Citizens Insurance’s letters broil frustrated customer in a ‘depopulation’ stew

How badly does state-owned Citizens Property Insurance Corp. want to depopulate?

So badly that in addition to participating with private-market insurers in a “takeout” program, the residual insurer is trying to remove customers out of policies that haven’t even begun.

And it’s doing so with confusing letters and questionable premium estimates that ensure the policyholder must take the private-market offer — at least for now.

State officials make no secret of the fact they don’t want Citizens Property Insurance Corp. to remain anywhere near its current 1.18 million policies.

It doesn’t want to carry so much risk and it doesn’t want to assess non-Citizens customers if a huge disaster prevents the company from paying its claims out of its own pile of money.

That’s why it participates in a depopulation program that shifts policies onto private market insurers.

But it would help to clearly explain to targeted policyholders what’s going on.

Scott Bassett, an Orlando homeowner with Citizens coverage, recently found himself plunged so deeply into Citizens’ depopulation rabbit hole that by the time he received his third takeout notice in seven months, he didn’t know what he was looking at or how to respond.

The first takeout letter was a clear no-go

His experience began on Aug. 26, when Citizens sent Bassett a letter informing him that Slide Insurance, a newly formed company headed by former Heritage Property and Casualty CEO Bruce Lucas, had submitted an offer to take over his insurance coverage.

The letter told Bassett that “this is an important choice, but one that needs to be made quickly” — by Oct. 5. If he did not respond, the switch would be made by Citizens “on your behalf,” it said.

It added that he would be switched to Slide on Oct. 17 if he did not proactively respond through his agent or on Citizens’ website with a choice to stay with Citizens.

It did not state that Bassett had the right to remain with Citizens if Slide’s estimated renewal premium was more than 20% over Citizens’ estimated renewal premium. But it warned that he would be ineligible to remain with Citizens if “future offers” are sent with estimates no more than 20% above Citizens’.

According to the letter, Slide’s estimated renewal premium was $3,501 while Citizens’ was $2,451 — a difference of 43%. Bassett opted to remain with Citizens.

The second letter narrows the gap

About three months later, on Dec. 1, Citizens sent another letter with yet another takeout offer from Slide. Unlike the first letter, the second letter stated that Bassett was eligible to remain with Citizens.

This letter stated that if he is transferred, he would “report any claims that occur after Jan. 23 to your new carrier.” It added, “Although your new carrier will be responsible for paying claims as of this date, your policy premium and terms and conditions will not change at the same time. You will receive billing and updated coverage information from your new carrier close to your policy renewal date.”

This time, Citizens’ estimated renewal premium was $299 higher — $2,750 — while Slide’s estimated renewal premium had dropped by $176 to $3,325. The difference was 20.9% — a hair over the 20% threshold that would have made Bassett ineligible to stay with Citizens.

So Bassett registered his choice to stay with Citizens.

Through his agent, Bassett signed with Citizens for a new policy year that’s scheduled to begin next month, on May 7. The actual renewal premium: $2,677, more than the Aug. 26 letter and less than the Dec. 1 letter.

Third time is the charm

More than a month before the renewed Citizens policy was to take effect, Bassett received another takeout letter. And this one confused him.

It stated that because Slide’s latest estimated renewal offer was not more than 20% greater than Citizens’ estimated renewal offer, he was ineligible to remain with Citizens.

While Slide’s estimated renewal offer was $3,500 — $1 less than estimated in the Aug. 26 takeout letter — Citizens was now estimating its renewal premium would be $3,023, or $572 more than estimated on Aug. 26.

What’s more, the latest letter stated that his policy with his new insurance company would begin on May 7, 2025 — more than a year later, and upon expiration of the 2024-25 policy that hadn’t begun yet.

The letter said that if he received additional offers and wanted to select a different company, “you must register your choice by May 6, 2024.” It added, “Your policy will be transferred to the private insurer that you select, and coverage with your new insurance company begins the same day your current Citizens policy expires on May 7, 2025.”

