90,000 Citizens Reports for Property-Insurance Discounts Rejected
9/3/2012

By: Charles Elmore

Palm Beach Post

Forget a few isolated cases. More than 90,000 times, Florida’s last-resort insurer Citizens and its contractors rejected reports from inspectors they hired to determine whether customers qualified for property-insurance discounts, an analysis of more than 225,000 inspection records by The Palm Beach Post shows.

The bottom line after reports were kicked back: approximately $50 million in higher bills for customers.

The results have made homeowners furious. For some, annual premiums have doubled.

“This inspection process is a sham and an outrage,” said Harriet Golding of Palm Beach. “They seem to be shaking down their customers and hoping people won’t complain.”

Citizens spokeswoman Christine Turner Ashburn said, “The only purpose of this program is to make certain our policyholders receive the correct credits for the storm damage mitigation features present on their homes.”

Three out of four homeowners have lost credits for building features that harden homes against hurricanes, often raising bills far beyond the regular 1o percent annual rate increases Citizens is allowed by law. The massive campaign has affected about 250,000 homeowners, has raised premiums by more than $137 million and is ongoing.

Gov. Rick Scott has pushed state-run Citizens to raise premiums, reduce coverage, shrink its risk exposure and help drive customers to private competitors. A lawsuit against Citizens by customers in Palm Beach and Broward counties claims the reinspection program is a “subterfuge” to raise premiums, alleging coordinators withheld payment to inspectors until they changed reports to deny credits. Citizens denies the claims and has filed a motion to dismiss the suit, which seeks class-action status.

In all this, the stakes are plenty big: Citizens, with 1.4 million customers including 140,000 in Palm Beach County, is the state’s largest property insurer.

The Post analyzed data on more than 225,000 inspections obtained from Citizens in a public records request.

A majority of rejections are for “cosmetic” reasons to make sure the report is clear, concise, easier to understand and properly documented, and are “often not material to impacting whether a feature would be granted or not,” Citizens spokeswoman Ashburn said.

Still, The Post found when supervisors rejected inspectors’ reports, the outcomes weren’t 50-50, helping homeowners about half the time. They were overwhelmingly bad for consumers.

Fewer than one in 10 rejections resulted in lower customer bills — for instance, catching a discount the inspector might have missed. After rejections, customer bills jumped an average of more than $660 or almost 25 percent, more than average for the overall program. Citizens calculates the overall average premium increase after 225,501 reinspections is $608.50, or or 23.9 percent.

The statistics appear to support what a former Citizens inspector in Palm Beach County told The Post on condition of anonymity in a story published Aug. 5. He said nearly half his reports were rejected, and consumers were left worse off in virtually every case.

“I quit because of what I considered to be unethical practices,” the inspector said. “I don’t think it’s the inspectors’ fault on this. Inspectors are being told how to inspect it.”

Inspectors whose reports get rejected often lose compensation in the process, sometimes 20 percent of an $85 fee. In more than 16,000 cases, both Citizens and a contractor rejected reports for the same houses. Companies helping Citizens carry out the program, including Inspection Depot Inc., Mueller Services Inc. and Quality Built LLC, did not respond to calls for this story or referred questions to Citizens.

Inspection reports can be rejected for reasons such as beomg incomplete, incorrect or inconsistent with known features of the property, Ashburn said. Poor photo quality, wrong or duplicate photos, or missing or inadequate documentation are among a litany of reasons that can lead to a rejection, she said.

Citizens executives, acknowledging the program is “under fire,” announced Aug. 17 they are making some changes in the reinspection campaign. They will consider further revisions at a board meeting Sept. 7. About 90,000 more reinspections are scheduled.

Chairman Carlos Lacasa, a former state legislator from Miami, said he is sensitive to concerns about the program.

The company said it will suspend the loss of credits in cases where an inspector says he cannot get into an attic to see roof features, and the customer can request a free inspection when access is clear.

Customers will have 12 months after a Citizens inspection to request a second free inspection if they make upgrades or disagree with the results. Citizens also hopes to communicate better about why customers are losing credits and how they can dispute the results.

But the Citizens board, which includes some members appointed by the governor, often has been divided in votes affecting what customers pay and the coverage they get.

Homeowners typically have no way of knowing when Citizens or a contractor rejects an inspector’s initial report. They’re notified only of the final result.

Richard Miller and Gail Anderson of Lake Worth said they have no idea whether their inspector’s report was rejected, but they were expecting a decrease in their bill — not a whopping $1,779 increase. Their yearly Citizens premium jumped 70 percent to $4,267.

“This is shocking to us because we have improved the home since we have been with Citizens and expected a lower premium after the inspection,” Anderson said. “We installed hurricane proof windows, hurricane proof garage door and R19 high density foam in the attic. The inspector was very impressed with all our efforts and left us with a very positive impression.”

In Palm Beach, Harriet Golding said her annual premium doubled to $16,000 after a company-paid re-inspection.

“After the last round of hurricanes, I installed all new shutters, with the approved markings, stating they met all codes,” she said. “Yet the inspector somehow did not see the markings! Two years ago, I replaced my front door and garage doors with hurricane approved doors, which I had inspected and paid for. They passed the inspection at the time.”

She gathered the building permit for the front door and photos of her approved shutters and was able to win back credits after a period of anguished struggle, she said.

Often credits hinge on such matters as access to an attic, pulling a permit or whether a qualifying stamp or imprint has fallen off, been painted over or is otherwise not visible.

Len Gilman of Juno Beach, cited in Post coverage in August, had his credits restored after he protested his hurricane shutters that cost him $11,000 in 1998 lacked an imprinted stamp but met the standards to qualify, a Citizens official said.

But many homeowners say the program makes it difficult to figure out why they lost credits. In a case cited by state insurance consumer advocate Robin Westcott, two Citizens inspectors failed to check permits that would show South Florida villas had a roof that qualified for credits. A third company inspector gave a credit for the same shared roof.

The results of inspections are more than an idle budget exercise for residents like Carol Browne. She and her mother are owners of a property in Boynton Beach where a “free” Citizens inspection resulted in a $1,276 premium increase, nearly 100 percent, she said.

“My mother, who is 94 years old, cannot afford to pay an additional $1,276 per year for insurance,” Browne wrote in a letter to the Citizens chairman, with a copy to the governor and others.

The neighborhood hasn’t had any significant wind damage in 40 years, she maintains, but now some residents with fixed incomes and paid-off mortgages are dropping insurance. That means they could lose everything if a bad storm does hit.

“You are forcing us to have no insurance on this property,” Browne said. If that’s the mission, she said, “you have accomplished your goal.”

Staff researchers Niels Heimeriks and Andrew Maloney contributed to this report.