The Republican lawsuit targets reinsurance that helps insurance companies provide universal coverage without accounting for pre-existing conditions.
Nov. 12--SEBRING -- Citizens Property Insurance Corp. wants to raise rates every year to make the state-owned company less attractive to its own policyholders.
That's OK with legislators who have questioned for years whether the state should be exposed to $491 billion worth of possible payouts.
"The state has to get out of the insurance business and reduce taxpayers' exposure to potential payouts that Citizens cannot cover in the event of a major disaster," State Rep. Denise Grimsley, R-Sebring, said Thursday.
Why then, Gov. Rick Scott asked Carlos Lacasa, chairman of Citizens Property's board of governors Tuesday, is Citizens insuring new homes?
In October, the insurance giant began mailing letters to 300,000 of its 1.5 million policyholders. Citizens wants to loan money to private insurers who will write policies to those 300,000, plus another 100,000 in December.
Insuring new construction at below-market rates is a disincentive to depopulation, Scott argued in his Cabinet meeting. Florida's construction industry is a huge jobs generator, Lacasa replied. Builders rely on Citizens' coverage in coastal areas, where much of the development occurs.
"The Legislature has offered a lot of direction to Citizens and (the Office of Insurance Regulation) in the form of statutes and oversight," Grimsley said. "I think it's important to distinguish 'depopulating' from 'terminating' policyholders. I anticipate that the Legislature is going to be watching every action that Citizens takes or even proposes to take. The goal is making sure that taxpayers are protected and the private home insurance market becomes more competitive and consumer-friendly."
Citizens' staffers recommended third-party reviews earlier this month after lawmakers and elected officials like Chief Financial Officer Jeff Atwater and incoming House Speaker Will Weatherford, R-Wesley Chapel, suggested slowing down the depopulation. Weatherford said the Legislature should be able to review the program, which would provide $350 million in 20-year loans to companies that write substantial numbers of policies for at least 10 years. Citizens' exposure would be reduced by $2 billion.
The loans are really just a corporate giveaway, said Sen. Mike Fasano, R-New Port Richey, and Rep. Frank Artiles, R-Miami. Artiles has threatened an injunction to stop the loan program if it is implemented without Legislative consent.
Citizens board members voted unanimously to pay two separate companies $200,000 for independent, 90-day reviews of the program that would use the state-run company's surplus to lend money to private companies. One review will be conducted by the Goldman Sachs financial firm, with the other company yet to be determined .
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