Citizens Property Insurance continued to receive sharp-tongued
backlash this week over its plan to loan
out $350 million from its surplus to private insurance companies.
Rep. Frank Artiles, R-Miami, wrote another scathing letter
calling the plan a wasteful inside deal for insurance lobbyists, and Florida’s Insurance Consumer
Advocate penned a lengthy list of unanswered questions about the high-risk
simply, it is reckless to rush the [surplus note] program through without
taking the time to vet the program and make sure that it works,” wrote Artiles,
who believes the plan is against the law and has spoken out forcefully against it.
The surplus note program is the latest in a series of
ambitious moves by Citizens board in response to Gov. Rick Scott’s mandate to
shrink the size of the government run insurance company.
The plan provides low-interest, forgivable loans to private
companies who agree to take policies out of Citizens for 10 years. Last month,
the board unveiled
the plan over the course of two days, with little public input and
without legislative approval.
The lack of details and the speed of the approval set off
red flags for Artiles, Insurance Consumer Advocate Robin Westcott and other critics who believe the unprecedented
new program is being rushed through without adequate transparency.
In his letter, Artiles notes that several of the private
insurers that are looking to participate in the program have troubled financial
records and could go belly up after a major storm. That would leave Citizens on
the hook for multimillion-dollar losses when the loans go into default. He also
points out that several insurers have agreed to take over Citizens’ policies
without any cash incentive, drawing into question the need for a new loan
appears that Citizens has been heavily influenced by lobbyists, as there is no
for such glaring violations of your fiduciary responsibilities to Floridians,”
he said in a letter that followed a lengthy public records request seeking more
details on the program. “Perhaps this is why Citizens is blindly rushing the
SPN Program through with no public input or substantive changes.
Citizens has argued that the program is a revolutionary way
to reduce its risk at a low price, and avoid the “hurricane taxes” that would
be caused if the state-run insurer ran out of money.
“We have to reduce the overall size of Citizens,” said Barry
Gilway, president of the state-run insurer, during a September meeting of its
Depopulation Committee. “If we are to be successful in moving a large number of
Citizens’ customers to financially secure markets, this program is compelling.”
Westcott has a number of questions about the program, and is asking Citizens
to do a better job of proving that these loans make sense financially and won’t
end up costing the company millions.