Monday, December 11, 2017
Business

As Citizens sheds policies, Florida homeowners face tough choices

TALLAHASSEE — In the next month, nearly 400,000 people whose homes are covered by the state-run Citizens Property Insurance Corp. will get a letter in the mail from another insurance company taking over their homeowners insurance coverage by Nov. 5.

Policyholders will have two options: say no, and remain with Citizens, taking their chances that their options could be even more limited beginning in January when a $44.9 million clearinghouse comes online to allow insurance agents in the private market to handpick Citizens policies. Or, homeowners can accept the coverage from the so-called takeout company, one of 10 smaller carriers. Unlike Citizens, those companies have the right to raise insurance premiums by unlimited amounts when the policies come up for renewal.

It's all part of the aggressive and controversial push by Gov. Rick Scott and the Florida Legislature to shed Citizens Property Insurance of its 1.2 million state-subsidized policies. Under current law, if Citizens falls short of the cash it needs to pay its claims after a massive storm, policyholders of other lines of insurance and state taxpayers will be assessed fees to foot the bill.

But as Citizens shifts policies to the private market, the bottom line for homeowners is that costs will rise. Private companies don't face the same rate caps as those imposed on Citizens and they don't benefit from the taxpayer-backed system.

Under legislation passed by lawmakers last spring, Citizens policyholders will be prohibited from renewing their policies if they receive a comparable private-market offer that is equal to or less than their Citizens renewal premium.

Beginning Jan. 1, homeowners applying for Citizens policies for the first time will be required to go with the private carrier if it offers coverage that is within 15 percent of Citizens rates. Current Citizens customers will be treated differently. Private carriers may offer them less coverage, but it must not be more expensive than their current policy.

That leaves policyholders who receive a takeout offer this month in a quandary. What incentive is there to shift to the new company when you may have more choices later?

"Arguably, takeout recipients have more choice,'' said Michael Peltier, Citizens spokesman. "They can try out the private takeout carrier, which may offer better coverage, and still be eligible for Citizens until their renewal comes up.''

But homeowners who turn down a takeout offer in November may not be able to keep their Citizens insurance much longer anyway. "In theory, the more closely the Citizens rate is to the market rate, the more likely that multiple offers are forthcoming," Peltier said.

The centerpiece of the new law is a clearinghouse that will be used by insurance agents representing private carriers to identify potential customers.

Policyholders who receive an offer from a takeout company have 30 days after the private company takes over their policy to come back to Citizens at the same rate they were paying before, Peltier said. But policyholders who receive an offer of coverage through the clearinghouse have only 48 hours to shop around.

The goal of the clearinghouse is to make sure that Citizens doesn't take on new customers as it sheds old customers.

Last month, the Citizens board approved a $21.7 million, five-year contract with Bolt Solutions of Connecticut to design and operate the software for the clearinghouse system. The contract could be extended another five years, with the value not to exceed $44.9 million and the cost is contingent on the number of policies actually transferred to private carriers.

"This is like the iPhone for insurance in Florida," said Citizens board member John Rollins before the vote. "It's going to really transform everything about the way a consumer thinks about shopping for home insurance."

Rep. Frank Artiles, R-Miami, a frequent critic of Citizens, said the clearinghouse concept offers some consumer protections but is designed to benefit insurers and insurance agents over customers.

"My take on the clearinghouse is that it was built to protect agents,'' he said, referring to agents who sell auto, life and personal property for national companies but don't sell homeowners insurance in Florida. "Your property gets put into the clearinghouse and it gets shopped around for anybody who is writing insurance so they can keep their clients."

Under a compromise reached with the Miami-Dade delegation, Citizens policyholders who are forced to take a policy from a private carrier in the clearinghouse will see their premium increases capped at 10 percent for three years and have the option to return to Citizens.

Artiles advises Citizens customers to do their homework.

"Ask for a copy of the policy and ask for the differences between it and your Citizens policy,'' he said.

For example, private companies have the right to repair damage to a home, instead of paying for replacement coverage. Hidden in some policies, however, is a statement that if they hire a third-party contractor to do the work, the carrier is not responsible for the work, Artiles said.

"I have a problem with that,'' he said. "If you want the right to repair, then you have to take full responsibility for the subcontractor or vendor who works for you."

