Florida Representative Artiles lashes out at Citizens, calls for audit of companies involved in loan program
Sep 14, 2012
The following article was published in The Florida Current on September 14, 2012:
By Gray Rohrer
Rep. Frank Artiles, R-Miami, sent a letter Friday to Insurance Commissioner Kevin McCarty, calling on him to conduct an audit of companies that wish to take policies out of state-run Citizens Property Insurance Corp. through a prospective loan incentive program.
Artiles, a critic of recent Citizens decisions to cut back coverage on secondary structures, structures under construction and older houses, warned Citizens board members last week not to move ahead with a plan to provide private companies with “surplus notes” – low interest loans – if they remove large amounts of Citizens policies and keep them for at least 10 years. Board members nonetheless voted to go ahead with the program, directing their staff to draft contract language for approval before their next meeting, in December.
The program would allow companies to draw down as much as $350 million in 20-year loans at a 2 percent variable interest rate.
“The (surplus notes program) is a giant waste of policyholder money. At a time when CPIC is raising rates, reducing coverage, and telling Florida residents to pay more for less, CPIC has selected a handful of insurance companies to deliver a $350 million gift to a few insurance companies in Florida,” the letter states.
Artiles called out Citizens for tentatively approving the project with minimum public input while meeting with lobbyists for Tower Hill Insurance Group behind closed doors.
Citizens rejected Artiles’ characterization of the lead-up to the decision, citing a public workshop in Tampa attended mostly by insurance agents, insurance executives and lawmakers, as well as a public meeting in Miami in July where companies presented their take-out plans.
“Rep. Artiles is misstating the chronology of what has occurred,” Citizens spokeswoman Christine Ashburn wrote in an email. “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
In addition to his letter to McCarty, Artiles also sent a letter to Citizens president and CEO Barry Gilway, asking for all public records and communication between Citizens officials and Tower Hill and American Integrity Insurance Group officials.
Citizens board members, pushed by Gov. Rick Scott and legislative leaders last year to reduce its exposure and the risk of assessments on non-Citizens customers after a large storm, began reducing coverage without lowering premiums and zealously implemented a wind mitigation reinspection program that resulted in increased premiums for the majority of customers. The reinspection program has sparked two lawsuits from customers claiming inspectors reduced their discounts under pressure from Citizens.
Gilway, who was selected by the board to take the helm of the company in June, said last week the loan program is a “great opportunity” for Citizens to reduce its exposure. Citizens has 1.4 million policies and is the largest property insurer in the state.
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