Citizens insurance to vote on downsizing policies, increasing parts of budget

A man lifts a collapsed porch screen in Coconut Creek, one day after hurricane Wilma lashed South Florida. (Carl Seibert, Sun Sentinel)

Citizens Property Insurance’s board will consider approving a plan Wednesday to shrink and reduce its financial risk to Floridians.

All automobile and property insurance policyholders in the state would be charged fees if a major hurricane triggers deficits for Citizens, the largest property insurer in the state.

The board gave an early green light recently to 31 recommendations that are part of the plan. The recommendations include reducing coverage and raising premiums – to prompt policyholders to find insurance elsewhere.

Board members are expected to tweak the recommendations, which would implemented as early as May, before a final vote today.

Separately, Citizens will discuss a recommendation from its employees to reduce hurricane claims payouts by 15 percent for policyholders who didn’t put their shutters up.

The board will consider approving its 2012 budget, including some expenses that are increasing.

Compensation: Citizens plans to increase its headcount to 1,321 from 1,277 this year and 1,179 last year. Citizens managers noted they eliminated 21 positions a few years ago. That came after a period in which the insurer's employees grew by 17 percent while it trimmed more than 26 percent of its customers.

Citizens' compensation costs increased 7 percent, or $4.6 million, for the first nine months of the year because it has more new hires with higher salaries.

Consulting costs: Citizens plans to spend $29 million, or 190 percent, more on consulting because of a project its implementing called Core and inspections its doing to ensure policyholders' discounts for hurricane-proofing their homes are deserved. The Core project will consolidate its claims, billing and other operations to a single, user-friendly insurance platform to increase efficiency and reduce operating expenses.

Citizens' temporary worker costs for the first nine months of 2011 increased $1.5 million, or 119 percent, because of what it’s paying to process inspections.

Traveling and operating costs: Costs for travel costs and operating supplies such as furniture and computers are projected to increase 132 percent and 58 percent, respectively, largely due to the Core project.

Still, the insurer plans to collect $3.6 billion in premium in 2012, which will more than offset claims and other expenses. Its projected net income is $572 million.

Citizens' direct written premiums increased nearly $400 million for the first nine months of 2011 because of rate hikes and an 18 percent increase in policies.

Citizens board meeting starts at 9 a.m. and can be heard live by phone.