Citizens Property Insurance is too often the "insurance company of first resort," Gov. Rick Scott said, when it was intended to be an insurer of last-resort. Because of this issue and the threat that a major storm will put both Citizens policyholders and all Floridians on the hook for covering claims, the company's size needs to be addressed, Scott said Friday morning during a speech at the Florida Chamber of Commerce's Annual Insurance Summit.
Scott said policyholders, when provided more information, may chose to leave Citizens for other insurance companies, even if not forced by de-population efforts or higher premiums. For example, many Citizens customers don't know about the "hurricane tax" they would be required to pay if a major storm creates more damages than the company can cover with existing surpluses. He said the average Citizens premium is $2,300 but the "hurricane tax" could add another $1,000 to that bill for several years.
"Shrinking Citizens is the first step toward increasing competition in the marketplace and driving down prices for homeowners," he said. "Shrinking Citizens will also protect Florida families from hurricane taxes.
The governor also addressed recent allegations of financial mismanagement and other improprities at Citizens, pointing out that he has asked the state's Inspector General to investigate.
"We must also ensure Citizens is not wasteful," he said. "So as you know I've directed the chief inspector general to investigate travel, expenses and firing at Citizens. This report will tell us what additional steps must be taken to enforce oversight and compliance within Citizens. A taxpayer-oriented entity has to be held to the highest standard of integrity and good stewardship."
During a Q&A session following his speech, Scott was asked about the status of his letter to Health and Human Services Secretary Kathleen Sebelius asking for a meeting to discuss health exchanges. He said he hadn't received a response and there was no timeline, seeing as the state's request to HHS to switch Medicaid receipients to managed care plans has been pending for a year.
But he also repeated a line that he's been using in recent weeks, indicating that he is willing to work with the federal government to implement aspects of the Affordable Care Act.
"The election is over," he said. "No is not an answer."
But Scott also said he is still concerned about the cost of insurance and whether the health care law will help or hurt that matter. He said the Congressional Budget Office has determined family that is not on a private group play may be forced to pay up to $2,100 on health insurance, which would be a tough endeavor when over half of Florida families make less than $50,000 a year.