Citizens Property Insurance should be up front with its customers about their options for homeowners insurance even as it tries to shed policies to lessen its liability. But instead, Citizens is aggressively trying to push its clients into the private market and conceal the fact that homeowners can actually choose to stay put. It is unconscionable that a state-run company is being this opaque. Citizens and the insurance companies that stand to benefit from its cast-off policies should be transparent about customers' rights.
For several years, the state has been working to shed policies in Citizens, the state-run insurer of last resort. Homeowners who are targeted for release into the private market are supposed to learn of the transfer through a letter from the takeout carrier that will assume their policy. Through the letter, customers should learn that they have 30 days to opt out of the policy switch. Citizens then follows up with a letter of its own, confirming the proposed course of action.
But Citizens customers around the state say the process is flawed. According to a Tampa Bay Times report on Sunday, some said they never received letters from takeout companies. Others may have discarded them as junk mail because they came from insurance companies they did not recognize. And some property owners who received letters said neither Citizens nor takeout insurers gave them a form to decline the policy switch, though Citizens warned of the possibility of steep premium hikes if customers did not accept the new deal.
The Legislature allows Citizens to shed policies. Lawmakers justify the practice by saying that it helps offset costs for all Florida residents, who would be forced to contribute if the state-run insurer were swamped with claims after a major hurricane. As of mid October, Citizens has about 930,000 polices, down from 1.5 million in 2013. And the company recently announced plans to release more policies. But Citizens should not engage in deceptive tactics and trickery to reach its goal.
Citizens' tactics have left many homeowners feeling as if they had no choice but to do business with new insurers, many of which are untested. Some have poor reputations and/or charge higher premiums. A state-run entity should be transparent in its dealings. Citizens can start by reaching out to homeowners and clearly making them aware of plans to switch policies. The company also should identify the name of the potential new insurer and outline the full scope of property owners' options. A follow-up letter from takeout insurers should be clearly labeled as containing important information about Citizens' insurance policies, thereby increasing the chances that homeowners will pay attention. And all communications should include a place for homeowners to accept or reject the switch. These small steps will empower consumers and ensure that Citizens operates in a fair and ethical manner.