Reacting to harsh criticism, Citizens Property Insurance is revamping the way it pushes homeowners policies into the private market.
The move comes a month after a Tampa Bay Times article detailed consumer complaints over how state-run Citizens was letting private insurers take policies out. Under the program, policyholders who are selected for a "takeout" have to fill out a form to opt out or their policy is automatically shifted to a new company.
Since January, more than 300,000 Citizens policyholders have been shifted to other carriers, a groundswell that state leaders applaud for decreasing financial risk statewide. Under state law, all Floridians with insurance are at risk of being assessed if a cumbersome Citizens Property is swamped by claims after a major hurricane that it cannot afford to pay.
However, the takeout program triggered numerous complaints.
"We've heard some concerns, and they have not fallen on deaf ears," said Steve Bitar, Citizens' vice president of consumer and agent services. "We hear you and are making a slate of changes that we think will alleviate much of the confusion."
Among issues cited in the Times story, some customers either never received the initial takeout offer from the company or it was assumed to be junk mail, so their policies were automatically switched. Also, a Citizens' followup "encouragement" letter to homeowners did not include an opt-out form and that form was hard to locate on Citizens' website. And customers complained Citizens' language exaggerated the potentially dire financial consequences to resist switching.
In some cases, Citizens policyholders who never wanted to leave were subsequently shocked to find huge premium jumps upon renewing with their new carriers.
Some policyholders found it deceptive for Citizens to underplay its own financial security in the letters, when it is sitting on more than a $7 billion surplus after nine hurricane-free years. At the same time, the company gave only cursory information about the financial viability of the carriers taking out policies. A recurring complaint among policyholders is that some of the fledgling Florida-based carriers are untested and, at least based on one ratings firm, are financially weak.
Among the changes that Citizens executives outlined to their board on Tuesday:
• The Florida Office of Insurance Regulation has begun requiring takeout companies to provide estimates to policyholders comparing their renewal premiums to Citizens'. Companies will be required to either include the estimates on the takeout letter or provide a telephone number that customers can call.
• Citizens will change the timing of its encouragement letter so that it is mailed to customers before the takeout company contacts policyholders. The encouragement letter also has been rewritten, Citizens said, to better inform customers about the upcoming takeout offers. The revamped letters will begin starting with the February takeout.
• Citizens will establish a new group to address customer questions and concerns about how Citizens is pushing out policies. The group, which is expected to begin meeting early next year, will include representatives from the Office of Insurance Regulation, insurance agents, private companies and consumer advocates.
• Citizens has modified its website, www.citizensfla.com, to make it easier for customers to find more information about the takeout process and obtain necessary forms.
Mike Mahan, a Tampa homeowner who balked at having his Citizens policy taken out by Avatar Property & Casualty Insurance in October, called the changes "steps in the right direction."
But he still has two major objections.
For one, consumers shouldn't have their policies switched unless they initiate the move, he said. "The onus shouldn't be on the consumer," he said.
Second, Mahan still has concerns about Citizens pushing policies to small companies that may not be able to weather a deluge of hurricane claims.
"It's still a matter of just how solvent are these companies?" he said.
Contact Jeff Harrington at firstname.lastname@example.org or (813) 226-3434. Follow @JeffMHarrington.