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Citizens Insurance to open up bidding for home reinspections

Under growing pressure, Citizens Property Insurance's board said Monday that it will seek competitive bids for its controversial home reinspection program following a pilot project now under way.

The decision is a reversal of the board's vote in late October, when it handed an emergency $60 million contract to administer the program to Inspection Depot Inc., a Jacksonville software company.

Citizens' staff claimed it did not have time to seek bids for the work, which involves verifying that policyholders qualify for wind-mitigation discounts. About 400,000 homeowners currently receive the discounts, costing Citizens about $740 million a year in premiums.

Though Citizens' staffers insisted that most of the emergency contract's funds would be funneled to field inspectors — not Inspection Depot — the action triggered a lawsuit from a Georgia software firm and protests from other companies shut out of consideration.

Even Allan Katz, a Citizens board member who questioned the deal, said the arrangement gave Inspection Depot "huge economic power."

Three months after the vote, Florida's chief financial officer, Alex Sink, chimed in with a letter to Citizens' chairman, James Malone, on Saturday, urging a competitive bid. On Monday, the board complied.

Though he dismissed the issue as a "brouhaha," Malone said, "We're grateful to Alex Sink's office for reminding us of our responsibility on two fronts: to do the quotation as outlined and the urgency of getting it done."

Inspection Depot's contract will now be limited to managing a short-term inspection project that could run through midyear. About 500 Citizens policyholders have already received letters notifying them of the effort. Inspection Depot will receive $25 per inspection from Citizens to administer the program, including gathering and analyzing the data.

Inspection companies hired to do the reinspections will receive $95 per home. Although Inspection Depot has an affiliate that performs inspections, it will be limited to a maximum of 750 inspections, with the rest of the work going to unrelated companies.

By April, Citizens will open bidding on managing the reinspection of the remainder of its policies that qualify for wind-mitigation discounts. That contract will take effect early this year and could last up to two years.

Referring to Citizens' efforts to recoup wind-mitigation discounts that prove, upon reinspection, to be fraudulent, Malone said, "Make no mistake that this is something that is being pursued with all appropriate speed and dispatch."

Kris Hundley can be reached at khundley@sptimes.com or (727) 892-2996.

Citizens Insurance to open up bidding for home reinspections 01/25/10 [Last modified: Monday, January 25, 2010 8:27pm]
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