While the clearinghouse will not be available for consumers to comparison shop, it will be available for agents. Meanwhile, the Office of Insurance Regulation has a website, floir.com, that offers information for each takeout company with a link to a "Citizens Coverage Comparison."

Artiles considers the website difficult to navigate and understand. He advises: "If you have to make a decision with your eyes closed on a takeout company, stay with Citizens."

Contact Mary Ellen Klas at [email protected]miamiherald.com. Follow her on Twitter @MaryEllenKlas.

Comments
Outback Steakhouse co-founder Chris Sullivan steps off Bloomin’ Brands’ board

Outback Steakhouse co-founder Chris Sullivan steps off Bloomin’ Brands’ board

Chris Sullivan, co-founder of Outback Steakhouse, resigned from the board of the restaurant chain’s parent company last Wednesday, according to a Monday filing with the Securities and Exchange Commission. The document, filed by Tampa-based Bloomin’ B...
Updated: 9 hours ago
Tampa Hillsborough Expressway Authority plays beat the clock on GOP tax bill

Tampa Hillsborough Expressway Authority plays beat the clock on GOP tax bill

TAMPA — With the Republican tax bill poised to eliminate the opportunity, the Tampa Hillsborough Expressway Authority on Monday said it had refinanced a big chunk of its debt to save money in the future.The authority borrowed $152 million from the bo...
Updated: 11 hours ago
JW Marriott Clearwater Beach project still on target despite some bumps

JW Marriott Clearwater Beach project still on target despite some bumps

CLEARWATER BEACH — While Tampa is excited about its first JW Marriott hotel, plans are moving ahead for a $130 million JW Marriott property on Clearwater Beach, despite some hiccups. "We’ve done really well in our opinion," Uday Lele, developer of t...
Updated: 11 hours ago
HSBC says U.S. will dismiss criminal charges against it

HSBC says U.S. will dismiss criminal charges against it

HSBC said Monday that U.S. authorities were preparing to dismiss criminal charges against the bank, five years after it reached an agreement to avoid prosecution related to lapses in its money-laundering controls.In 2012, the bank, one of the world’s...
Published: 12/11/17
Major auto manufacturer offers longer hours, incentives to fix airbags

Major auto manufacturer offers longer hours, incentives to fix airbags

TAMPA — With nearly 200,000 people around Tampa Bay still driving around with defective airbags that could kill them, a major automaker is trying to dramatically cut that number down this week.Fiat Chrystler Automobiles U.S. has launched Airbag Recal...
Published: 12/11/17
This 6-year-old kid made $11 million in one year reviewing toys on You Tube

This 6-year-old kid made $11 million in one year reviewing toys on You Tube

When most people think back on the child celebrities of their time, they likely think of child movie actors, the well-trained stars of showbiz. For some, these were stars like Mary Kate and Ashley Olson, or Macaulay Carson Culkin from "Home Alone." F...
Published: 12/11/17
Ticket-fighting firm hires former Florida Bar president to sue the Bar

Ticket-fighting firm hires former Florida Bar president to sue the Bar

Times Staff WriterWell, this is awkward. A company that is suing the Florida Bar has hired a former Bar president to represent it. Ramon Abadin has joined the legal team of TIKD, a company that expedites the process of fighting traffic tickets in Pin...
Published: 12/11/17
A longer wait: Some now try nearly 3 years to get disability insurance

A longer wait: Some now try nearly 3 years to get disability insurance

By the time Teralyn Fleming could finally plead her case to get federal disability insurance, she had been waiting two years and three months. The wait was not a peaceful one — a blood clotting disorder pushed her out of the workforce in 2015 so she ...
Updated: 10 hours ago
Tampa: Hundreds protest Trump’s decision on Jerusalem

Tampa: Hundreds protest Trump’s decision on Jerusalem

TAMPA — Hundreds rallied near the University of South Florida on Friday night to protest President Donald Trump’s recent declaration that the United States will recognize the divided city of Jerusalem as the capital of Israel.The protest was organize...
Published: 12/08/17
Updated: 12/09/17

Duke outage leaves 7,700 without power near Pinellas Park

PINELLAS PARK — Up to 7,700 customers across Pinellas Park, Lealman and Kenneth City lost power in a Thursday night outage, according to Duke Energy.The outage impacted a cloverleaf-shaped area of customers, with pedals extending in the cardinal dire...
Published: 12/08/17