Frank Artiles: It's Our Money that
Citizens is Gambling
By: Frank Artiles
At a hearing scheduled for 4 p.m. Thursday at the Miami Dade College Wolfson
Campus, the Citizens board will consider input regarding a proposed premium rate
increase of nearly 11 percent statewide. It is the only scheduled hearing for
Plainly speaking, it amounts to robbing Peter to pay Paul. That’s what the board
of Citizens Property Insurance Corp., Florida’s property insurer of last resort,
did this month when it voted to award $350 million in low-interest, forgivable
loans to a handful of private sector insurance companies to take hundreds of
thousands of Citizens’ policies.
Citizens’ board calls the loan program a needed incentive for insurance
companies to take the policies. But there are three serious issues with this
• The $350 million in loans comes from premium dollars paid by Citizens’
policyholders with no guarantee of full repayment.
• Citizens incorrectly branded the loan program as offering “incentives” when it
is actually paying “bonuses.” Before hatching this plan, Citizens was set to
remove more than 270,000 policies from its rolls this year alone, in addition to
more than 110,000 policies moved to private insurers in 2010 and 2011.
Depopulation efforts are alive and well — and private insurers did not need
motivation to take some of Citizens’ lowest-risk policies. But they will
appreciate the added bonus.
• Citizens’ board passed the plan with no public input, and no consultation with
Under the loan program, private insurers could borrow up to $50 million for 20
years at a low interest rate of 2 percent. In return, Citizens obligates the
insurers to take the policies for only 10 years, and allows them to raise rates
beyond 10 percent a year, after three years.
To make matters worse, virtually none of the insurance companies in line to take
the policies have been audited in at least three years by the regulators. With
no recent audits, Floridians have no assurances that these insurers — several of
which have had massive underwriting losses over the past five years — are
financially healthy enough to withstand storm losses.
This plan is a gamble that no Floridian can afford to take. Citizens’ board is
tone deaf to the public’s best interests — it seems interested only in making
inside deals that run counter to free-market principles and fairness. It’s no
surprise that as many as 300,000 of the affected policies would be given to
Tower Hill, a giant insurance conglomerate that created the program, is seeking
up to $200 million in loans, and actively lobbies Citizens’ board.
I have asked the Florida Office of Insurance Regulation to perform audits of the
insurers in line to receive the loans. We need what I would call an “assurance
policy” that gives us confidence these insurers aren’t going to leave
policyholders high and dry. While the audits take place, Citizens should discuss
its plan with policyholders and the Florida Legislature.
I agree with Citizens’ board chairman Carlos LaCasa that Citizens needs to
aggressively reduce the number of policies it carries, but the reduction needs
to be made responsibly so Floridians aren’t burdened with more costs. As
reported in the Tampa Bay Times and Miami Herald, Florida’s insurance
consumer advocate, Robin Westcott, said that the plan was pushed through “in a
A plan of this magnitude, which impacts the future cost of all Floridians’
property insurance, deserves an open debate, not a board decision influenced by
lobbyists that smacks of an insider, sweetheart deal.
Tell Insurance Commissioner Kevin McCarty how these insurers need to be audited
and how Citizens’ board needs to slow down this train to get input from
ratepayers and the Legislature.
State Rep. Frank Artiles, R-Miami, has a master of law in real property
development from the University of Miami Law School and is a general contractor
and a public adjuster and appraiser