In the heyday of the Great Florida Sinkhole Lottery, Iris and Harry Irizarry would have had all the ingredients for a big cash payout: A sinkhole policy from state-run Citizens Property Insurance Corp.; visible cracking in the walls and floors of the Spring Hill home they bought new in 2003; and a sinkhole confirmed by both an engineer and the Hernando County Property Appraiser's Office.
But the era of easy sinkhole claims is over, slammed shut by a 2011 overhaul of the state insurance law. Based on the new law, the same engineering firm that found the Irizarrys' sinkhole — and recommended that it be filled with grout — deemed that it wouldn't qualify for an insurance claim.
"We pay our insurance but (Citizens) doesn't want to pay to fix the house, and I can't sell my house because (it) has no value," said Iris Irizarry, 64, a retired Head Start director from Brooklyn. "What kind of a law is that?"
In short, it's a law that has done what it was supposed to do: stem a flood of claims that by 2011 were driving up insurance rates and driving down property values in the "sinkhole alley" of Hernando and Pasco counties.
But concerns are surfacing that the sinkhole fix has gone too far: It has limited the availability of sinkhole insurance and allowed insurers to charge prices rivaling the cost of a standard homeowners policy. It has made it far more difficult for homeowners to qualify for a claim. And by leaving homeowners stuck with sinkhole homes they cannot repair, it has created a potential new drag on property values. Story here.
Florida property owners will stop paying a 1 percent emergency assessment on their insurance bills two years earlier than planned under a recommendation approved Wednesday by the board of Citizens Property Insurance.
For the average homeowner, that translates into a total savings of about $40 over two years.
Citizens was allowed to tack the assessment on to Florida property policies after eight storms during the 2004-05 hurricane seasons left the state-run insurer with a deficit of more than $1.7 billion. The assessments, used to pay off a bond, were supposed to last 10 years.
The emergency assessment began at 1.4 percent in 2007 and was reduced to 1 percent in 2011 because of an increase in the number of insured policies. Continued growth has helped Citizens recoup funds even more quickly than anticipated.
Citizens chief financial officer Jennifer Montero told board members at their monthly meeting in Orlando that the company now expects to have enough money by June 2015 to satisfy the bond's balance. The assessments originally were scheduled to be collected through June 2017. Story here.
State regulators have approved lower rates for most homeowners covered by Citizens Property Insurance, the first widespread rate cut by the state-run insurer in years.
Citizens, which insures those who cannot find coverage in the open market, is the largest property insurer in Florida with more than 933,000 policies as of July 31.
The Florida Office of Insurance Regulation on Friday said the average Citizens' homeowners rate will fall by 3.7 percent, slightly better than the 3.4 percent decrease sought by the insurer in its June filing. Rates will be cut 4.6 percent, on average, for mobile home owners with multi-peril coverage. Nearly all of the rate reduction is for inland properties and those with multi-peril coverages while nearly all coastal accounts for wind-only coverage will get hit with another rate increase.
Citizens has previously said nearly seven out of 10 policyholders statewide would see lower rates if its filing were approved.
Among bay area counties, Citizens had proposed average rate cuts for most homeowners policies of 8 percent in Hillsborough; 8.9 percent in Pinellas; 6 percent in Pasco; and 9.5 percent in Citrus. Hernando County policyholders faced an average increase of 0.4 percent. A countywide breakdown of approved rates was not immediately available.
From the News Service of Florida:
The Florida Office of Insurance Regulation announced Thursday that more than 425,000 customers of the state-backed Citizens Property Insurance Corp. could be shifted in November to 16 private carriers.
But don't count on all of the policies landing in the private market.
The targeted accounts, nearly double the number of policies previously approved this year to be taken out by private firms, are comprised of 425,357 personal-residential and 2,227 commercial-residential polices. However, past takeout efforts have shown that private companies cherry-pick the least-risky policies and that companies often go after many of the same policies.
Since the start of the year, regulators have approved 894,156 policies for takeout, including the policies announced Thursday. As of Aug. 30, 124,995 had been removed. (Note: Policyholders who refuse the take out to remain with Citizens may get hit with a rate incurease, and for those who agree to the take-out, there there is no guarantee that the rate the customer gets the first year with the takeout will match the rate in subsequent years.)
Citizens had 933,807 policies as of July 31.The agency in February went under the 1 million policy mark for the first time since August 2006.
Citizens President and Chief Executive Officer Barry Gilway has said he expects the number of Citizens policies to reach about 850,000 later this year, with the number flattening out around 650,000 policies before the end of 2017.
In addition to the just-announced November takeouts, Southern Oak Insurance Company will have a chance to receive up to 10,000 policies on Sept. 16, while six companies are lined up to acquire as many as 91,499 policies, mostly inland personal-lines accounts, in October.
For the first time in four years, Citizens Property Insurance wants to lower rates for nearly 70 percent of its customers while everyone else – mostly South Florida condominium owners and homeowners in coastal areas -- will see another year of increases.
