Insurance Consumer Advocate Robin Westcott on Thursday criticized Citizens Property Insurance for revoking legitimate discounts for hurricane-resistant features.
"Hardening of homes is the only way Floridians have to help control ... the spiraling cost of insurance in this state," she told a Citizens' panel. "The more they hear, 'I didn't get anything for doing that,' the less they're going to" make upgrades.
Leaders of Citizens, the largest home insurer in the state with 1.4 million policies, said they're doing the inspections so premiums and discounts are based on accurate information, not to raise premiums. "We're trying to do all the right things" but Citizens employees have to balance what regulators, elected officials, and others want, said Yong Gilroy, Citizens' chief insurance officer.
Westcott said her office has heard from a lot of real estate agents that Citizens' inspections are killing potential home sales: "You might get to the closing table [and find out] you can't afford to buy that house anymore because the insurance is going to be greater than you expected."
Westcott recommended Citizens use "plain language" for anything sent to consumers about inspections; require inspectors to pull permits; provide space for policyholders' comments on forms filled out during inspections; and provide detailed information to policyholders before inspections and after so they can make the right upgrades.
Carol Everhart, a Citizens board member, asked Westcott to help Citizens draft a brochure to make the process easier to understand. Citizens said it plans to look into some of Westcott's other recommendations.
Westcott said her office is also concerned about some proposals to reduce coverage for certain water damage to $15,000 and raise new Citizens policyholders' premiums more than the current cap of 10 percent a year. If approved, the rate proposal would mean some customers in South Florida pay in excess of 50 percent more than neighbors with similar coverage and some condominium owners pay twice as much.
Citizens' board plans to vote on the proposals, which aim to shrink the insurer and its financials risk to Floridians, at a meeting in Miami Friday. Citizens would then need approval from the Office of Insurance Regulation.
The board also will vote on increasing existing policyholders' statewide average rates by 8 percent or 9.1 percent, depending on whether the new coverage limit on water damage is approved.
Another Citizens Property Insurance panel discussed proposals Thursday to have private insurers take over large batches of its policies. Under some proposals, Citizens would provide private insurers with cash or loans or it would make companies compete for the policies to get the best deal. Citizens plans to have employees analyze the ideas, have the board vote Sept. 7 and implement the plans early next year — if regulators approve them.
Westcott described a consumer who had three inspections done by Citizens' contractors and each had a different result. One inspector pulled permits and took a photo of roof clips to help the consumer score discounts. The other two did not pull the permit and wrote "other" instead of noting the clips were there. "What is 'other?' Well, they lost all of their credits," Westcott said.
"That is unfair," she said. "We are not doing the right thing by the consumer here."
Citizens said only 3 percent of policyholders who had inspections done disputed them, and only 1 percent received additional discounts after disputing the findings.
The state's Department of Financial Services, which oversees Westcott's office, received 268 complaints about Citizens' inspections from Jan. 1, 2011, to July 25, 2012. That means fewer than 1 percent of policyholders with inspections complained to the state.
Citizens' board meeting is at 9 a.m. Friday at the Marriott Hotel, 11099 Brickell Ave., Miami. More information about proposals to move policies out of Citizens is available at SunSentinel.com/HouseKeys.