Confident in the program but aware of the political winds, executives running the state-backed insurer said Tuesday they will step back and again review a $350 million loan program that has raised concerns among key lawmakers.
Instead of voting next week, the governing board of Citizens Property Insurance Corp. will postpone action until at least December while outside analysts crunch numbers to ensure that the program will deliver what it promises: to reduce Citizens' policy count by more than 300,000 and the exposure to those who remain at a fraction of cost of traditional reinsurance.
On Tuesday, Citizens' depopulation committee recommended that the insurer hire Goldman Sachs, or another major investment firm, to review the surplus notes program, which would provide up to $50 million in 20-year, low-interest loans to individual companies willing to take Citizens policies for at least 10 years.
The plan, approved by the governing board last month, has come under fire from key lawmakers, who have raised concerns over the program itself and the speed with which it has been pulled together.
On Monday, Citizens Chairman Carlos Lacasa called on the board to hold off on an expected Oct. 19 vote and look more closely at the program, the first of its kind, aimed at reducing the number of Citizens policies, which now top 1.4 million.
Barry Gilway, Citizens' president and CEO, acknowledged the desire for additional information, but stood firm in his belief that the program will work as intended and represents the innovation needed to reduce the ranks at a reasonable cost.
According to his analysis, Gilway said the loan program will reduce Citizens maximum loss by $2 billion and save Florida insurance policyholders an estimated $1.7 billion in assessments during the 10 years in which the take-out companies would be required to hold the policies.
"Instead of trying to depopulate Citizens by coverage elimination, reductions and restrictions, which have not played well in the marketplace this program, on the other hand, clearly benefits the policyholder," Gilway said.
Robin Westcott, Florida's insurance consumer advocate, applauded the board's decision to take a closer look.
"It is absolutely the right thing to do, simply because developing a program like this is a very complex endeavor," said Westcott. "Sometime when we are in the middle of doing that, it helps to have a third party to come in and take a look."
Citizens committee members said the additional review would be beneficial, but agreed to move forward quickly to have a plan in place in time for the 2013 hurricane season.
"We have a clock in this game," said committee member John Rollins. "Running out the clock is not a good policy for our team."
