Tuesday, December 12, 2017
Opinion

Ruth: Hung out to dry in the eye of the storm

There came a point as Citizens Property Insurance president and CEO Barry Gilway droned on about the international insurance market, CAT bonds, HO3 policies, loss ratios and Florida domestics when I began to feel like Laurence Harvey's poor brainwashed prisoner of war in The Manchurian Candidate.

Gilway, who met this week with the Tampa Bay Times editorial board, waxed euphoric over Citizens' success in pushing policyholders off on fly-by-night concerns like Big Stinky's Sticky Ribs and Property Insurance. Then I was snapped out of my catatonic state when he suggested he wants the company to become the Mr. Rogers of insurance.

"What do we have to do to change Citizens' image in the marketplace?" Gilway mused. "We want to be a kinder, gentler Citizens with the consumer."

But Gilway's Kumbaya of sinkholes came as he swooned about Citizens shedding some 500,000 policies in less than two years and sending them to Vito's Haberdashery and Property Insurance, serving Florida's homeowners since, oh, about 8:15 this morning.

This seemed like a perfect "ahem" moment. Just how, Gilway was asked, can Citizens claim it is being "kinder and gentler" toward its customers when the company wants to get rid of as many of them as possible, treating policyholders as dupes to be passed into the clutches of Biff's Brazilian Wax and Property Insurance?

In fact, Gilway acknowledged that when a homeowner receives a take-out letter saying that the policy is being assumed by Fat Bubba's House of Calzones and Property Insurance, Citizens has not vetted the financial strength of the company. That's the state's Office of Insurance Regulation. How comforting.

Gilway estimated that by the end of the year, Florida-based companies like Tootsie's Macaroon Hut and Property Insurance will hold 70 percent of homeowners' policies. In other words, we are all toast.

Even Gilway conceded that he "worries about the ability of the take-out companies to respond in the event of a disaster." He's worried!?!? In case you are wondering, this qualifies as the "kinder and gentler" stuff Gilway was referring to.

Or consider Gilway's observation that if you are a proud customer of Buster's Surf Shoppe and Property Insurance and your home is damaged in a storm, the chances are very good the company likely will have no more than five or six adjusters on the payroll to help oversee claims.

But take comfort that he is worried.

You're probably wondering if you get shunted over to Bruno's Medical Marijuana Clinic and Property Insurance, what happens if a hurricane hits, your house is damaged and your undercapitalized and overwhelmed carrier goes belly up? Where do you get coverage for the repaired house? Back to Citizens. Does this make any sense?

It gets better, or perhaps worse.

In 2012, Hurricane Sandy rolled up the East Coast causing $65 billion in damage. Some 650,000 homes and 250,000 vehicles were destroyed. More than 300,000 businesses were affected and 159 people died. It was the second worst storm in American history, lagging only behind Hurricane Katrina.

Yet Gilway acknowledged that if you were about to close on a house on the New Jersey Shore this weekend, you would have no problem getting a major insurance carrier like Geico, State Farm, or Liberty Mutual to issue you a homeowner's policy.

But Florida, despite having no major hurricanes since 2005, remains a flea market of property insurance. Gilway kindly and gently explained.

"I turn to modeling," he said. Or basically, in deciding to enter or leave a market, the insurance industry relies on a handful of companies that conduct statistical studies on the probability of a major storm hitting that region.

So when you crunch the numbers, analyze the algorithms and dissect the linear charts, Long Island is a better bet than Florida, leaving us with Happy Clyde's Landscaping and Property Insurance.

Gilway was a pillar of empathy, even as he remained committed to continue to downsize Citizens, hoping to get rid of about 300,000 more policyholders over the next three years.

The take-outs, he confessed, are "a no-win argument for us."

It may be a no-win argument for Gilway and Citizens. But in the meantime, Florida homeowners are being hung out to dry with Patsy's Ale House and Property Insurance. Bottoms up.

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