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<p class="MsoNormal"><span style="color:#1F497D">Please see below and attached re: Citizens Insurance - thanks to Jay Mussman.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<b><span style="font-size:12.0pt;font-family:"Times New Roman","serif";color:#1F497D">Scott P. Pence | Carlton Fields</span></b><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D"><o:p></o:p></span></b></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Board Certified in Construction Law by The Florida Bar<o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Direct: 813.229.4322 | Fax: 813.229.4133<o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">4221 W. Boy Scout Blvd., Ste. 1000<o:p></o:p></span></p>
<p class="MsoNormal" style="text-autospace:none"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Tampa, Florida 33607-5780
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black"><a href="http://www.cfjblaw.com/spence/"><span style="color:blue">bio</span></a> |
<a href="http://www.cfjblaw.com/FCWSite/Features/_Attorneys/vCard.aspx?attorney=7">
<span style="color:blue">vcard</span></a> | <a href="http://www.linkedin.com/in/pencescott">
<span style="color:blue">linkedin</span></a></span><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> Mussman, Jay D. [mailto:jmussman@daypitney.com]
<br>
<b>Sent:</b> Wednesday, December 07, 2016 3:22 PM<br>
<b>To:</b> Pence, Scott<br>
<b>Subject:</b> FW: Press Release: Litigated water claims, AOB to top Citizens 2017 challenges<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">FYI</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">Please share with committee</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">Thank you</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">Regards</span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:12.5pt;color:#003366">Jay D. Mussman | Attorney at Law |
<a href="http://www.daypitney.com/professionals/M/Mussman-Jay-D"><span style="color:blue">Attorney Bio</span></a>
<br>
</span><span style="font-size:6.0pt;color:#1F497D"><br>
</span><a href="http://www.daypitney.com/"><span style="font-size:6.0pt;color:blue;text-decoration:none"><img border="0" width="585" height="25" id="_x0000_i1025" src="cid:image001.jpg@01D2509D.9ABBC450"></span></a><span style="font-size:6.0pt;color:#1F497D"><br>
<br>
</span><span style="color:#1F497D">399 West Palmetto Park Road, Suite 202 | Boca Raton FL 33432-3760<br>
t (561) 537 4934 | f (561) 952 4267 | m (561) 862 8107<br>
<a href="mailto:jmussman@daypitney.com"><span style="color:#003366">jmussman@daypitney.com</span></a> |
<a href="http://www.daypitney.com"><span style="color:#003366">www.daypitney.com</span></a><br>
<a href="http://www.daypitney.com/about/offices/boston"><span style="color:black;text-decoration:none">BOSTON</span></a> | <a href="http://www.daypitney.com/about/offices"><span style="color:black;text-decoration:none">CONNECTICUT</span></a> | <a href="http://www.daypitney.com/about/offices"><span style="color:black;text-decoration:none">FLORIDA</span></a>
| <a href="http://www.daypitney.com/about/offices/parsippany"><span style="color:black;text-decoration:none">NEW JERSEY</span></a> | <a href="http://www.daypitney.com/about/offices/new-york"><span style="color:black;text-decoration:none">NEW YORK</span></a>
| <a href="http://www.daypitney.com/about/offices/washington-dc"><span style="color:black;text-decoration:none">WASHINGTON, DC</span></a> </span><a href="http://facebook.com/DayPitney"><span style="color:blue;text-decoration:none"><img border="0" width="20" height="20" id="_x0000_i1026" src="cid:image002.jpg@01D2509D.9ABBC450" alt="Day Pitney LLP on Facebook"></span></a><span style="color:#1F497D">
</span><a href="http://www.twitter.com/daypitneyllp"><span style="color:blue;text-decoration:none"><img border="0" width="25" height="20" id="_x0000_i1027" src="cid:image003.png@01D2509D.9ABBC450" alt="Follow Day Pitney LLP on Twitter"></span></a><span style="color:#1F497D"> </span><a href="https://www.linkedin.com/company/day-pitney-llp"><span style="color:blue;text-decoration:none"><img border="0" width="20" height="20" id="_x0000_i1028" src="cid:image004.jpg@01D2509D.9ABBC450" alt="Day Pitney LLP on Linkedin"></span></a><span style="color:#1F497D"><br>
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<p class="MsoNormal" style="margin-left:.5in"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> Newsroom [<a href="mailto:Newsroom@citizensfla.com">mailto:Newsroom@citizensfla.com</a>]
<br>
<b>Sent:</b> Wednesday, December 07, 2016 1:16 PM<br>
<b>To:</b> Newsroom<br>
<b>Subject:</b> Press Release: Litigated water claims, AOB to top Citizens 2017 challenges</span><o:p></o:p></p>
</div>
</div>
<p class="MsoNormal" style="margin-left:.5in"> <o:p></o:p></p>
