New insurer offered Citizens customers steep premium hikes. Then the state stepped in.

Bill Marchant of Satellite Beach, a customer of state-owned Citizens Property Insurance Corp., was surprised when his agent called him last October with an offer from a private insurance company to take over his policy.

He was paying $3,200 for his current policy with Citizens. The private company, Tampa-based Slide Insurance, was offering to renew Marchant’s policy for $16,000, Marchant wrote on Facebook. Would he be willing to pay 400% more to leave Citizens, his agent asked.

Marchant didn’t just tell his agent no, he wrote in the post. He told him, “HELL NO.”

Marchant was far from the only Citizens policyholder who received a confusingly high renewal offer from Slide last year as part of Citizens’ aggressive effort to reduce its policy count.

As the largest participant in Citizens’ depopulation program, Slide sent hundreds of thousands of letters that Citizens policyholders could have easily overlooked among piles of junk mail. Ignoring those letters — and crucial deadlines to respond — put them in jeopardy of being automatically transferred to Slide, where many faced renewal premiums far higher than what they were paying Citizens.

The letters sent to Citizens policyholders state that they had been selected by one or more private companies for what’s commonly known as a “takeout” by a private-market company. They contain estimates by Citizens and Slide of what each company would charge for the next year’s policy term. Policyholders are also told that they cannot stay with Citizens if any private company’s estimate comes within 20% of Citizens’.

Slide’s estimates far exceeding that 20% threshold and a larger-than-usual number of takeout letters that Slide directed Citizens to send last year caused officials of Citizens and the Office of Insurance Regulation to impose caps to prevent homeowners from potentially paying Slide up to eight times the cost of their Citizens premiums.

In September, they also caused a member of Citizens’ Board of Governors to urge Citizens leaders to watch out for “entrepreneurs” banking on policyholders being automatically transferred to their companies because they failed to open takeout letters received in the mail.

A Sun Sentinel analysis of data obtained from Citizens shows that thousands of policyholders received offers from Slide for takeouts in August, October and November of 2023 that did not require them to leave because they were more than 20% higher than Citizens’ estimates.

And yet, 15,478 of those policyholders were transferred anyway to higher-cost Slide policies because they did not contact Citizens as directed in the letters with a choice to remain with the state’s nonprofit insurer of last resort, the data shows.

Some policyholders of two other insurers were also surprised by large renewal costs after their policies were taken over by Slide.

Homeowners who found themselves with Slide after United Property & Casualty went into liquidation and after Farmers Insurance withdrew from the state have sent complaints to the Attorney General’s Office and the Better Business Bureau stating that Slide sent bills to their mortgage companies that they never approved.

Slide, which introduced itself in 2022 as an “insurtech” that would use advanced technology to serve policyholders, repeatedly declined to explain to the South Florida Sun Sentinel how or why it developed such high renewal estimates. A Slide spokesman acknowledged only that the company made an unspecified number of “errors.” He also defended Slide’s elevated premium renewal offers as necessary to prevent the company from failing.

Citizens CEO Tim Cerio was asked during a meeting with the South Florida Sun Sentinel and Orlando Sentinel editorial boards recently if he knew why Slide sent such high renewal estimates across the state. Cerio said he hadn’t spoken to the company but heard that Slide had told state insurance regulators it was “inadvertent.”

Proposed renewal premiums averaging 40% to 832% higher than Citizens' premiums were sent for the three takeouts to policyholders in 759 out of 992 Florida ZIP codes.

Slide estimated average premium increases of at least twice as much as Citizens' premiums across 518 ZIP codes for its August and November takeouts, the analysis showed.

Other findings from the analysis of the Aug. 22 takeout offers included:

•Homeowners in St. Johns County's 32081 ZIP code were offered premiums costing an average of $28,630 — 833% more than Citizens' estimated $3,070.

•Policyholders in the 33947 ZIP code in Charlotte County were offered policies with premiums that averaged $15,318 — 606% more than the $2,171 premium estimated by Citizens.

•And in South Florida, policyholders in the 33411 ZIP code that includes a part of West Palm Beach received letters proposing a 396% average estimated premium hike — from $3,220 to $15,979.

