Florida Consumer Advocate Calls for
More Analysis of Citizens' Property Depopulation
10/1/2012
By: Jim Turner
Sunshine State News
Florida Insurance Consumer Advocate Robin Smith Westcott says additional
assurances are needed on the $350 million low-interest loans going to private
insurers to help the state-backed Citizens Property Insurance Corp. to shed
350,000 policies.
However, one of the business lobbying groups that supports the depopulation
program warns that bloated Citizens “is a ticking time bomb that must be defused
now.”
With the Citizens board of governors set to meet on Oct. 9, Westcott fired off a
question-laced letter to Citizens Chairman Carlos Lacasa on Monday that seeks to
know if the program will reduce costs to consumers.
“The Office of the Insurance Consumer Advocate shares the board’s goal of
depopulating Citizens and reducing the potential assessments on all property and
casualty policyholders in the state,” Westcott wrote.
“The surplus note take-out program tentatively approved at the last board
meeting appears to advance this goal. However, Citizens must assure consumers
and policymakers that a thorough cost-benefit analysis justifies the commitment
of up to $350 million of Citizens’ surplus, as this program would allow.”
Among Westcott’s questions: How were the policies selected? Can a map be
provided that specifically identifies the location of these policies? Has there
been an analysis of the impact of the program on the marketplace?
Under the Citizens depopulation program approved last month, Citizens will
provide the upfront capital, in the form of 20-year loans, to support the
assumption of large blocks of Citizens’ personal residential policies by
qualifying insurers.
The program has been estimated to reduce the emergency assessment tax by 38
percent if a one-in-100-year hurricane hit Florida.
Citizens developed the program after soliciting depopulation and risk-sharing
ideas from private insurance companies that do business in Florida in
an effort to significantly reduce Citizens policy count, which currently stands
at close to 1.5 million.
Citizens has estimated the reducing catastrophic risk through purchasing
reinsurance coverage alone would cost Citizens approximately $240 million per
year.
Sen. Mike Fasano, R-New Port Richey, and Rep. Frank Artiles, R-Miami, have
previously expressed concern that the program was rushed to approval and audits
should be conducted of the companies involved.
The low-interest loan program has the backing of Florida TaxWatch, Americans for
Prosperity-Florida, and Associated Industries of Florida for relieving Citizens
of thousands of policies and potentially reducing future hurricane tax
assessments by an estimated $1.2 billion.
AIF President and CEO Tom Feeney quickly responded to Westcott on Monday by
saying that the program could fall apart by delaying it until 2013.
“Citizens Property Insurance Corp. (Citizens) is a ticking time bomb that must
be defused now; with more than 1.4 million policyholders, it has gone from being
the insurer of last resort to being the largest insurer in Florida,” Feeney
wrote. “Time is of the essence and this plan should not be delayed.
“The financial black cloud that hangs over every Floridian and all of our
businesses is dark and getting darker. We are one big hurricane away from
financial catastrophe due to the massive hurricane taxes that will be foisted on
virtually every insurance policyholder in the state. Imagine while trying to
rebuild our property and our businesses we learn we are going to be hit with a
huge hurricane tax bill – possibly for years!
“A crucial consideration of the depopulation program is the timing of its launch
and that is based on some very precise math. If we were to wait until next year,
the plan simply would fall apart.
