The recent column by John Rollins, a member of the Board of Governors of Citizens Property Insurance Corp., offered a rosy outlook about Citizens that is one-sided at best.
We have "dodged a bullet" for the past several hurricane seasons, allowing Citizens to build up a strong reserve of more than $6 billion. Rather than asking for rate increases each year, Citizens should be using its healthy reserves to bring down the cost of its coverage.
Is that what is happening?
No, of course not.
Rollins speaks about the "glide path" to gradually increase rates but neglects to mention the many ways Citizens has raised rates through the back door. Citizens is continually seeking ways to reduce coverage by excluding nonattached structures, taking away wind and other mitigation credits, and increasing replacement costs on the structure to the point where Citizens is driving people out of their homes. Bottom line, Citizens is making it more difficult for policyholders to keep their coverage. For many people, the only way to keep coverage affordable is to agree to a huge deductible. If, God forbid, a disaster were to occur, there are many people who would be hard-pressed to come up with that deductible.
If there is one outrageous example of how Citizens has erred with its customers' surplus, it was in entering into an agreement with Heritage Property and Casualty Insurance Co. of St. Petersburg to pay up to $52 million of its policyholders' money to this company. Heritage, which was only in business for nine months at the time of the agreement, has been offered the money to "take out" up to 60,000 existing Citizens policies (policies of Heritage's choice, leaving riskier policies in Citizens' hands).
How out of touch the Citizens board must be to believe that its policyholders want an unproven insurer to get their hard-earned money rather than a reduction in premiums, or restoration of credits, or a host of other benefits that have eroded away over the past few years. If a customer does choose to leave Citizens because a take-out company picks them up, they are generally excluded from ever returning to Citizens.
It is odd that Rollins trumpets that the cost of reinsurance has declined by more than 30 percent, thus leading to smaller rate increase requests (capped by statute at 10 percent). A key point that is missed is that the Legislature, not the Citizens board, capped potential increases at 10 percent so that runaway rate increase applications would not be filed. There is no requirement that Citizens ask for any rate increases. I would much rather read that Citizens is bragging about not asking for a rate increase this year, rather than asking for one at all.
Many have chosen to go without insurance coverage because they can no longer afford the premium. This sad fact knows no bounds. Many people who live in single-family homes, condominiums and mobile homes have decided to drop insurance and take their chances.
It is laughable that a member of the Citizens governing board has to assure the public that Citizens "will play by the rules." Should not a quasi-governmental entity such as Citizens be expected to "play by the rules"? The fact is, Citizens continually changes the rules in the middle of the game with increased replacement values on homes, eliminated windstorm discounts, increased deductibles and reduced coverage. The well-documented travel scandals that prompted a scathing inspector general's report demonstrate that Citizens has a history of not playing by the rules.
For most people, it is simple economics. If the company has a healthy surplus, that money should be returned to those who pay the bills in the form of smaller premiums, greater coverage, or a combination of both. Policyholders should not be seeing more requests for rate increases, reductions in coverage and shady deals with upstart companies. If the Citizens board would start leading in this fashion, then Citizens may once again earn the trust of its customers. Until that time, Citizens will always be looked at with a jaundiced eye.
Rollins writes that the future looks brighter. Yes, from the industry's perspective it is brighter. It is not brighter for policyholders. It is quite dim. Let's hold Citizens to account so that the bright future spoken about becomes a reality for the policyholders as well as the company.
Rep. Mike Fasano, R-New Port Richey, wrote this column exclusively for the Tampa Bay Times.