service,'' said Bruce Douglas, chairman of Citizens' board.

Have questions for Citizens? We've got answers

Q. I am a current Citizens policyholder and already have paid the higher premiums that went into effect Jan. 1. Will I get a refund?

A. Citizen will automatically mail you a refund. It has not set a date to start mailing refunds but expects it will be in March.

Q. I just received my renewal offer from Citizens, and it contains the higher premium that went into effect Jan. 1. Should I pay the entire bill?

A. Yes. To prevent cancellation of your policy, you should pay the entire bill. Citizens officials say they will send you a refund for the percentage of your premium that was raised.

Q. Will I get any other refund from Citizens?

A. Yes. The company expects to lower rates by at least 5 percent in 2007. If you already have paid your renewal for this year, company officials say you should receive a refund to reflect those savings.

Company officials advise patience, however, because that check may not be sent until April.

Q. I don't pay my homeowners premium directly, but pay it to my bank or mortgage company escrow account. I already have seen a higher charge assessed to reflect higher rates for the year. How do I get my money back?

A Citizens officials say they will mail refund checks directly back to your escrow account. You will need to contact your bank or mortgage company to obtain a refund.

Q. My current insurance company charges high rates. Could I switch to Citizens for lower rates?

A. Yes. Under the new rules, Citizens eligibility requirements have been eased. In the past, you were eligible for Citizens only if you could not find coverage from a private carrier. Now if your rates are more than 25 percent higher than what Citizens charges, you can switch to Citizens.

Q. I thought Citizens' rates were supposed to be higher than those of private carriers. How could I save money by switching?

A. Citizens' rates over the last year have not kept up with the rising rates of some private carriers. A proposed Citizens rate increase, held up by insurance regulators for about a year, was canceled by the legislature during the special insurance session. In the meantime, other major companies have been granted approval for major rate hikes. State Farm imposed a 53 percent rate hike in December. Citizens officials say State Farm's rates are on average 60 percent more than what Citizens charges.

Q. I live east of Interstate 95 in the windstorm pool area. I have two policies: a wind policy from Citizens and a fire and theft policy from a private market carrier. Will I be able to get my entire coverage from Citizens?

A. Citizen expects to be able to offer a combined full policy starting around the beginning of April.

Citizens must get approval from the governor and other top state officials and key legislators before implementing the plan.

Company officials say that once they are given a green light, they should be able to offer a minimum 10 percent savings for homeowners who choose Citizens for the entire insurance package.

Q. Will Citizens' rates remain stable?

A. Not necessarily. There could be another rate hike in the beginning of 2008.

The legislature canceled Citizens' two 2007 rates increases to give policyholders relief.

But Citizens' rates are not actuarially sound now, meaning the company is not taking in enough in premiums to cover predicted losses. The legislature has said that Citizens' rates will need to be actuarially sound by Jan. 1, 2008.

Q. I already have a Citizens policy, but a take-out company wants to assume my policy. Can I stay with Citizens?

A Yes. Under the new insurance law you can remain a Citizens policyholder for as long as you like.

Q. I have put up storm shutters or made other improvements to make my house more hurricane-proof. Am I entitled to a discount from Citizens?

A. Yes. Citizens, like other insurers, must give you a discount. You will need to check with your agent or Citizens to determine the amount of the discount given.

Q. How do I contact Citizens to get a policy?

A. Citizens sells its policies through agents. Most agents in Florida, including State Farm, Allstate and Nationwide agents, are allowed to sell Citizens.

Q. How can I reach Citizens?

A. Call (888) 685-1555. Citizens' new service pledge Citizens officials have submitted to the governor and other top state officials their plan of operation, which includes a new customer service pledge.

Here are its key promises:

The right to courteous, prompt and professional customer service.
The right to fair, prompt and professional claims service.
The right to prompt, professional service from your Citizens insurance agent.
The right to know about Citizens, its products and its services.

Douglas is serious, but Citizens customers may be a little skeptical. After all, this is the homeowners insurance provider that does not publish its phone numbers for consumer calls, making its customers instead call their agents.


That policy is changing, and that's just the beginning.