In addition, policyholders received offers at least triple Citizens' premiums in 104 ZIP codes prior to the Aug. 22 takeout and in 87 ZIP codes prior to the Nov. 21 takeout.

They received offers of double to triple Citizens' premiums in 156 ZIP codes for the Aug. 22 takeout and in 335 ZIP codes for the Nov. 21 takeout.

Not all of Slide's average estimated renewal prices in the August, October and November takeouts exceeded Citizens'. Among 540 ZIP codes targeted in the Aug. 22 takeout, Slide's average estimates were lower in 18 of them. Slide proposed lower average premium increases in 16 of 881 ZIP codes targeted for the Oct. 17 takeout. And of the 868 ZIP codes targeted in the Nov. 21 takeout, Slide's average estimates were lower in nine.

Beginning with the December takeout, a cap imposed by the Office of Insurance Regulation prevented Slide or any other insurer from sending takeout offers with renewal estimates that exceed Citizens' by more than 40%.

Citizens' CEO Tim Cerio and an OIR spokeswoman have since acknowledged that the cap was prompted by Slide's high renewal premiums.

Takeout authorizations signed by the insurance commissioner say the cap is needed "because of the potential harmful impact to Florida policyholders."

Specific properties missing from data

The Sun Sentinel originally asked Citizens to provide a database that included renewal estimates from Citizens and private companies that were sent to each policyholder in takeout letters stretching back to spring 2023, when the current depopulation effort began.

Citizens declined, saying that the information in takeout letters is protected by privacy laws. The company offered to instead produce ZIP code-level averages of all of the estimates sent to policyholders for each insurer, for each takeout date.

To further protect privacy, the data would only include ZIP codes in which at least two estimates were sent by an insurer, Citizens noted.

The Sun Sentinel analyzed the data by calculating the differences between Citizens' and takeout companies' estimates in each ZIP code, then ranked the differences by largest to smallest. The data did not include a count of the number of letters participating insurers sent to each ZIP code.

Takeout rules changed in 2023

Citizens has long asserted that its below-market prices create unfair competition for private insurers that have been struggling in recent years. Correcting that, and shrinking Citizens, is the aim of the depopulation program.

With Citizens' policy count exceeding 1.4 million last year, the company began encouraging private-market insurers to select Citizens policies they might be interested in taking over. Changes in state laws restricting rampant litigation led to the creation of several new companies, including Slide in 2022, interested in increasing their policy counts through Citizens takeouts.

So far, 14 private market insurers have participated by directing Citizens to mail hundreds of thousands of letters to policyholders with deadlines to make a choice or be automatically transferred to a new company.

Lawmakers enacted the 20% threshold in 2022 after years of allowing selected Citizens policyholders to opt out for any reason. Beginning in June 2023, targeted policyholders can only remain in Citizens if any and all premium renewal estimates exceed Citizens' by more than 20%.

Policyholders who are transferred to a takeout company are covered for the remainder of the Citizens term at no additional cost. But there's no restriction on increases takeout companies can request when the term ends.

Homeowners like Marchant say they were stunned to receive Slide's high renewal offers.

Marchant told the Sun Sentinel, "I was a bit upset [thinking] that if I didn't act on the renewal, that it would just transfer to the new higher rate." Ultimately, "I was lucky enough to have a great agent who helped me to get it straight," he said.

Policyholders reached out to their agents, wondering what the letters with the two estimates required them to do, according to news reports and comments on social media sites.

Although the letters spelled out policyholders' rights and responsibilities, the terms were confusing. Some recipients still wondered: Were their premiums increasing immediately? Was a transfer to Slide required? If not, what were their options? And why was Slide proposing to increase their premiums by such a large amount?

Agents relayed complaints to Citizens and met with Florida's insurance commissioner.

In addition to the Office of Insurance Regulation capping future takeout offers beginning in December, Peltier said that Citizens officials "approached Slide, which agreed not to send (future) assumptions out that were more than 100% higher than Citizens premiums," Peltier said.

Slide apparently listened to Citizens' concerns. After Slide transferred 1,041 Citizens customers who received offers of more than double Citizens estimates for the Aug. 22 takeout, no ZIP code received letters for the Oct. 17 takeout with average estimates that exceeded Citizens' by more than 98.6%.

