Citizens CEO: Give Insurance
Consumers More Choice
Palm Beach Post
The CEO of Florida's largest property insurer, Citizens, said a change he wants
could help as many as 30 percent of new customers find coverage outside the
state-run carrier, while another panelist at a roundtable Wednesday called for
state action to address problems spotlighted by reporting in The Palm Beach
The answers emerged from a hail of questions at the newspaper's Straight from
the Source Roundtable on property insurance, a free event suggested by readers.
The No. 1 change he wants from state legislators, Citizens President and CEO
Barry Gilway said, is a new "clearinghouse" to make sure customers are aware of
options they may have in the private marketplace before they are sent to
Citizens. It's the state's biggest insurer with 1.3 million customers.
"Customers don't get access to the total market," Gilway said. Under a
clearinghouse, he said, "that policy would be shopped to virtually every
insurance company in Florida."
One problem, he said, is agents may be tied to only one or a few insurance
carriers and may wind up writing policies with Citizens to keep auto or other
business. He mentioned as an example State Farm, which is writing little new
property insurance in the state.
The clearinghouse would be designed to improve on the current system but is not
a "panacea," he acknowledged.
In many instance, customers in mobile homes, homes older than 50 years and those
near the coast may not have any realistic options besides Citizens, he said. But
in his view, perhaps 1,500 out of every 5,000 new policies headed for Citizens
may have a real choice of insurers that the customer does not necessarily know
It's perhaps the biggest issue in the legislature right now for agents, said
Brian Samberg, president of Southeast Insurance agency in Boca Raton and past
president of the Professional Insurance Agents of Florida.
"There are some issues with the details we would like to see worked out,"
Samberg said. He said he's not opposed to the concept but he wants to make sure
the results are in the best interests of agents and consumers alike.
The clearinghouse is a "great idea," said William F. "Chip" Merlin, president of
Merlin Law Group, which represents policyholders against insurers and has office
in Tampa, West Palm Beach, and other cities.
But another area that could use some attention from regulators and legislators,
he said, is business practices one state advocate calls "abusive" at the state's
largest private insurer, Universal Property and Casualty of Fort Lauderdale.
A Post story Wednesday highlighted cases where the insurer accepted premiums for
years but denied claims based on items from a customer's credit history not
disclosed on an application, such as old tax lien in another state.
"I bet today now that this is coming out it will get some attention," Merlin
said. "We need some stronger regulation, from the insurance commissioner and
(Chief Financial Officer) Jeff Atwater - the Legislature needs to do something."
Audience members asked why rates need to keep going up when Florida has been
spared from major storms for seven years.
"Give the absence of hurricanes in the last few years, why does our annual
insurance rate keep rising so much each year?" asked Kirk Spresser of West Palm
One way to keep rates stable is to change the Florida Hurricane Catastrophe
Fund, said Charles Grimsley, chairman and president of the Florida Property and
Casualty Association, which represents many Florida-based home insurers. The Cat
Fund helps make sure insurers can pay claims if bad storms hit.
Some bills in committee would shrink the Cat Fund, forcing insurers to buy more
expensive private reinsurance and raise consumer rates 3.6 percent if private
reinsurance rates stay the same, according to a Senate staff analysis.
But Grimsley's group proposes that the Cat Fund kick in earlier, after $5
billion in losses to insurers instead of $7 billion.
That would keep rates stable at little added risk to the Cat Fund, he said.