Last week Gov. Charlie Crist signed an insurance law that makes significant changes to Citizens' eligibility requirements. Those changes are expected to add hundreds of thousands of policyholders to the "insurer of last resort."


Citizens officials say the insurer was already in the midst of a transformation into a very different company. But after a special insurance session that focused a great deal on Citizens, the need to change is taking on a new urgency.


The revisions to the company's procedures include:


Allowing Citizens to compete with private insurers for the first time.

Eliminating the requirement that Citizens charge more than other carriers.

Removing the mandate that policyholders leave Citizens if another insurance company wants to take them.

Allowing customers of private insurers to seek out Citizens if they can get a reduction of 25 percent or more in rates.

Canceling two of the company's planned 2007 rate hikes.

Promises of rate decreases of between 5 percent and 10 percent.


Citizens executives expect that the new rules could push the company to as many as 2 million policies by the end of 2007.

Last year, Citizens grew from about 800,000 policies to more than 1.3 million as other insurers abandoned or scaled back their property insurance coverage in Florida.


Accommodating that new business is going to take a lot of work and a lot of new employees. A new director of employee training, who will oversee plans to increase staff training, started this month and is busy getting up to speed.


Scott Wallace, who took over as interim president of Citizens this month, expects to hire 500 employees in the next year.


Those hires are on top of about 800 employees today, up from 250 a year ago.


So many people are being hired, in fact, that a book containing pictures of new managers was passed out at Thursday's meeting in Jacksonville. 


Wallace acknowledged that adjusting to the changes will be a challenge but said Citizens can handle the growth.


The key to success will be putting infrastructure in place to support it, Wallace said.


Already in the works are substantive changes aimed at improving employee training, including a plan to increase company audits and investigations if there are allegations of staff wrongdoing. The provider also plans to better monitor agents.


Agents by the thousands


Dealing with 8,300 insurance agents is a huge task on its own, said Joe Bouthillier, Citizens' director of agency operations.

He acknowledged that there have been significant issues with agents in the past.


Citizens allows any agent in the state to sell its policies, as long as he has a valid license and represents at least one other carrier.


By comparison, State Farm, which is No. 2 in homeowners policies, has fewer than 900 agents, and they sell primarily State Farm products.


Under the new rules, agents will be subject to more performance audits and written tests to show they know proper policies and procedures, Bouthillier said. Those who repeatedly give consumers wrong information or are unable to show they understand Citizens' underwriting rules and regulations will be fired.


But the focus of Thursday's staff meeting was on customer service. Consumer frustration can be alleviated, at least in part "by giving great service,'' Douglas told about 100 managers.

It is up to managers to ensure employees are sensitive to policyholders, he said.


It can be done even if a consumer is upset, he said. At one point, a thank-you letter from a customer was held up as an example. It sang the praises of a representative despite the fact that he had denied her claim.


Listening intently was Steve Bitar, Citizens' newly named manager of consumer services. His department will help consumers who are unable to get satisfaction with their claims adjuster or agent, whether it be by settling the claim or simply helping explain the terms of a policy.


"A lot of times within the insurance world there are a lot of language and jargon and provisions that are very hard for the consumer to understand," Bitar said. "So the customer-care representative will work with the consumer to help them understand it and make sure they're supported.''


Citizens already has more than 100 customer-care representatives, but Bitar's customer-care unit will consist of a second layer of representatives. They will step in and assist customers who aren't satisfied with their initial representative or field adjuster.


Bitar doesn't have a staff running yet, and like a lot of things at Citizens, his department is a work in progress. But he acknowledges a need for change, and he's drawing from experience in his previous job running Citizens' call center.

Often consumers calling for help were pushed back to their agent for answers. But the answers weren't always forthcoming, and many consumers ended up frustrated, Bitar said.


Another Citizens department starting from scratch in coming weeks is the commercial department, which will carry out the provider's newly expanded mission to insure more businesses.

Citizens also has put a new centralized purchasing department in place. It was formed to ensure that goods and services are bid out for the lowest price, something that didn't always happen in the past.


A senior purchasing representative asked managers attending the Jacksonville meeting Thursday to alert her to any personal purchasing arrangements they have with vendors so she could see whether they are subject to bidding regulations.


