Insurance professionals could help avert trauma, pain and remorse by helping clients construct a Plan B should they carry debt.
June 29--PALM SPRINGS -- John Adinolfe calls it like he sees it: "bullying."
Or ask Marcia Arsenault, another Citizens Property Insurance Corp. customer. She said the state-run insurer suddenly slashed coverage to less than half what it would take to replace her 2009 manufactured home in Jupiter -- only to double its offer after The Palm Beach Post inquired.
"They just steamroller over the common people," Arsenault said. "I don't suppose, if I hadn't called the newspaper, anybody would have paid attention."
Citizens, whose board approved an overall rate cut of 1 percent Wednesday after acknowledging it could not justify continued rate hikes for most customers, is simply trying to be a responsible insurer of last resort, company officials say.
But customers like Adinolfe, who lives in Palm Springs, feel like they're being pushed around for reasons they struggle to understand. He said this was the choice Citizens gave him: put a new roof on his owner-occupied triplex, costing him $24,000, or lose insurance coverage entirely.
Never mind he says the company should have been able to confirm the roof was replaced 20 or fewer years ago, and Citizens says it allows roofs up to 25 years old. The roof survived multiple hurricanes without a claim, had no visible damage, and Citizens never offered a report detailing any particular faults, he said. In the end, he saw little choice but to pay. He is aware of no other insurer who will cover him.
"They're able to do whatever they want to do and get away with it," Adinolfe said. "To me, that's bullying."
Citizens officials say that is not their intent, and emphasize it is important to work with agents to make sure the company has the right information. A company executive speaking to hundreds of concerned mobile home owners in Boynton Beach last month agreed to check on the questions of anyone who asked.
"We want to give policyholders and their agents the information they need to make well-reasoned decisions," said Citizens spokesman Michael Peltier. "That's not being a bully, it's being a responsible insurer of last resort."
Customers have options including, for example, an updated roof inspection to make sure replacement is needed, he said. Roofs under 25 years old can still be deemed uninsurable if they are judged have less than three years of life left, he noted.
Some who get fed up can leave if they want. About 600,000 of 1.5 million Citizens customers have moved to private competitors in the last couple of years, a record number.
But company executives have acknowledged at least two in three of the company's remaining 900,000 policyholders aren't likely to find coverage easily from a private insurer with state-regulated rates. Many live in mobile or manufactured homes, older homes, multi-family structures or other properties near the coast that private carriers have largely refused to cover.
Many people assume Citizens has no choice because it is merely obeying laws it cannot control, but it turns out that is not always true. In the cases above, Citizens acted on rules it adopted internally, company officials acknowledged.
The state-run company is overseen by Gov. Rick Scott and other top state leaders who appoint its board members and vote on issues affecting it in Cabinet meetings.
"Gov. Scott appoints three people on the nine-member Citizens Property Insurance board," press secretary John Tupps said. "He expects his appointees to share his vision of Citizens being the insurer of last resort while being good stewards of taxpayer dollars. That's why last year, the governor signed legislation to appoint an inspector general to Citizens Insurance to ensure that taxpayer dollars were protected."
Strictly speaking, Citizens is not funded by general-revenue tax dollars but rather premiums paid by its insurance customers, company officials say. Assessments that can be charged to its own customers and those of other insurance companies -- as happened with storms that hit in the previous decade -- are sometimes loosely called "storm taxes."
Aggressive moves to downsize Citizens have been supported by arguments that such steps are critical to reduce the risk of possible assessments in the future.
In 2014, though, Citizens has never been in better financial shape. It has built up a $7 billion-plus surplus after eight relatively calm storm years. It receives by far the strongest financial rating of any Florida-based insurer from Weiss Ratings of Jupiter. Smaller, private insurers in Florida continue to fail even in the absence of major storms, burdening the state's policyholders with assessment risks of their own -- most recently Sunshine State Insurance Co. of Jacksonville.
Citizens would need no bailout after a repeat of the 2004 or 2005 hurricane seasons, records show. Even the return of the state's worst modern storm, 1992's Hurricane Andrew, would have caused no assessments for other insurance customers last year, and $8 on a $2,000 policy for Citizens customers, The Post found. The risk is dropping further this year as Citizens gets smaller.
Yet the company's decisions still affect more people than any other property insurer in Florida. Citizens remains the largest insurer in Palm Beach County with about 100,000 customers, roughly double the nearest private competitor.
Under a 2010 announcement, Citizens said it would require proof of roof replacement or at least three years of remaining useful life on asphalt shingle roofs that are over 25 years old, and it applied the 25-year standard to mobile home roofs too. For most tile, slate, concrete or metal roofs the company standard is 50 years. Company officials acknowledge these are not specific requirements in a state law they can cite, but they say it amounts to a more forgiving version of what they call "industry standards."
On any given day, though, industry standards can be difficult for consumers to nail down.
Take American Integrity Insurance Co. A Post reader said the company told her it would not renew coverage on her Palm Beach County home -- even though her roof was only 20 years old.
Lisa Miller, a spokeswoman for American Integrity, said that was a snafu and the company changed its decision after The Post asked. American Integrity will renew existing customers with roofs up to 25 years old but may not take new customers with a roof older than 20 years, she said.
In other cases, Citizens is acting on a law, but then going beyond it. Example: A 2006 law says mobile homes built in 1994 or earlier are to be covered at actual cash value, not the full cost to replace them. But Citizens decided on its own to cover all mobile homes at cash value, regardless of age, "to match industry standards," a spokesman said.
Tens of thousands of mobile home owners in Palm Beach County are getting hit this year as the company recalculates their home values. Some retirees on fixed income fear the coverage is so small they will be left homeless after a disaster.
For instance, Citizens said it could offer no more than $27,000 coverage for Arsenault's residence in Jupiter, even though she says it would cost at least $70,000 to rebuild. She took action by working with her agent, taking photos and reaching out to The Post.
After the newspaper asked why a 2009 home would be valued so low, Citizens said it updated its records and offered $50,000 of coverage. That's still not where Arsenault thinks it should be, but it's better.
"It is critical that policyholders get with their agents to ensure that all the upgrades and model information is accurate and up to date," company spokesman Peltier said.
Arsenault wonders whose interests the company thinks it is supposed to serve.
"Hopefully, they will change their ways and treat their captive customers with the respect we all deserve," she said. "We have no other alternative to their coverage."
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