The rate changes were recommended Wednesday at the quarterly meeting of Citizens’ Board of Governors and now must go before the Office of Insurance Regulation for final approval.
Base rates vary greatly from policy to policy but, in Miami-Dade County, Citizens is proposing average rate cuts of about 4.3 percent for homeowners with multi-peril policies. Similar policies in Broward will see rates drop an average of 7.3 percent and homeowners in Monroe County will see rates rise 2.6 percent.
For condominium owners in South Florida, however, the rate hikes will continue with average increases of 6.4 percent in Miami Dade, 3.2 percent in Broward and 1.4 percent in Monroe County. Download 2015 RATES county by county
Citizens Inspector General Bruce Meeks said Wednesday he has launched an investigation into the way the state-run insurer handles employees who leave the agency to go to work for companies that receive contracts.
Citizens CEO Barry Gilway and board chairman Chris Gardner asked Meeks on Monday to conduct an independent investigation in the wake of a report by the Miami Herald/Tampa Bay Times on the recent exodus of executives who have left the state-run insurance company to work for vendors. Meeks reports to the governor and Cabinet.
"Chairman Chris Garner and CEO Barry Gilway have requested that I conduct a review of issues related to Citizens’ post-employment policies and requirements,,'' Meeks told the Herald/Times. "I have informed them of my agreement to undertake this charge, and am in the process of project preparation and planning."
State law prohibits employees who are responsible for a contract from leaving a state agency to work for a company that holds that contract. Citizens applies the law only to senior executives and members of the board of directors, and says there is no ethical breach when an employee with oversight of a company contract takes a job at that company but handles other matters.
The Herald/Times found that in recent years at least three senior executives at Citizens who were in charge of multimillion-dollar contracts awarded to private companies went to work months later for those companies.
Dan Krassner, director of the non-profit government watchdog institute Integrity Florida, also on Monday called for Meeks to investigate the ethics practices at Citizens, but he also urged the inspector general to investigate whether the contracts cited in the Herald/Times story “provided the best deals for the public.”
Responding to a report by the Herald/Times on the exodus of executives that leave Citizens Property Insurance to work for companies that receive contracts, the head of a public watchdog group as well as the two top executives at Citizens called for an investigation on Monday.
Dan Krassner, head of Integrity Florida, called on the newly-appointed inspector general of Citizens to conduct the investigation "into the numerous examples of a revolving door between Citizens Property Insurance Corporation and the organization’s vendors." Download Close the Citizens Insurance Revolving Door – Investigation Needed June 2, 2014
Krassner's request to Bruce Meeks was followed by a similar request by Citizens CEO Barry Gilway and chairman of the board Chris Gardner. Gilway said the review was needed to "to ensure Citizens is operating in a transparent and ethical manner." Download Citizens investigation ethic
In the past three years, at least three senior executives at Citizens Property Insurance who were in charge of multimillion-dollar contracts awarded to private companies went to work months later for those same companies.
Florida’s ethics laws ban state employees from going to work for a company for two years if their duties for the state job involved a contract related to that company. But Citizens, the state-run insurer of last resort, reads the statute more narrowly. Its executives say no one has done anything wrong.
Critics, however, say the situation is evidence of a revolving-door mentality at the public company that handles millions of dollars in contracts each year, and add that it raises serious questions about the fiscal management of the company, whose claims will be paid by taxpayers if Citizens runs out of money after a storm.
“Every dollar you don’t spend is a dollar that goes to pay somebody’s claim,” said Sean Shaw, the former Florida Insurance Consumer Advocate from 2008-10. “They should have a moral compass that says, ‘This is taxpayer money. We are going to be as careful as we should with our own pocketbook.’ ”
The head of the Florida Senate Banking and Insurance Committee, Sen. David Simmons, is calling for the ethics law to be tightened relating to Citizens’ contracts and has ordered Senate staff members to draft legislation to do that.
After a brief debate, the Florida Senate passed SB 1672 to shift homeowners who carry Citizens Property Insurance into non-regulated property insurance plans in an effort to get them out of the state-run company.
The Senate voted 22-16 to send the bill to the House, where a similar proposal was killed last year. Opponents the proposal could mislead homeowners into thinking they are getting the same insurance for less and could cause homeowners, seeking to save money, into out-of-state companies that aren't held accountable in Florida.
Under the bill, SB 1672, unregulated insurance sold by surplus lines carriers would be included in the list of options homeowners can choose from in the state-run clearinghouse when their policy is up for renewal.
These companies would have to offer the same coverage Citizens offers and rates must be 15 percent or but, since surplus lines are not regulated, there is no assurance the rates won’t change.
Sen. Jeremy Ring, D-Margate, said it was “admirable and some would say necessary to try to depopulate citizens insurance,’’ but he warned it will have unintended consequences.
"Surplus lines are not regulated,'' he said. "If they try to get their benefits after a storm, they’re going to have a tough time doing that."