One year ago, employees were permitted to have private purchasing arrangements with vendors. It was not unusual for an employee to go to a local appliance store to purchase television monitors.


Those days are over, Wallace said.


Legislating customer service


State lawmakers mandated some of Citizens' more consumer-friendly changes. The legislature last year mandated the creation of Bitar's consumer unit.


The new standards promise prompt and professional claims and customer service.


"We are a different company than we were 2 1/2 years ago,'' said Douglas, the 72-year-old investment adviser who serves as the unpaid chairman of Citizens' board. "If people could see the facts, then their attitudes would be so different.''


Citizens officials need to present the governor and other top officials Tuesday with a plan of operations that shows customer service standards.


Andy Martinez, Citizens' director of outreach and education, said the company can improve and that he wants to hear from consumers.


Citizens plans to hold public hearings once each quarter in different parts of Florida to gather input.


"People are going to yell,'' Martinez said.


He is OK with that because comments will help Citizens be more responsive to consumers. The first hearing likely will be held in South Florida in the next few months, he said.


But there also is movement behind the scenes, including at the catastrophe operations center.


"We will have a best-in-class response if there is a major hurricane,'' said Tim Loftin, Citizens' new senior vice president in charge of claims. He left his job as claims manager for 12 Southern states at Safeco, another insurance company, to build Citizens' claims operation.


Citizens' problems handling about 120,000 claims from the 2004 storms are not hard to understand when you know what was happening in the background, Loftin said from his office in the Jacksonville building that will house the center.


Citizens had just two supervisors in place to deal with the 2004 storms. They were, in turn, dealing with more than 1,000 outside adjusters.


Loftin conceded that 10,542 complaints in 2004 was a high number, as was the 4,662 complaints filed after the 2005 storms. But he said the 2005 total also reflected a pool of claims that was about 50 percent higher than in 2004.


Although Citizens increased the number of supervisors from two to eight, it still was not enough, he said.


Now the troops have arrived.


Staffing has been beefed up to 52 supervisors in the catastrophe center, with 23 others expected to be hired by the time hurricane season is in full gear, Loftin said.


Those 75 supervisors work out of a large warehouse-type room with computer monitors and new claims-adjusting software.

That technology will enable adjusters to monitor the changing 

price of construction material after a storm to ensure Citizens provides windstorm victims with enough to rebuild.

Further, Loftin said Citizens has contracts with more than 2,000 outside adjusters and should be able to avert past problems that left it with inadequate field personnel.

Citizens also is working on improving its non-hurricane response, Loftin added.

Of 25,000 claims handled last year from Jan. 1 through October for fires, water pipe breaks and other damage, there were only 266 complaints, Loftin said. That's less than 1 percent.

But Citizens still ranks high compared with other big insurance 

companies in the overall number of complaints and inquiries the state Department of Financial Services received.


The department received 4,800 non-hurricane-related service inquiries about Citizens in 2006, spokesman Jeff Takacs said. However, he could not break down how many were complaints as opposed to general inquiries about Citizens.


In comparison, State Farm had just 707 service calls reported to the department. State Farm had about 1 million homeowners policies; Citizens had 1.3 million.


In addition, the department reported an additional 4,225 Citizens calls in 2006 related to unresolved hurricane claims from 2004 and 2005.


State Farm had about a quarter of that number of calls.


Loftin said Citizens has resolved about 98 percent of the claims from the 2004 and 2005 hurricane seasons. Many of the remaining claims are being contested, he said.

Top state officials will be watching to see what happens to Citizens' remaining hurricane claims.

The legislature's insurance plan includes the formation of a task force that will report by July 1 on what Citizens is doing to clear up its remaining hurricane claims. The task force also will review Citizens' entire claims-handling operations.

Not only will claims operations be improved, but consumers are assured of getting better information regarding their policy questions, said Christine Turner, Citizens' director of legislative affairs.

Within the next few months, consumers will see publicized phone numbers for Citizens if they want to call for information.

A revamped Web site also will be consumer-friendly - it will even have options for people to contact customer service.