Florida Lawmaker Calls for Audit of
Citizens Insurance's New $350 Million Loan
9/14/2012
By: Toluse Olorunnipa
Bradenton Herald
Another day, another controversy for Citizens Property Insurance Corp., which
has moved aggressively to make itself less attractive ever since Florida Gov.
Rick Scott ordered it to downsize last year.
In recent months, the state-run
insurer has hiked rates, sidestepped the state Legislature, spent lavishly on
executive perks and backed a risky multi-million dollar loan program pushed by
an insurance lobbyist. As Citizens plows ahead with its massive overhaul, it is
picking up a host of enemies along the way.
This week, State Rep. Frank Artiles,
R-Miami, sent a sharply-worded letter to Citizens' regulator, the Office of
Insurance Regulation, calling for an official audit into the
insurer-of-last-resort's latest controversy. Citizens' board approved a plan
last week to loan out $350 million in money from its $6.2 billion surplus to
private insurers--under very generous terms--to incentivize the companies to
take over some of the state's policies.
The concept of plan was approved less
than 48 hours after it was fully unveiled to the public, and there was no
opportunity for public input. Artiles is now calling for a full audit of the
companies involved, and has requested loads of public records from Citizens.
"It
is our hope that the Citizens board can take a step back and allow an audit of
these insurers while discussing its plan with its policyholders, the public, the
governor and the Florida Legislature," Artiles said in a letter. "A decision
like this,which affects both taxpayer dollars and the future of property
insurance in Florida, deserves to be discussed in a rational public
way."
Florida's insurance consumer advocate, Robin Westcott, also said last week
that the plan -- which could result in Citizens losing all or part of the $350
million loan -- was being put through "in a hurry."
Citizens disagrees, saying
that it did provide several opportunities for public input, beginning back in
June.
"Rep. Artiles is misstating the chronology of what has occurred," said
Citizens spokeswoman Christine Ashburn, in a statement. "Citizens began public
discussions of depopulation proposals at the summit on June 1 which was open to
all members of the public and broadcast live by the Florida Channel."
Artiles
called the program, which was supported by a lobbyist for a
politically-connected insurance company, an "inside deal" and said it made
Florida's $20 million Digital Domain debacle "look like a drop in the
bucket."
Those harsh words come at a time when Citizens has been smarting from
several public relations dust-ups in recent weeks and months.
This week, yet
another homeowner filed a lawsuit over Citizens' reinspection program, which has
led to premium increases of more than $150 million. Stephanie Ritchie, of
Tequesta, sued a Citizens contractor for allegedly conspiring with the state-run
insurer to double her insurance premiums by stripping discounts she had received
just a year ago.
Last week Citizens was forced to reform its executive travel
policy after a Times/Herald report unveiled a pattern of luxury corporate
spending by employees travelling to international locations on the company dime.
Scott ordered the Chief Inspector General to investigate the spending, which
included $600-a-night hotel rooms and expensive dinners.
Earlier this summer,
Citizens moved to reform its controversial reinspections program, after several
policyholders complained that their premiums soared unjustly because of the
program.
Plans to remove the 10 percent cap on rate hikes for new customers,
limit water loss damages to $15,000, discontinue builders risk insurance and end
coverage for some mobile homes have all sparked public backlash.
Several of the
plans were ultimately abandoned, and some have since been walked backed in
response to public criticism.
Citizens has responded to much of the criticism by
launching new communications initiatives and several operational reforms. The
company's new president, Barry Gilway, said last week that "communication, or
the lack thereof" is one of Citizens' biggest problems.
But the company stands by
its handling of the new $350 million program of loans to private insurers.
"We
have been very transparent about our goal to look at different programs while
protecting Citizens' financial position," said Ashburn. "Before this or other
depopulation programs are finalized there will be time provided for public
testimony before the depopulation committee and the board." Copyright 2012 . All
rights reserved. This material may not be published, broadcast, rewritten or
redistributed.
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