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Citizens Property Insurance to inspect homes for wind mitigation fraud

The board of Citizens Property Insurance on Friday unanimously approved what it called "an emergency plan" to inspect for cases of fraud among 400,000 policyholders who have received wind mitigation credits.

The credits have cut premiums by $700 million for Citizens' policyholders.

Under state law, insurers have to give homeowners a discount if they install features such as storm shutters, impact-resistant windows and doors or reinforced garage doors to protect a home against violent weather.

The mitigation credit program, however, has been a growing source of angst in the insurance industry.

Advocates point to it as a worthy program to give discounts to property owners who shore up their homes against hurricanes. But detractors say the program is ripe for abuse and difficult to monitor. Insurers have also blamed the credits for lowering premiums enough to justify hefty rate increases.

Other insurers have been examining whether adjusters are properly inspecting homes and filing out the mitigation forms, according to the Florida Office of Insurance Regulation.

Tom Zutell, a spokesman for the state office, said companies should refer instances of alleged fraud to the state's division of insurance fraud at the Department of Financial Services.

Citizens plans to physically inspect a cross-section of personal and commercial residential policies. The insurer intends to inspect about 500 homes at the cost of $150 per inspection.

After results are analyzed, it will determine whether the program should be expanded to include inspection of all policyholders who get mitigation credits.

"This is one of the most important initiatives that Citizens has ever undertaken," Citizens senior vice president of underwriting Paul Palumbo said. "Citizens will benefit by ensuring that it has accurate information on the risk it covers. Policyholders will benefit because they will receive validated information on the storm worthiness of their home."

The company may also opt to focus the program on a particular trend that emerges, spokesman John Kuczwanski said.

State-run Citizens, which covers those who cannot find property coverage on the open market, is by far the largest property insurer in Florida with a million homeowners policies.

Effective Jan. 1, Citizens plans to end a three-year rate freeze with a 10 percent increase for most policyholders, the first step in a multiyear effort to build reserves through higher rates.

Jeff Harrington can be reached at or (727) 893-8242.


Wind mitigation discounts

Houses that have been built or improved to withstand windstorms could qualify for up to $1,000 in discounts on wind insurance premiums.

To qualify for discounts, wind mitigation inspections must be done by a state-licensed general or residential contractor, building code official or professional engineer or architect. Homeowners can verify such licenses through the state Department of Business and Professional Regulation. A $150 inspection takes about an hour.

Calculate what you might save at

Times files

Citizens Property Insurance to inspect homes for wind mitigation fraud 10/23/09 [Last modified: Friday, October 23, 2009 11:56pm]
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