Citizens’ $350M Incentive Plan To Undergo Outside Review

Officials with state-run insurer Citizens moved Tuesday to seek an outside financial review of a controversial plan to use $350 million in ratepayers’ money as incentives for private insurers to take customers and discussed pushing back final board approval — perhaps until December.

That did little to reassure skeptics like state Sen. Mike Fasano, R-New Port Richey.

The plan “needs to be put on hold until the legislature meets next year,” Fasano said. “There is a surplus now at Citizens of over $6 billion because of high premiums and few storms. Now the board wants to step in and give ratepayers’ money away with no guarantees of ever getting that money back.”

Several companies are already poised to take potentially hundreds of thousands of Citizens customers under existing “depopulation” programs without such incentives, he said.

The money would be given as low-cost, potentially forgivable 20-year loans to companies who agree to keep Citizens customers for 10 years and not raise rates more than 10 percent annually for three years. Up to 20 percent of the loan can be forgiven each year a hurricane hits Florida. Officials hope to transfer 300,000 or more additional customers under the incentive plan.

Citizens has almost 1.5 million customers in Florida and more than 140,000 in Palm Beach County.

Proponents say it could reduce the company’s risk exposure and cut down on chances of assessments to Florida insurance customers if, say, a storm worse than Hurricane Andrew, a once-in-100 year megastorm, were to hit the state. Board member John Rollins, an appointee of Gov. Rick Scott, said it should not be put off until another hurricane season is at hand.“Time is a factor,” Rollins said. “This isn’t baseball.”

At a meeting of the company’s depopulation committee Tuesday, board member Chris Gardner said delaying a decision more than a month or two risks missing the chance to protect Florida’s policyholders from more than $1 billion in assessment risk.

On Friday, incoming House Speaker Will Weatherford, R-Wesley Chapel, expressed concerns about how fast the Citizens program was proceeding without input from legislators.

“I am concerned that the board’s aggressive timeline will result in the program’s implementation before the two chambers of the Legislature complete hearings on this important matter of state policy,” Weatherford said. In a letter to to the Citizens chairman, he referred to “uncertainties regarding the (Citizens) Board’s legal authority to adopt and implement the program.”

Asked if the Citizens board should act on its own or wait for the legislature to weigh in, Scott said Tuesday, “The structure is that there’s a board and this is the purview of the board.”

Citizens chairman Carlos Lacasa discussed the possibility of presentations to pre-session gatherings of legislators following the November election. He indicated he would be contacting Weatherford about opportunities for legislative input.

On Monday, Lacasa called for an “outside assessment” of the loan incentive program to “ensure that we have properly vetted the transaction from all angles.” Several officials on Tuesday mentioned Wall Street firm Goldman Sachs as a likely candidate for that role.

Business lobby group Associated Industries of Florida was fine with that. CEO Tom Feeney said in a statement that Citizens has “heard the concerns of some of our state leaders and policymakers, and they have responded well. The review by a highly regarded, national firm will assuage the apprehensions that some have voiced about the depopulation plan.”


Source:  Palm Beach Post

Leave a Comment

Your email address will not be published. Required fields are marked *