If he failed to register a choice, the letter said, his coverage would be transferred to Slide and begin the same day his current Citizens policy expires on May 7, 2025.”

If he receives just one offer, no action is needed, the letter said. “Coverage with your new insurance company begins the same day your current policy expires on May 7, 2025.”

Bassett didn’t know what to make of the letter, considering he wasn’t even in his “current policy” that was due to expire on May 7, 2025.

Why was he receiving a takeout offer for a term that starts a year after one that hasn’t started yet, he asked. And how can Citizens know it will need a substantial premium increase more than a year in advance without seeing the results of the upcoming hurricane season? How can it accurately predict a 2025-26 renewal premium when it was twice wrong about the 2024-25 premium?

“It looks to us like they just selected an increase they know would be within 20% of Slide’s offer to assure we would have to leave Citizens,” Bassett said in an email, adding, “Is this a pattern, scheme, conspiracy?”

Mystery solved?

What the third takeout letter did not clearly state was only hinted at on its second page, in a section titled “notes” below the three references to Bassett’s coverage with his new insurer beginning on May 7, 2025.

The paragraph directed Bassett to report any claims that occur “on or after May 21, 2024” to Slide, which will be responsible for paying them. Premiums, terms and conditions of his Citizens policy “will not change until your policy begins with the new insurer on May 7, 2025,” it says.

Essentially, that means his new policy with Slide will begin on May 21, 2024, Citizens spokesman Michael Peltier confirmed. As Bassett’s renewal date of May 7, 2025, approaches, he should check the actual renewal prices. If the actual prices are no longer 20% or less apart, he can return to Citizens for the 2025-26 policy year.

After hearing the explanation, Bassett said, “It’s hard to imagine a more confusing letter.”

“I couldn’t figure out why I was being forced to accept a takeout offer more than a year in advance of the start of the policy,” he said. “But (the) explanation makes sense. The letter certainly did not.”

As to why Citizens’ estimated renewal premium jumped by $572 between the first and third takeout letters, Citizens was approved by the state Legislature in 2022 to change the cap that limits how much it can increase premiums every year, from 10% in 2022 to 15% in 2026.

As part of its mission to transfer as many policyholders as possible out of Citizens, the company has been seeking the maximum premium increase each year. Adding 14% to Bassett’s current $2,677 premium would bring it to $3,052 — in line with the estimate in the third takeout letter.

But the Office of Insurance Regulation frequently approves smaller rate increases than requested by Citizens.

And Slide, unlike most other insurers operating in the state, has not sought a rate increase for new and renewing single-family homeowner policies since early 2023. Last February, it actually requested a rate decrease averaging 0.5%. That’s most likely the reason its estimated renewal premium for 2025-26 was within $1 of its estimated 2024-25 premium.

There’s no guarantee that Slide won’t seek authorization to increase its premiums between now and May 7, 2025.

Asked if Slide refrained from requesting rate increases to ensure that more Citizens takeout customers would eventually, like Bassett, find themselves ineligible to decline the takeout, CEO Bruce Lucas said by email, “I’m not sure what you’re talking about in terms of our rate filings.”

He said, “We are required to make annual rate filings, and our actuary determines what that rate needs to be based on our expenses and costs. We recently filed for a small rate reduction in February, but that has nothing to do with Citizens.”

Slide has been the most active of 11 companies that have taken policies out of Citizens this year. Of 254,174 selected for removal from Citizens since January, 140,202 have been selected by Slide.

The state Office of Insurance Regulation permits companies to make takeout offers “more than a year in advance,” Citizens spokesman Peltier said.

And 21% of selected takeout customers are in a similar situation as Bassett — they renewed their Citizens policies after receiving a takeout letter but before the date they were to be transferred to their new company, Peltier said.

How many of those received the same confusing letter because they were ineligible to remain in Citizens is not known.

Meanwhile, Citizens is considering rewording those letters to make it clear that policyholders won’t be waiting a year or more to be transferred, Peltier said.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].