HCI
#Okay.
So I think in terms of trying to rationalize that, you have three things that would explain this.
One is strengthening, two is the actual issues that you have with AOB occurring, so there is loss ratio points increase because of AOB and lawsuits and everything else, yes.
And the third item is weather, as in weather as in any unusual events, kitty cats that might have occurred during the quarter, yes.
The one kitty cat that occurred during the quarter was Tropical Storm Colin, which was like in early June, okay.
And what we were saying to <UNK> and so let me say it even more clearly, hopefully, is if you just look at those three items, some of the increase, the $3 million or so was reserve strengthening.
The bulk of the rest of the money would probably have more to do with just losses increasing because of the activity that's going on in development and everything else.
And then there is a small component that will have come in from Tropical Storm Colin because as I said it was about 120 claims, but when you look at it across $26 million, we didn't want to mischaracterize it that, oh my God, because of Colin we're here, right.
That would be a ---+ that's why we were trying to minimize the weather effects, yes.
Two things, is because we manage ---+ not even manage, we have to acknowledge every lawsuit that comes our way.
So we count how many lawsuits you've got year-over-year in Tri-County, et cetera and I think as <UNK> rightly pointed out, our lawsuit count year-over-year is down.
So that's an interesting development in a world where everybody is talking about increasing AOB and increasing lawsuits.
So that's ---+ as I also stated in response to that, whether that's a temporary respite or whether it's a trend that will continue on, it's just too early to tell, but that deviation is there and it's almost a public record.
So we have that going on, the other kinds of things that we also see a leveling off is in terms of claims coming in and how many AOB, lawsuits, et cetera that are coming in and AOB non-lawsuit claims that are coming in.
It is sort of ---+ it's looking like it's leveling off now.
I'm not saying it's going away, I'm not saying it's (inaudible) or anything else, I'm just telling you that whatever the elevated level is, it seems to be leveling off because we measure this week after week, month after month, yes.
That's a nebulous question, I don't know what everybody else is or isn't doing, what I can tell you is because we monitor a number of lawsuits filed across a large cross section of the Florida insurance market, what we're seeing is this trend seems to be leveling off across the industry, if you look at it on a cumulative basis.
Now, there are a few outliers, there is a handful of carriers, the only one I am willing to name is Citizens, who may still be seeing an increased claim and lawsuit activity, it seems to be there's a few places ---+ a few carries that seem to be still seeing increases month over month, but as an industry, at least for whatever reason the last couple of months, the lawsuit activity seems to have leveled off, it's still way too high, but it's leveled off, yes.
Very simple answer, Citizens new policy language went into effect July 1, obviously too early to see what effect it would have on it.
Homeowners' Choice policy language went into effect on August 1, one month later and again it's too early to tell, but policy language is there and done.
Yes.
<UNK>, I am an optimistic person.
I hope it will have the desired effect and lead to the improvements that we are seeking.
We really want that to happen because we are trying desperately to not increase rates or charge any more premiums to people who have done nothing wrong in this situation.
Having said that, it's just too early to tell whether my optimistic viewpoint will actually be met or whether somebody will discover a new loophole or something or the other around it, it's just too early to tell, yes.
So I guess my answer is going to be slightly different than what most people would like to hear on this call.
But we've tried to be straightforward and explain this, we are trying very, very hard not to raise rates at all on anybody.
And from what we see, we see that a handful of people are gaming the system and passing the cost on to everybody else and we are trying to see what steps we can do and see if you can do the best that we can do for the vast majority of our customers who have ---+ basically are just trying to pay their bills, raise their kids, go through life and we are trying to do what we can to avoid have a rate increase, either file for a rate increase or have one approved.
And to put this into perspective, it's been ---+ the last time we actually applied for a rate increase, it was 2012.
So we'd like to keep that record going.
And especially as we just reduced rates last year, we're always in this for the long-term, so we don't look at this that you go increase rates at the drop of a hat just because you can.
And I think our policyholders appreciate that, yes.
Yes, absolutely.
I think because of the sentiment that I just ---+ question, the last answer to the last question, what's happening out there is our high retention rates actually seem to be getting even higher.
So we are looking at projections ---+ compared to the projections we had, we are seeing the retention be even higher than we had anticipated.
The part above that is I think partly because this is going on, agents, people out there are talking to policyholders and saying, do you want to be with a company that looks for any reason to raise rates or be with Citizens who has raised rates every year for the last umpteen years or do you want to be with a company who is trying very hard not to raise rates.
