Since its creation, Citizens Property Insurance Corp. has worked hard to balance its dual mission of providing quality insurance coverage to policyholders who do not have private market options while minimizing the financial risk to all Floridians who must pay up following a major storm or series of disasters.
Balancing those missions is an ongoing process in Florida's dynamic insurance marketplace.
With that in mind, Florida law since the mid 1990s has allowed private companies to remove policies from Citizens and its predecessors. The so-called takeout program authorizes the Florida Office of Insurance Regulation to permit private companies to select insurance policies from Citizens after the state insurance office concludes that the company has the financial backing and management expertise to stand by its coverage.
Here's how it works. A private company sends a notice to policyholders informing them of the takeout offer. Included in the notice is an opt-out form that policyholders return if they wish to remain with Citizens. Policyholders have 60 days to make a decision. If they do nothing, the policy transfers to the private company.
During the process, Citizens sends affected policyholders a letter encouraging them to consider the private offer while making it clear they can stay with Citizens and showing them how to do so. While well-intentioned, the encouragement letter clearly has not done what we hoped it would.
Since its inception, Citizens has modified the program to better inform policyholders. At our request, OIR recently began requiring takeout letters to include estimates on what the private company would charge at renewal compared to Citizens.
The encouragement letter referenced in the Times' editorial, ''Insurance trickery must stop,'' on Nov. 12 and in letters to the editor was added in 2013 as a backup measure to provide policyholders with more information and to confirm that the offer they received was not an advertisement or a scam but part of a program involving Citizens.
Despite such efforts, we are well aware some customers have raised questions over the process and the financial stability of the private company making the offer. We want to address those concerns head on.
It is true that some of these companies have not yet weathered a major hurricane. It is also true that these Florida-based companies have satisfied the scrutiny of the Florida Office of Insurance Regulation, which is responsible for licensing all private insurers that conduct business in the state.
The office has determined these companies have the financial resources and business experience to write property insurance in Florida and participate in the takeout program. These companies have also undergone a rigorous financial review by Demotech Inc., Florida's leading insurance rating agency.
As to the process, we have heard policyholders' concerns loud and clear. More importantly, we are committed to taking action to make the program less confusing and even more transparent.
Here's the bottom line: In the coming weeks, Citizens will work with private companies and insurance regulators to make sure takeout information is understandable and easily available so policyholders can make the best decisions for themselves and their families. Stay tuned.
Barry Gilway is president, CEO and executive director of the state-run Citizens Property Insurance Corp. He wrote this exclusively for the Tampa Bay Times.