Business
Citizens Property Wants Independent Eyes to Ensure Depopulation Plan Reduces Risks
Around the State
The bloated state-backed property “insurer of last resort” is bringing in independent eyes to review a $350 million loan program that is hoped to shift about 300,000 policies into the hands of private insurers.
Members of the Citizens Property Insurance Corp. board of governors, meeting in a teleconference on Friday, agreed to hire Goldman Sachs and a second firm that has yet to be determined to study the depopulation proposal that has drawn a growing chorus of concerns.
Carlos Lacasa
“When you go with a known brand to conduct a review, it just adds credibility and reliability to the ultimate results.”
The second firm, expected to provide a deep analytical assessment of the program, will be named next week.
The review is to ensure the benefits safeguards in place for policyholders and state taxpayers, and are expected to be completed by the board’s December meeting.
The depopulation plan has received criticism from a number of elected officials and consumer advocates, including Chief Financial Officer Jeff Atwater, House Speaker-designate Will Weatherford, R-Wesley Chapel, Sen. Mike Fasano, R-New Port Rickey, Rep. Frank Artiles, R-Miami, and Florida Insurance Consumer Advocate Robin Smith Westcott.
With Citizens up to 1.48 billion policies and many seeking its policies before looking at private firms, the depopulation program also has a wide range of proponents.
Florida Sen. John Thrasher, R-St. Augustine, called for the proposal to be urgently embraced, while Associated Industries of Florida President Tom Feeney has said the loan program is “a good step in the right direction” to reduce the state’s catastrophic hurricane risk.
Under the program, private insurers wouldn’t be allowed to increase rates on any former Citizens policyholder by more than 10 percent a year for three years and any rate adjustment after that would require prior approval from the state Office of Insurance Regulation.
The former Citizens customers who couldn’t afford the hikes after three years could jump back into the state program. However, for each policy that drops from private hands during the 20-year loan period, the private insurer would have to pick up a different Citizens policy.
The program has been estimated to reduce the emergency assessment tax by 38 percent if a one-in-100-year hurricane should hit Florida.
The decision to have the review comes a day after the Florida Office of Insurance Regulation approved a separate removal of 100,000 policies from Citizens to two Florida domestic insurance companies.
American Integrity Insurance Company of Florida will take 50,000 policies in November and another 40,000 in December.
Heritage Property & Casualty Insurance Co., which was licensed in August and has opened its home office in St. Petersburg, has been approved to remove 60,000 policies.
There have been 84,339 policies removed from the 1.48 million existing Citizens policies through the take-out process as of September. The insurance regulation office has approved up to an additional 6,643 for October, 210,000 for November and 100,000 for December.
By Florida law, Citizens' policyholders must be notified of the take-out request and given 30 days to accept or decline the offer. However, if policyholders do not respond, they will be “assumed” by the Florida domestic company on Dec. 4.
Reach Jim Turner at jturner@sunshinestatenews.com or at (772) 215-9889.
Comments (3)
Why? One would start to look at the friends of the other company to figure out why your company (Citizens) is doing them a favor. In this case, their friend is Gov. Scott, friend of private insurers everywhere and beneficiary of large campaign contributions from them.
Scott appointed henchmen to the Citizens board with the mission of destroying the company, no matter what the interest of their customers or the interests of everyone in the state. To Scott and his allies, only one thing matters, and that is the profits of private corporations. Some of these profits become campaign contributions which, in turn, increase the power of the beneficiary.
Is Scott more committed to capitalism or to power? I'd say power because real capitalism thrives without handouts from the government or help from the governor. Real capitalists, real businessmen, would be proud to compete in the marketplace, pitting their superior products against all comers, including the government, which, as we all know, is so incompetent it could not possibly compete against the private market.
Sadly, insurance companies have destroyed their own marketplace. Using computer models, they dumped many of their best customers and forced them (the customers) to create their own company, Citizens. It turns out this works better than the insurers thought, and now they want a share of the other guy's profits. They would like Citizens surplus redistributed to them. They find it easier to cultivate the legislature and the Governor than to compete for business.
Given the outrage of Citizens customers, the insurers may not prevail. It promises to be an interesting battle. That's why Gov. Scott and his handpicked team at Citizens are trying to do the dirty deed before the legislature can act.
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