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Citizens Customers Need More Facts about Private Insurers, Advocates Say

9/12/2012
By: Paul Owers and Donna Gehrke-White
Sun Sentinel

The push by Florida's largest property insurer to transfer a record number of policies to private firms is sparking calls to offer homeowners more details that will help them make the critical decision about whether to switch.

Customers of Citizens Property Insurance Corp. have to discover for themselves facts such as whether their premiums would increase under a private insurer, a company's responsiveness to policyholders and its track record on corrective actions from regulators.

"For the consumer, there really isn't enough information," said Robin Smith Westcott, the state's consumer insurance advocate.

Her office is working to collect more comprehensive information on the five companies currently hoping to take over Citizens policies. Westcott hopes to create a website within in the next couple of weeks - before the Nov. 6 deadline for policyholders to move to a private insurer.

In the meantime, she recommended that at the very least consumers Google the companies' name to see what existing customers have to say about the insurers.

Citizens could lose some 300,000 policies this year -- or a fifth of its portfolio -- after Gov. Rick Scott ordered the state-backed insurer of last resort to cut its risk. That figure would exceed the total number of policies removed in the past three years combined.

By state law, affected Citizens customers will be notified whether their policies have been selected for removal. Policyholders have 30 days to decline and stay with Citizens. If customers don't respond, their policies will be assumed by the private companies.

State Sen. Mike Fasano, R-New Port Richey, said the letters that Citizens policyholders receive from private insurers don't give enough meaningful information. He agrees with Westcott, saying there needs to be more transparency for consumers to make better decisions.

"She's right on target making sure that happens," Fasano said.

Already this year, 84,339 policyholders statewide have switched from Citizens to private firms.

The companies scheduled to take over thousands of policies this fall include Boca Raton-based Florida Peninsula Co., one of the state's 10 largest home insurers. This month, Citizens approved a $350 million plan that would give low-interest loans to encourage private insurers to take even more policies out of Citizens.

The state's Office of Insurance Regulation has vetted the five companies but only to ensure they are financially solvent and can handle the extra customers, spokeswoman Amy Bogner said in an e-mail. Homeowners can find that information online.

But in past years some insurers declared financially sound still went out of business, said Jay Neal, executive director of the nonprofit Florida Association for Insurance Reform.

He urged consumers to take those extra steps and do other research, such as checking with the Better Business Bureau on any complaints consumers may have filed against the insurers.

Consumers should look to see how long the company has been in business and check on its financial history, Neal said. They should also press their insurance agents to research the companies proposing to take over the policies.

Some companies taking over Citizens policies have actually lowered premiums, Neal said. But Sean Shaw, president of Policyholders of Florida, an advocacy group, has said that policyholders complained of rate increases after the first year.

"Most people are only interested in whether their premiums are going up," Shaw said Tuesday. "But there are other things that are just as important, like the ability of a company to pay a claim and how long it takes."

Citizens customers face steep assessments if the state-backed insurer does not have enough money to pay claims after a major storm. So policyholders who have the chance to switch may be better off in the private market, Neal and others say.

Florida Peninsula started in April 2005 to take over Citizens policies following the busy hurricane season of 2004. It now has 120,000 policies.

The four other insurers - Homeowners Choice P&C Insurance Co., Southern Fidelity P&C, Southern Oak Insurance Co. and American Integrity Insurance Co. of Florida - all are based in Florida and have been licensed in the state since at least 2004.For the information provided by the Office of Insurance Regulation about each company go to http://www.floir.com/Sections/PandC/TakeoutCompanies.aspx