I'd note that about 15 companies or 16 companies may have filed for rate increases under this whole AOB thing, we are not one of them.
Okay.
So I will tell you one other item.
Yes, retention has probably gone up by a couple of points, because it ---+ from 88%, 90%, it can't go up much, because then it will be over 100%, so it can't go up by much, it's only a couple of points.
But what we are also doing and to my earlier conversations about trying to manage the business in challenging times is that we are non-renewing and we are shedding business in ---+ on a very targeted basis of policies that we think are likely to develop over the next few years and past rate increases on all the other policyholders.
So we are using the elevated retention rate to actually shrink the business a little bit, if you like.
Tri-County and the Orlando area.
Again, it just worked out that way.
We're looking through the numbers and where we see these things, we're trying to hold down rates for the vast majority of customers requires us to take the actions that we have to take.
And there are some AOB trends in the Orlando area, yes.
Shoot.
Yes, funny enough, we've been so busy doing other things (inaudible) I figured maybe around the 155,000 mark, give or take a couple of thousand.
155,000.
Yes, I think if you were to consider flood policies, TypTap already has more flood policies than Homeowners' Choice does, yes.
It depends, right.
And what it depends on is how great a deal or lack of a deal people are getting from the NFIP.
And what we are doing is, we are taking advantage of dislocations in risk and what happens with it also is that we are doing, in terms of flood policy, the same thing that we did with wind policies in Citizens all those years ago, yes.
So we are basically trying to take good risk and underwrite the matters out of NFIP.
Some of the risks we take, you'd be amazed as to how much money they saves up, it can be as easy as 15%, sometimes it's high as 50%.
Yes, some of those places, it gets as high as that, right.
I don't want to put out a slogan, 13 seconds could save you 50% or something, but they'll have seen those kinds of savings, yes.
Because as we have done ---+ in our entire history and we continue to do so, we charge a fair price for a great product and people look at the stuff and it comes out the ---+ and they make their choices as to whether they want come with us or they want to stay with the NFIP.
All we're doing is we're depopulating in a profitable manner with a good spread of risk.
Again, these are all things that we've done on the wind side for years and continue to do so.
So we're applying the same basic business principles to the flood side.
Really it consists of two books, the books those a set of policyholders who have to buy flood insurance and these are the ones that are in the A and the V zones and then there's a whole different set of people who don't have to buy ---+ the guys have to buy it because of mortgage issues, et cetera and as all the folks in the X zones who buy because they choose to buy.
And basically, how this is working out, it's on average working out to be about $375 per policy in the X zones, about $1,400 to $1,500 in the A zones and about $33,000 or so in V zones.
It's averaging at about $1,400 or so.
I think we are doing what we do and trying pick what we can out of all three zones.
What you have to keep in mind is that it's not like the three zones have equal numbers of the policyholders in them.
So we are trying to make sure we build the balance book.
(multiple speakers) people out there.
What the X zone stuff is our people who are not required by their mortgage to buy flood insurance.
That does not mean that he isn't imprudent buy flood insurance and that people shouldn't buy flood insurance or anything else of that nature, it just says, if you're in X zone, it is not a condition of your mortgage that you're required to buy a flood insurance, usually, yes.
That we're seeing or that ---+ the NFIP.
Okay.
So look, this is where ---+ you're going to love my answer, because if you think about Florida and the NFIP, Florida has about 2 million policies in NFIP, about 1.3 million of them are X zone policies, about 700,000 are A zone policies probably about 30,000, 40,000 are V zone policies, something in that ---+ those kinds of numbers.
So if you get an enamored with PIF counts, obviously the X zone is the biggest opportunity, right.
As you know, we've never been always about PIF count, we look at where the opportunities lie and where there's good risk and where there isn't.
What balance we're going to do, we are not exactly disclosing at this point because again I suspect lots of competitors are going to be listening to this call.
We have gone to great lengths to figure out what would be a balanced book and how to get it and time will tell.
It's a mix of agents and policyholders and and neighbors telling each other.
We are seeing quotes and people jumping on to TypTap all over the place and it's spreading virally.
On behalf of the entire management team, I would like to express our appreciation for the continued support we receive from our shareholders, employees, agents and most importantly, our policyholders.
We look forward to updating you on progress in the near future.
