I wasn’t aware that partial settlements were part of the official plan if Citizens has losses exceeding its available surplus (aside, perhaps, from the tendency for most insurers to impose controls in the face of claims on a major cat).
I had thought that, officially at least, if Citizens had claims exceeding its ability to pay, the state would issue bonds to fund the shortfall, and policyholder assessments made to pay off those bonds (c.f. Citizens Property Insurance OKs Early End to Surcharge)
In the US, most state-run wind plans have some sort of an assessment feature to recoup shortages – either they assess insurers, or they assess some/all insureds in the state.
If the former, insurers have to consider the potential assessments when considering their amount of cat exposure and pricing their products. If the latter…well, that becomes just a mechanism to socialize the costs.
Even the federal terrorism backstop has a recoupment mechanism prescribed in its enabling legislation.
Through S&P’s service, I just took a peek at outstanding homeowners filings in California.
I’m not in a pricing role anymore, and my employer only does commercial lines/specialty in the US, so this is not information I normally look at.
I don’t think my subscription allows me to access those filings, so I haven’t taken a closer look at the details…but DANG there are some big rate increases being requested.
It’s one thing to expect it, but it’s another thing to actually see it in the list of filings – +56%, +19.9%, +29.9%, +29.9%, +39.6%, +13.2%, +30.6%, +32.9%, +24.6%, +6.9%…
The consumer advocate must be working overtime fighting these.
One might note that in some filings, this “indication” isn’t expected by the company either. It’s more of a political move to get the “consumer advocate” happy with saying they’ve kept rate increases down.
Also, the last time I worked on a rate filing in CA, the DOI generally doesn’t bother with looking at the company’s indication and has their own “process” to determine the indication; which is often much smaller (or more negative) than what the company files.
That “consumer advocate” will often intervene even on rate filings that are decreases. And hire an “expert” with very dubious credentials.
I remember the CA DOI’s templates. They were actually useful several years ago, when my company’s IT department wanted to almost-prohibit VBA. IT wasn’t initially responsive to near-rebellion among the actuarial teams, but the (perhaps exaggerated) argument “this will probably prevent us from filing in California” did generate enough of a reaction to restore something resembling sanity.
I also remember the difference between the headline indication and the actual target…and the institutional knowledge we had within the pricing teams on differences in tactics by state.
Fortunately, I never had to do a homeowners or personal auto filing in CA. The filings I did do there were bad enough.
In saner times, I would have expected to see a bunch of filings headlining in the +10 - +20 range, with maybe a few outliers (a company here or there that was having trouble, or a filing that focused on a particular coverage within a larger package). Seeing a bunch of +20-+30’s from some big names…wow.
I might have to see if I can get a copy of a couple of those, to satisfy my curiosity now…
Since it’s CA they’re kind enough to put you through the personal lines ringer even if you’re writing large commercial risks. Many states don’t even require a rate filing for that business.
Yep. On more than one occasion, when developing a new specialty segment, when the underwriting/product development team indicated their market needed an admitted product, and they needed to be in California, I’ve asked “are you sure you can’t be surplus lines in CA?”
Even so, for the products I worked with in my most recent prior life, CA wasn’t the worst place to do rate filings. The CDI template and prescribed filing structure, and getting through the folks in intake was annoying, but (at least several years ago) higher-level staff were professional and reasonable within the constraints imposed on them by law and regulation.
Today, I learned that State Farm is one of the LAST insurers to take the action of not writing new business in CA.
In fact, it appears that Allstate started it several months ago and it’s just now finding its way into the media.
The only thing that I can see that CA has going for it that FL didn’t back in the day is that the CA DOI does not expect that the parent company’s surplus should be used to directly support the state’s insurance risks.
They’re all publicly available and easy to search on the CA DOI website.
I’ve got a +20% in the queue that I filed November 2021. They made me wait five months before giving me their latest objection, which only took a few hours to resolve. I think they’re … stalling.
I’ve got another filing that is much higher than 20% also in the queue. It’s not going any faster.
Well, that takes care of my missing my rate-filing days of my career…or my personal auto days.
My employer doesn’t do personal lines in the US. I hadn’t appreciated just how ugly it has gotten until the recent WSJ or NYT article that linked to 2022 industry results for personal auto.