State Representative Frank Artiles Asks Florida Office of Insurance Regulation to Audit Companies In Line to Receive Citizens Property Insurance Depopulation Incentives
Sep 13, 2012
In a news release issued on September 11, 2012, State Representative Frank Artiles (R-Miami) asked the Florida Office of Insurance Regulation to perform audits of insurers that are slated to receive incentives from Citizens Property Insurance Corporation (“Citizens”) for assuming the State-run insurer’s “takeout” policies.
Portions of Representative Artiles’ news release are reprinted below:
“Last week, the Citizens board decided to award $350 million in low-interest, forgivable loans to a handful of Florida insurance. The decision, made with no input from the public, would essentially give away millions in premium dollars paid by Citizens’ 1.4 million policyholders.
“One problem with Citizens’ plan is that none of the insurers in line to receive the incentives – along with hundreds of thousands of policies – have been audited in at least three years.
‘With no recent audits, how are consumers to know that the insurers taking their policies are in financial shape to expand coverage in Florida and still be in shape to withstand losses if a severe storm occurs?’ asked Representative Artiles.
“Many of the affected policies would be given to Tower Hill, a giant insurance conglomerate that actively lobbies the Citizens board. At the same time, the board insisted that there be no public workshops, second opinions or consultation with the Legislature. Discussions to create the loan program only a few days, culminating with its hasty decision on September 7.
‘This move is the latest example of Citizens doing business through inside deals and not taking a reasoned or thoughtful approach,’ Representative Artiles said. ‘We agree with Board chairman Carlos Lacossa’s (sic) goal to depopulate policies in a responsible manner. But the plan driven by CFO Sharron Binnum (sic) in no way matches that goal.
“Under the new Citizens program, private insurers could borrow up to $50 million for 20 years at a low interest rate of 2 percent. The program obligates the insurers to take the policies for only 10 years, and the insurers would be allowed to raise policy rates beyond 10 percent a year after three years. Also, there are no provisions for what happens if a private insurer encounters financial difficulties that could prevent it from repaying a loan.
‘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,’ Representative Artiles said. ‘A decision like this, which affects both taxpayer dollars and the future of property insurance in Florida, deserves to be discussed in a rational way that doesn’t smack of an insider, sweetheart deal.'”
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