Citizens Property Insurance Corporation to start changes to reduce policy count

Dec 14, 2011

The following article was published in The Florida Current on December 14, 2011:

Citizens to start changes to reduce policy count

By Gray Rohrer

The Citizens Property Insurance Corp. Board of Governors voted Wednesday to begin implementing changes in their operations aimed at reducing their policies.

The vote came after Gov. Rick Scott publicly called for reforms to shed policies from Citizens in recent Cabinet meetings. He’s concerned the state-backed insurer would need to rely on special emergency assessments on all homeowners in Florida in the wake of a catastrophic hurricane. At 1.46 million policies in force as of Sept. 30, Citizens is the largest property insurer in the state.

Citizens will reduce or eliminate coverage for secondary structures like carports, reduce coverage of property inside a residence, stop writing policies for and phase out coverage of buildings during construction, limit coverage of homes in coastal areas to those valued at less than $1 million, increase deductibles for sinkhole coverage by 10 percent and reduce their personal liability coverage from $300,000 to $100,000, among other changes.

Those new operational changes will take effect for new policies beginning May 1, and for renewals on June 1. They are expected to reduce Citizens’ risk and coverage by nearly $201 billion, and would escape $1.5 billion in probable losses, a 7 percent decrease.

The Citizens board also voted to draft recommendations for lawmakers to pass in the upcoming legislative session. They want an increase in their cap on annual rate increases, currently set at 10 percent, increase requirements for eligibility for Citizens, and make it easier for private companies to take on Citizens’ policies.

Meanwhile, Sen. Mike Fasano, R-New Port Richey, is fielding complaints about how Citizens is trying to reduce risk and reduce its policy count.

In a letter Wednesday to Sen. Garrett Richter, R-Naples, Fasano asked for Citizens president Scott Wallace to appear before the Senate Banking and Insurance Committee Richter chairs. Fasano states he’s getting calls from consumers complaining about dropped coverage for secondary structures like carports, dropped coverage for other areas when a sinkhole claim is filed and inconsistent handling of roof replacement claims.

“I have received a torrent of phone calls, emails and letters from homeowners and insurance agents requesting that I find out why Citizens is conducting business in ways that, in some cases, are inconsistent from one homeowner to another,” Fasano’s letter states.

Richter, however, declined to grant the request, citing time constraints. Instead, he suggested Fasano submit his questions in writing to Wallace, which Fasano reluctantly agreed to do.

Fasano and Richter tussled over SB 408 earlier this year, and Fasano tacked an amendment on Richter’s SB 578 to allow surplus lines companies to take out Citizens policies last week, even though the amendment merely rewrote a provision mandating customers receive an outline of the differences in the policies before signing up.

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