But then letters sent for the Nov. 21 takeout went in the other direction, with average renewal estimates that more than doubled Citizens' estimates in 422 ZIP codes. The Slide spokesman declined to say why that occurred.

Data provided by Citizens showed that Slide transferred only 37 of those policyholders. Slide's spokesman said the 37 "affirmatively selected Slide and made the choice to pay the higher renewal premium."

Slide defends its high renewal estimates

Asked why the company sent such high estimated increases to so many Citizens customers, a Slide spokesman said the "higher rate-increase policies" were "outliers." In a separate email he said, "We had small errors early on that overstated Slide's renewal premium." Policyholders who received the letters and agreed to the takeout were ultimately charged less than what was in their letters when their policies renewed, the spokesman said.

Yet, the company also defended rates that were used to determine its renewal estimates as "actuarially sound" — meaning based on what the company projected would be necessary to pay all claims during the policy year — and approved by the Office of Insurance Regulation.

Slide CEO Bruce Lucas did not personally respond to questions for this report. Instead, the company directed a spokesman from the global public relations firm Prosek to comment on its behalf.

The Sun Sentinel sent its analysis to the spokesman who, after sharing it with Slide officials, criticized it as "extremely flawed."

Citizens did not provide counts of how many letters were sent to each ZIP code, but noted that each received at least two letters. That makes it unfair to compare percentage increases across them, the spokesman said. Slide might have sent two letters to some ZIP codes and 800 letters to others. In those cases, a comparison of differences in all the letters would show lower increases, he said.

He also said that it's unfair to report that Slide sent out the highest premium offers without the ability to compare differences in offers sent by competing insurers to the same properties. Other missing factors include whether properties selected for takeout are houses or condominiums, their values and characteristics, and levels of coverage chosen by policyholders, he said.

"You are comparing what we're doing to other [insurers] and that's not accurate," he said.

But the spokesman declined to say what kind of properties Slide focused on that justified such high premium offers compared to other insurers.

When properties are selected by more than one insurer in a takeout period, he said, Slide "wins" about 50% of the time by offering a lower premium, "which proves that Slide's premiums are in line with the broader market." Slide's total rate increase for all policies assumed over six takeout dates — including three that occurred after the Office of Insurance Regulation capped future takeout offers at 40% — was 8%, he said. In addition, 25% of policies assumed by Slide were transferred with a rate decrease, the spokesman said.

Christine Ashburn, Citizens' chief of communications, legislative and external affairs, said the company did not have enough data to verify Slide's numbers.

Slide's spokesman said the company will beat Citizens' estimates for many more customers when their policies come up for renewal at the end of the terms. The reason is that Citizens' renewal estimates for the August through November takeouts did not include a 12% average rate increase approved last year or a 14% hike that the company is asking the Office of Insurance Regulation to approve for 2025, he said.

In addition, Citizens' estimates do not include a requirement that its policyholders purchase flood insurance, which can cost an additional $500 to more than $3,000, the spokesman noted. That requirement took effect in 2023 for all policyholders who have Citizens wind coverage and live in special flood hazard areas. All of Citizens' personal lines residential policyholders will be required to buy flood insurance by Jan. 1, 2027.

Number of takeout letters prompts cap

Slide was authorized to assume up to 100,000 policies in the Oct. 17 takeout and directed Citizens to send out 258,656 takeout letters, Peltier said. Citizens allows companies to send out more letters than the number of authorized takeouts because the percentage of customers that accept the takeouts is typically low, Citizens CEO Tim Cerio told the company's Board of Directors in September.

But Slide's large October request prompted Citizens to cap the number of takeout letters companies are allowed to request at 30,000 or 20% over the number of authorized takeouts, whichever is lower, Cerio said.

Asked about the October takeout, the Slide spokesman said, "We worked closely with Citizens to give consumers a choice and we were encouraged to select as many policies as possible, which is why Citizens sent a large number of letters in October 2023. Slide never intended to assume policies in excess of an 88% rate increase because we believe that is the threshold where most consumers end up saving money by not purchasing an expensive flood insurance policy."

