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Sha'Ron James

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Citizens Insurance Need Not Loan


By: Glenn Marston

The Ledger

The insurance consumer advocate for Florida on Monday released a long series of concerns about a plan of the state-owned Citizens Property Insurance Corp. to loan $350 million from its surplus fund to private insurance companies. They would take over the policies of some Citizens' customers.

Many in state government, the insurance industry and across Florida say the state has taken on too much liability — creating a burden on state government as well as the residents of Florida, who ultimately stand behind the company. They say Citizens was intended only as an insurer of last resort, one for those who could not find property insurance elsewhere.

The result has been an effort to encourage private insurance companies to take a greater share of the market.

For some, the idea of adding private coverage is a matter of principle or ideology. They just don't think the state should be in the insurance business — property insurance should operate as a free market.

For others, private coverage is a matter of reducing the state's liability in the case of massive claims of the sort that could result if a large-and-powerful hurricane were to cause great damage to many homes.

However, until Citizens unveiled the notion of the $350 million "surplus-note loan," for which insurance companies had lobbied and which the Citizens board approved in September with minimal public comment, few had contemplated the idea of loaning money to private insurers to accomplish the privatization goal.

With her announcement Monday, Consumer Advocate Robin Westcott wrote a letter to Citizens Chairman Carlos Lacasa, laying out her concerns, reported the News Service of Florida."

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," she wrote. However, she added, "Citizens must assure consumers and policy-makers that a thorough cost-benefit analysis justifies the commitment of up to $350 million of Citizens' surplus, as this program would allow."

Friday, incoming speaker of the House Will Weatherford, R-Wesley Chapel, also wrote to Lacasa, reported the Tampa Bay Times.

"I am concerned that board's aggressive timeline will result in the program's implementation before the two chambers of the Legislature complete hearings on this important matter of state policy," Weatherford wrote.

"My concerns involve serious questions regarding the process by which the proposed program was approved, the sufficiency of the information and analysis on which the approval was based, and uncertainties regarding the board's legal authority to adopt and implement the program," he wrote.

The transfer of more than 200,000 policies of an expected transfer of 350,000 policies is under way, reported The Palm Beach Post. Citizens holds 1.4 million policies.Citizens' surplus-note loan is "reckless," says state Rep. Frank Artiles, R-Miami.Artiles wrote a letter to Citizens president Barry Gilway on Sept. 28, reported The Post."In short, you are well on your way to accomplish your goal of 300,000 customers by year's end, and you do not need to give away $350 million to do so," Artiles wrote.Westcott, Weatherford and Artiles are all correct in their concerns about this unusual action by Citizens.

Loaning money to insurance companies to prod them to take over policies — something they were in the process of doing without a loan — is not necessary. It is bad governmental policy and it would disrupt the private market.[ Glenn Marston is editorial page editor. E-mail: glenn.marston@theledger.com. Phone: 863-802-7600. ]