Citizens Property Insurance Corporation board approves proposals for depopulating
Dec 15, 2011
The following article was published in the St. Augustine Record on December 15, 2011:
Citizens Board Approves Proposals for Depopulating
By Brent Kallestad
The board overseeing the state’s largest insurer of homes and businesses on Wednesday recommended several proposals aimed at reducing the size of Citizens Property Insurance Corp.
Gov. Rick Scott wanted the recommendations ready for the Legislature to take up during the 2012 session that begins in less than a month. He is looking for the state-backed Citizens to be downsized, or even sold, to try to reduce risk to millions of Floridians who are liable for catastrophic losses if the insurer became insolvent.
The plan approved by the Citizens’ board would allow the insurer to increase its rates more quickly and reduce its overall exposure by passing along excessive risk to policy owners.
New board chairman Carlos Lacasa of Miami, a former state lawmaker, said the panel is becoming more clear about the mission it is pursuing with Scott on streamlining Citizens that has nearly 1.5 million policyholders and is growing at a rate of roughly 1,000 new ones a day.
Legislators, however, have been reluctant to embrace yet another series of committee meetings dealing with Citizens less than a year after passing a bill they hoped would rectify the problems. They’re already facing plenty of lobbying pressure from a host of special interests hoping to avoid any big hit during negotiations on a fraud-ridden, state required personal injury protection (PIP) insurance that Scott also wants fixed.
Citizens total exposure of $507 billion far exceeds its ability to pay claims in the aftermath of a catastrophic hurricane or series of storms and losses.
The eight-member board also heard that sinkhole claims spiked dramatically in the quarter ending Sept. 30. The number of sinkhole claims filed with Citizens jumped from 2,300 at the end of June to 3,200 by Sept. 30.
Created by the Legislature in 2002, Citizens was designed to provide insurance to homeowners in high-risk areas and those who cannot find coverage in the private market. It was largely an offshoot of an underwriting association formed by the state in the aftermath of Hurricane Andrew in August 1992.
However, a series of storms in 2004 and 2005 led to several private insurers either pulling out of the state or cutting back on the number homes or businesses it would provide coverage on and Citizens was no longer the “insurer of last resort.”
The board’s next meeting was scheduled for Feb. 23, spokeswoman Christine Ashburn said.
Find this article here: http://ap.staugustine.com/pstories/state/fl/20111214/929064256.shtml