<p class="MsoNormal" align="center" style="margin-left:.5in;text-align:center"><span style="font-family:"Times New Roman","serif""><img border="0" width="802" height="133" id="Picture_x0020_3" src="cid:image008.jpg@01D2508B.FB883690"></span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">FOR IMMEDIATE RELEASE</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">December 7, 2016</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">Contact: Michael Peltier</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">(850) 513-3774</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">(850) 264-7702 (cell)</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><b><span style="font-family:"Times New Roman","serif""> </span></b><o:p></o:p></p>
<p class="MsoNormal" align="center" style="margin-left:.5in;text-align:center"><b><span style="font-family:"Times New Roman","serif"">Litigated water claims, AOB to top Citizens 2017 challenges</span></b><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><b><span style="font-family:"Times New Roman","serif""> </span></b><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">MAITLAND, FL – Rising water claims and “out of control” litigation threaten the Citizens Property Insurance Corporation’s long-term financial stability and will
stifle efforts by Citizens to offer premium breaks to policyholders in 2017, Citizens leaders stressed during a governing board meeting on Wednesday.</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">Barring significant changes, including possible legislative action on assignment of benefits, non-hurricane losses will continue to chip away at Citizens’ reserves
and could result in policies returning to the state’s insurer of last resort as private insurers face similar challenges.</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">“Without significant reform, litigation, water claims and AOB pose a serious threat to the financial position of Citizens,” said Chris Gardner, Chairman of the
Board of Governors. “This is not a sustainable situation.”</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">The percentage of nonweather-related water claims – burst pipes, sudden dishwasher leaks, etc. – that head toward litigation has skyrocketed in recent years. Each
litigated case raises the average claim cost by at least $20,000. These costs must be passed on to Citizens policyholders.</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:0in;margin-right:0in;margin-bottom:12.0pt;margin-left:.5in">
<span style="font-family:"Times New Roman","serif"">8,097 new lawsuits were filed against Citizens between January and November 2016, a 30 percent increase from the same period in 2015. Meanwhile, Citizens’ policy count dropped by 26.3 percent between January
2015 and November 2016.</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">“While less than 15 percent of water-related claims resulted in litigation in 2011, nearly 50 percent did so in 2016,” said Barry Gilway, Citizens President, CEO
and Executive Director. “The situation is really out of control.”</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">Contributing to this sharp increase is the fact that, in many cases, Citizens is made aware of a loss only after repairs are made or the policyholder has hired
an attorney or a public adjuster to represent them. </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">Another factor is the use of assignment of benefits, in which policyholders who suffer a loss sign over policy rights to a third party, such as a contractor, who
then has control of the claim and deals directly with Citizens. On average, AOB claims are more expensive and more likely to lead to litigation. Under current conditions, contractors assume all the benefits afforded the policyholders but bear few of the responsibilities,
such as cooperating with Citizens adjusters.</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif"">These losses are driving Citizens’ 2017 budget request, which was approved by the Board on Wednesday. For 2017, Citizens has estimated net operating losses of
$100 million in its inland residential policy lines, with losses concentrated in Miami-Dade and Broward Counties, where the bulk of litigated and AOB claims originate.</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" align="center" style="margin-left:.5in;text-align:center"><span style="font-family:"Times New Roman","serif"">###</span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Times New Roman","serif""> </span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><sub><span style="font-family:"Times New Roman","serif"">In 2002, the Florida Legislature created Citizens Property Insurance Corporation (Citizens), a not-for-profit alternative insurer, whose public purpose is
to provide insurance to, and serve the needs of, property owners who cannot find coverage in the private insurance market.</span></sub><o:p></o:p></p>
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