Citizens Property Insurance Corp. announced major changes to its home reinspection program Friday, following an outcry from consumers and recent media coverage about a staggering $137 million in premium increases tied to the unpopular program.
Under its new plans, homeowners who lose insurance discounts due to a reinspection can receive a second inspection free of charge and will have new tools to dispute the first inspectors’ findings. There will also be a stronger effort to educate homeowners about what they need to prepare for a reinspection.
"In response to policyholder and agent feedback, Citizens is implementing changes to its inspection program to address concerns about the implementation and quality of the program as well as provide better education on the importance of protecting homes against storm damage," said Citizens board chairman Carlos Lacasa at a press conference.
Citizens is still deciding whether or not to apply the changes retroactively. That decision could impact more than 175,000 property owners, who have already seen their premiums go up by an average of $810 after an inspection. Whether those homeowners will be able to reverse the premium hikes is “a question that we need to take a look at,” said Barry Gilway, president of Citizens.
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The announcement comes less than a week after the Herald/Times Tallahassee Bureau published a series of stories documenting how hundreds of thousands of Floridians have seen premiums soar as the state-run insurer intensifies its plans to raise rates through reinspections and reduce coverage.
Consumer advocates have complained about inspectors who do not check thoroughly for evidence that support the homeowner, often ruling quickly that homes do not qualify for discounts.
On Friday, Gilway acknowledged that several inspectors have failed to adequately check homeowners’ attics to see if they were not completely clear of obstruction. Property owners have lost thousands of dollars in discounts because their attics were blocked by boxes or insulation.
“The inspector is not required to wait while you move property that is restricting attic access,” a Citizens letter to policyholders reads.
Under the new changes, homeowners will have one year to clear their attic and receive a follow-up inspection, before any premium increases.
Consumer advocates said the changes sounded positive, but more details were needed.
"Citizens has a long way to go to mitigate public opinion, but free second inspections and enhanced dispute resolutions seem like a step in the right direction," said Sean Shaw, founder of Policyholders of Florida. "Without more concrete details, policyholders need to take a trust-but-verify approach.”
Created a decade ago to be a safe haven — the so-called “insurer of last resort”— Citizens has ballooned to become the state’s largest insurer, with about 1.4 million policies. Most of its risk is concentrated in South Florida and the Tampa Bay area, hazard-prone regions where many homeowners cannot find coverage in the private market. Its actions — including rate increases — affect the entire insurance market, impacting the cost of housing for nearly every Floridian, including those with private insurers.
The initial reinspection program began in 2010, with Citizens sending thousands of inspectors to review the homes of policyholders. About half of all homeowners receive wind-mitigation discounts for hurricane-resistant features on their homes. The reinspection program targeted those features, as inspectors have found that thousands of homeowners did not deserve the discounts they were receiving. The result has been more than $137 million worth of premium increases for homeowners.
The program was ramped up recently, with more than 200,000 inspections completed in the last year. Nearly 90,000 more are yet to be completed. In about three in four cases, homeowners have lost their discounts, leading to average premium hikes of more than 30 percent.
Consumer advocates have accused Citizens of using the inspections program to raise rates on homeowners. Citizens denied the charge, saying that it is simply trying to get accurate information about the homes it insures.
Gov. Rick Scott has been pushing for the state-run insurer to reduce its size and risk, leading to rate hikes and coverage reductions for hundreds of thousands.
The company also said Friday that it would be doing a full operational review to find areas where it could improve, focusing on customer service, administrative expenses and better communication.
“We want to make absolutely sure that Citizens will be run in the most fiscally prudent and efficient manner,” said Gilway. “And it’s going to require a top-to-bottom approach.”