The bloated state-backed property insurer of last resort is bringing in independent eyes to review a $350 million loan program that is hoped to shift about 300,000 policies into the hands of private insurers.
Members of the Citizens Property Insurance Corp. board of governors, meeting in a teleconference on Friday, agreed to hire Goldman Sachs and a second firm that has yet to be determined to study the depopulation proposal that has drawn a growing chorus of concerns.
One of the principal reasons Im recommending this review is, there are a lot of stakeholders in this state: the Legislature, the executive branch, members of the public and members of the press that have concerns about the surplus note program, said Citizens Chairman Carlos Lacasa.
When you go with a known brand to conduct a review, it just adds credibility and reliability to the ultimate results.
The second firm, expected to provide a deep analytical assessment of the program, will be named next week.
The review is to ensure the benefits safeguards in place for policyholders and state taxpayers, and are expected to be completed by the boards December meeting.
The depopulation plan has received criticism from a number of elected officials and consumer advocates, including Chief Financial Officer Jeff Atwater, House Speaker-designate Will Weatherford, R-Wesley Chapel, Sen. Mike Fasano, R-New Port Rickey, Rep. Frank Artiles, R-Miami, and Florida Insurance Consumer Advocate Robin Smith Westcott.
With Citizens up to 1.48 billion policies and many seeking its policies before looking at private firms, the depopulation program also has a wide range of proponents.
Florida Sen. John Thrasher, R-St. Augustine, called for the proposal to be urgently embraced, while Associated Industries of Florida President Tom Feeney has said the loan program is a good step in the right direction to reduce the states catastrophic hurricane risk.
Under the program, private insurers wouldnt be allowed to increase rates on any former Citizens policyholder by more than 10 percent a year for three years and any rate adjustment after that would require prior approval from the state Office of Insurance Regulation.
The former Citizens customers who couldnt afford the hikes after three years could jump back into the state program. However, for each policy that drops from private hands during the 20-year loan period, the private insurer would have to pick up a different Citizens policy.
The program has been estimated to reduce the emergency assessment tax by 38 percent if a one-in-100-year hurricane should hit Florida.
The decision to have the review comes a day after the Florida Office of Insurance Regulation approved a separate removal of 100,000 policies from Citizens to two Florida domestic insurance companies.
American Integrity Insurance Company of Florida will take 50,000 policies in November and another 40,000 in December.
Heritage Property & Casualty Insurance Co., which was licensed in August and has opened its home office in St. Petersburg, has been approved to remove 60,000 policies.
There have been 84,339 policies removed from the 1.48 million existing Citizens policies through the take-out process as of September.
The insurance regulation office has approved up to an additional 6,643 for October, 210,000 for November and 100,000 for December.
By Florida law, Citizens' policyholders must be notified of the take-out request and given 30 days to accept or decline the offer. However, if policyholders do not respond, they will be assumed by the Florida domestic company on Dec. 4.
Reach Jim Turner at jturner@sunshinestatenews.com or at (772) 215-9889.
