Blog: Lawmaker calls for audit of Citizens Property Insurance’s new $350 million loan
Sep 14, 2012
The following article was posted to “The Buzz” blog in the Tampa Bay Times on September 14, 2012:
By Toluse Olorunnipa
Another day, another controversy for Citizens Property Insurance Corp., which has moved aggressively to make itself less attractive ever since Gov. Rick Scottordered it to downsize last year.
In recent months, the state-run insurer has hiked rates, sidestepped the state Legislature, spent lavishly on executive perks and backed a risky multi-million dollar loan program pushed by an insurance lobbyist. As Citizens plows ahead with its massive overhaul, it is picking up a host of enemies along the way.
This week, Rep. Frank Artiles, R-Miami, sent a sharply-worded letter to Citizens’ regulator, the Office of Insurance Regulation, calling for an official audit into the insurer-of-last-resort’s latest controversy. Citizens’ board approved a plan last week to loan out $350 million in money from its $6.2 billion surplus to private insurers—under very generous terms—to incentivize the companies to take over some of the state’s policies.
The concept of plan was approved less than 48 hours after it was fully unveiled to the public, and there was no opportunity for public input. Artiles is now calling for a full audit of the companies involved, and has requested loads of public records from Citizens.
“It is our hope that the Citizens board can take a step back and allow an audit of these insurers while discussing its plan with its policyholders, the public, the governor, and the Florida Legislature,” Artiles said in a letter. “A decision like this, which affects both taxpayer dollars and the future of property insurance in Florida, deserves to be discussed in a rational public way.”
Florida’s insurance consumer advocate, Robin Westcott, also said last week that the plan—which could result in Citizens losing all or part of the $350 million loan–was being put through “in a hurry.”
Citizens disagrees, saying that it did provide several opportunities for public input, beginning back in June.
“Rep Artiles is misstating the chronology of what has occurred,” said Citizens spokesperson Christine Ashburn, in a statement. “Citizens began public discussions of depopulation proposals at the summit on June 1 which was open to all members of the public and broadcast live by the Florida channel.”
Artiles called the program, which was supported by a lobbyist for a politically-connected insurance company, an “inside deal” and said it made Florida’s $20 million Digital Domain debacle “look like a drop in the bucket.”
Those harsh words come at a time when Citizens has been smarting from several public relations dust-ups in recent weeks and months.
This week, yet another homeowner filed a lawsuit over Citizens’ reinspection program, which has led to premium increases of more than $150 million. Stephanie Ritchie, of Tequesta, sued a Citizens contractor for allegedly conspiring with the state-run insurer to double her insurance premiums by stripping discounts she had received just a year ago.
Last week Citizens was forced to reform its executive travel policy after a Times/Herald report unveiled a pattern of luxury corporate spending by employees travelling to international locations on the company dime. Scott ordered the Chief Inspector General to investigate the spending, which included $600-a-night hotel rooms and expensive dinners.
Earlier this summer, Citizens moved to reform its controversial reinspections program, after several policyholders complained that their premiums soared unjustly because of the program.
Plans to remove the 10 percent cap on rate hikes for new customers, limit water loss damages to $15,000, discontinue builders risk insurance and end coverage for some mobile homes have all sparked public backlash. Several of the plans were ultimately abandoned, and some have since been walked backed in response to public criticism.
Citizens has responded to much of the criticism by launching new communications initiatives and several operational reforms. The company’s new president, Barry Gilway, said last week that “communication, or the lack thereof” is one of Citizens’ biggest problems.
But the company stands by its handling of the new $350 million program of loans to private insurers.
“We have been very transparent about our goal to look at different programs while protecting Citizens’ financial position,” said Ashburn. “Before this or other depopulation programs are finalized there will be time provided for public testimony before the depopulation committee and the board.”
View the original article here: http://www.tampabay.com/blogs/the-buzz-florida-politics/content/lawmaker-calls-ans-insurances-new-350-million-loanudit-citize