Seeing rapid growth

Slide CEO Bruce Lucas has had a history of success using other companies' policies to quickly build books of business.

Lucas also had built his first insurance company, Heritage Property & Casualty, by relying on Citizens takeouts. In 2013, Lucas entered into a deal with Citizens that called for it to receive $52 million from the company to absorb 60,000 policies.

Critics blasted the deal, which occurred after Heritage donated $110,000 to a political committee controlled by then-Gov. Rick Scott, according to The Associated Press.

Lucas said the company was a victim of sensationalized news coverage, the AP story said. Ultimately, Heritage was paid $33 million, a Citizens spokesman told the Sun Sentinel.

In 2015, Lucas earned $27.3 million in bonuses and company stock a year before the company sought approval from the Office of Insurance Regulation for a 14.9% rate increase, the Palm Beach Post reported in 2016.

And in 2022, two years after leaving Heritage, Lucas was criticized by CEOs of competing insurance companies for striking a deal to have Slide take over 147,000 policies and $90 million in prepaid premiums from failed St. Johns Insurance Co. six days before Slide received approval to operate as a Florida insurer. Other CEOs wondered why they weren't given an opportunity to take over St. Johns policies.

Lucas told the Insurance Journal that there was nothing inappropriate about the deal that "just kind of fell into our lap."

Since forming in 2022, Slide has donated $967,600 to mostly Republican candidates and political action committees, including $100,000 in October 2022 to Treasure Florida, a PAC linked to Florida Chief Financial Officer Jimmy Patronis, whose department oversees the Office of Insurance Regulation, according to a state-run database of campaign finance reports.

The following February, Slide acquired the renewal rights for more than 91,400 policyholders of United Property & Casualty Insurance, about three weeks before that company was declared insolvent.

In October 2023, Slide announced it had acquired renewal rights for 86,000 customers that Farmers Insurance planned to non-renew as part of its strategy to pull out of Florida's homeowner insurance market. In a news release announcing the acquisition, Slide said the transaction would not have been possible "without the efforts by CFO Patronis, who worked tirelessly to find a solution for all policyholders."

The solutions, however, did not work for all policyholders.

In June 2023, a Jacksonville TV station published a story about a St. Augustine homeowner who last paid United Property & Casualty an annual premium of $8,800. Her renewal bill from Slide sought nearly $36,000, the story said.

Asked about the story, the Slide spokesman said, "We would like to point out the obvious: UPC went insolvent because it did not have adequate rates. Slide’s approved rates are higher than UPC’s rates because our rates are adequate, and we are solvent. If Slide used UPC’s rates, it would also go insolvent."

In an email to the Sun Sentinel, Orlando resident Bill Neumeister said he last paid $4,200 for a Farmers policy that Slide offered to renew for $10,700. "Needless to say, I let it 'slide' and fired my agent and found another insurance company myself for $4,700," Neumeister wrote.

Slide's spokesman said that Farmers Insurance pulled out of Florida because it, too, was "not charging sound rates, which caused financial losses to Farmers."

Slide faced similar complaints that customers filed with the state Attorney General's Office and the Better Business Bureau. The Attorney General said it received 16 complaints since July 2022. The office provided five examples received since May, all of which concerned unexpected bills. The Department of Financial Services also said it received 16 complaints but did not provide examples before this news article was published.

The National Association of Insurance Commissioners, meanwhile, noted 22 complaints filed in Florida against Slide in 2023.

Among 49 complaints about Slide posted since April 2022 on the Better Business Bureau's website, just 15 involve disputes about damage coverage. The majority are from former United and Farmers customers who say they were never given an opportunity to opt out of expensive policy renewals before Slide billed their mortgage companies for the premiums.

Several customers said in their complaints that their escrow accounts were depleted after their mortgage companies paid the invoices. One customer reported a premium increase from $3,100 to $11,000, while another's went from $3,000 to $13,814.

Slide responded to a majority of the billing complaints by saying the company's goal in invoicing customers' mortgage companies prior to their policy renewal dates was to ensure "there would be no lapse in insurance protection."

Responses from Slide on the Better Business Bureau website indicated that it processed cancellations and issued refunds to everyone who posted complaints.

