As citizens sheds policies, florida homeowners face tough choices gas bubbler


TALLAHASSEE — In the next month, nearly 400,000 people whose homes are covered by the state-run Citizens Property Insurance Corp. will get a letter in the mail from another insurance company taking over their homeowners insurance coverage by Nov. 5.

Policyholders will have two options: say no, and remain with Citizens, taking their chances that their options could be even more limited beginning in January when a $44.9 million clearinghouse comes online to allow insurance agents in the private market to handpick Citizens policies. Or, homeowners can accept the coverage from the so-called takeout company, one of 10 smaller carriers. Unlike Citizens, those companies have the right to raise insurance premiums by unlimited amounts when the policies come up for renewal.

It’s all part of the aggressive and controversial push by Gov. Rick Scott and the Florida Legislature to shed Citizens Property Insurance of its 1.2 million state-subsidized policies. Under current law, if Citizens falls short of the cash it needs to pay its claims after a massive storm, policyholders of other lines of insurance and state taxpayers will be assessed fees to foot the bill.

But as Citizens shifts policies to the private market, the bottom line for homeowners is that costs will rise. Private companies don’t face the same rate caps as those imposed on Citizens and they don’t benefit from the taxpayer-backed system.

Beginning Jan. 1, homeowners applying for Citizens policies for the first time will be required to go with the private carrier if it offers coverage that is within 15 percent of Citizens rates. Current Citizens customers will be treated differently. Private carriers may offer them less coverage, but it must not be more expensive than their current policy.

But homeowners who turn down a takeout offer in November may not be able to keep their Citizens insurance much longer anyway. "In theory, the more closely the Citizens rate is to the market rate, the more likely that multiple offers are forthcoming," Peltier said.

Policyholders who receive an offer from a takeout company have 30 days after the private company takes over their policy to come back to Citizens at the same rate they were paying before, Peltier said. But policyholders who receive an offer of coverage through the clearinghouse have only 48 hours to shop around.

Last month, the Citizens board approved a $21.7 million, five-year contract with Bolt Solutions of Connecticut to design and operate the software for the clearinghouse system. The contract could be extended another five years, with the value not to exceed $44.9 million and the cost is contingent on the number of policies actually transferred to private carriers.

"My take on the clearinghouse is that it was built to protect agents,” he said, referring to agents who sell auto, life and personal property for national companies but don’t sell homeowners insurance in Florida. "Your property gets put into the clearinghouse and it gets shopped around for anybody who is writing insurance so they can keep their clients."

Under a compromise reached with the Miami-Dade delegation, Citizens policyholders who are forced to take a policy from a private carrier in the clearinghouse will see their premium increases capped at 10 percent for three years and have the option to return to Citizens.

For example, private companies have the right to repair damage to a home, instead of paying for replacement coverage. Hidden in some policies, however, is a statement that if they hire a third-party contractor to do the work, the carrier is not responsible for the work, Artiles said.

While the clearinghouse will not be available for consumers to comparison shop, it will be available for agents. Meanwhile, the Office of Insurance Regulation has a website,, that offers information for each takeout company with a link to a "Citizens Coverage Comparison."