By March 31, 2024, Slide had grown to Florida's seventh-largest insurance company, with 255,644 policies, a quarterly market share report released by the Office of Insurance Regulation shows.

Since 2023, Slide has been approved to take 360,000 customers out of Citizens — more than any other insurer.

It has successfully transferred 147,366 of them.

State officials refrain from naming Slide

In public discussions, state officials had been reluctant to volunteer the name of the company that prompted the caps on premium renewal estimates and allowable numbers of takeout letters.

Insurance Commissioner Michael Yaworsky outlined the changes without naming Slide during an October hearing of the Senate Banking and Insurance Committee.

In an email outlining the Sun Sentinel's findings regarding Slide in June, an Office of Insurance Regulation spokeswoman responded by saying that "some carriers" were detected offering coverage between 300% and 500% higher than Citizens' rates. After it was pointed out that just one — and not "some" — carriers sent such high estimates, the spokeswoman confirmed it was Slide.

Slide's name also was not mentioned during a 20-minute discussion about the changes at the September Board of Governor's meeting.

Cerio, Citizens' CEO, explained during the meeting why it was a "problem" that "takeout companies" directed Citizens to send twice as many takeout letters as the number of policies as they were authorized to transfer in October with premium renewal estimates that Citizens customers were "highly unlikely to accept."

When a company sends a takeout letter, that customer is "essentially taken out of the [depopulation] queue for a couple of months," Cerio said. "And they're not available during that time for what may be a better offer, for a policyholder, from another company."

The caps imposed "will help ensure that the carriers are making fair and targeted offers to policyholders and not taking an inordinate amount of policies out of consideration that hurts a better offer coming from another company," Cerio said.

Finally, during the December meeting of Citizens' Exposure Reduction Committee, a Citizens staff member publicly mentioned Slide's name in connection with last year's depopulation issues. Former Chief Operating Officer Kelly Booten said Slide was "the main one" that requested a number of takeouts for October "above what they were allowed to take." She added that the request "caused a lot of turmoil."

At the September meeting, Charlie Lydecker, a member of Citizens' Board of Governors, called for "making sure that we hold all of these entrepreneurs that want to come in and that will want to come in from a depopulation standpoint accountable."

Lydecker said during the meeting that the example shared by Cerio suggested the company was "playing a game around the law of large numbers, and 'Let's just splatter it all out there'" with "a lot of letters" proposing to raise rates beyond the 20% threshold.

"And you know, it feels to me like they are banking on people not reading the mail. And if they can get a certain return on that, that feels to me like a really bad thing."

In a recent telephone interview, Lydecker confirmed he was talking about Slide during the September meeting, but might not have been aware of the company's name at the time.

He added that since the caps were imposed, Slide has been "a good corporate citizen."

An approach '12 years ago'

In an Oct. 22 podcast with two Alabama insurance agents that delved deeply into his history in the insurance business, Bruce Lucas described how easily Heritage Property Insurance Corp. acquired customers through takeouts a decade earlier.

"Ten years ago, the system was really easy," he said. "You send them a letter, they toss the letter in the garbage. They're a customer of yours."

Asked if Lucas was following the same strategy by blanketing Citizens' customers with high renewal-rate letters in hopes that a certain number will ignore them, Slide's spokesmen responded, "Bruce was providing an assessment of how the market operated 12 years ago." He said it would be "completely false" to think the remarks about the past were a "commentary on the current environment."

The data provided by Citizens shows that average differences between Slide's and Citizens' estimates narrowed sharply in the three takeouts after the 40% cap took effect in December.

That's also when Citizens' 12% rate increase for 2024 began showing up in renewal estimates included in takeout letters.

The Sun Sentinel's analysis shows the price increase enabled insurers to offer more premium increases below the 20% threshold that bars policyholders from staying in Citizens.

At the September Board of Governors meeting, Cerio cautioned against Citizens setting restrictions on price increases and pointed out that takeout companies' offers are all required to be issued at rates approved by the Office of Insurance Regulation.

"Maybe there's a reason a policyholder might want to pay more," he said, adding, "if it's 100% more, I can't fathom what that reason would be."

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].

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