The plan to loan $350 million to private insurers from the surplus account of Citizens Property Insurance Corp. hit a major roadblock Friday, when the incoming speaker of the Florida House asked the state-run insurer to halt the program and submit it for legislative review.
Rep. Will Weatherford, R-Wesley Chapel, wrote a letter to Citizens Board Chairman, Carlos Lacasa, calling for him to delay moving forward on the so-called “surplus note” loan, which was lobbied for by private insurance companies and hastily approved last month with little public input.
“I am concerned that 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 wrote in the letter.
Citizens’ board unveiled the plan last month and quickly voted to support it, despite backlash from some Republican lawmakers and concerns from the state’s insurance consumer advocate and the Office of Insurance Regulation.
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Board members also voiced concerns about the legality of the $350 million loan and asked that independent lawyers take a closer look at the legal ramifications of approving the plan without permission from the Legislature.
The plan would take up to $350 million from Citizens’ record $6.2 billion reserves and lend it — under favorable terms — to private insurers who agree to take over policies and keep them for 10 years.
Business and insurance industry groups have come out in support of the low-interest 20-year loans, and Citizens president Barry Gilway on Friday said enacting it was in “the best interest of Citizens, its customers and Florida’s insurance consumers.”
But criticism has intensified this week, with Florida’s Insurance Consumer Advocate sending a lengthy list of questions about the financial soundness of the unprecedented loan.
On Friday, Weatherford joined the growing group of officials expressing concerns about the program and the vetting process used to approve it.
"This is not an indictment of the idea, but an opinion that the proposal needs more vetting,” Weatherford said in a statement.
A Citizens spokesperson declined to comment on Weatherford’s letter, stating she had not yet spoken with Lacasa. The board is scheduled to meet over the next two weeks to approve the program, which could begin taking policies out of Citizens in early December.
One lawmaker, Rep. Frank Artiles, R-Miami, has threatened to file a lawsuit to stop the program, which he called an “inside deal” written by insurance lobbyists.
“In the past, when we’ve approved these programs it’s gone through the Legislature,” said Sen. Mike Fasano, a New Port Richey Republican who has been critical of Citizens’ growing independence from the legislative process. The Legislature created Citizens in 2002.
Gilway has responded to critics by stating that the program could help shrink the size of Citizens by 300,000 policies and significantly reduce the amount of fees Floridians have to pay after a once-in-a-century type hurricane. Gov. Rick Scott has championed the effort to shrink Citizens and reduce its risk, sparking controversial and unpopular coverage changes for many of the company’s 1.4 million policyholders.
Most of the changes have taken place without approval from the Legislature, but the new surplus note program has led some lawmakers to publicly question the growing autonomy of Citizens’ board.
Weatherford, who is slated to become the House speaker next month, indicated that the surplus note program “may be outside the Board’s legal authority.”
“My concerns involve serious questions regarding the process by which the proposed program was approved, the sufficiency of the information and analysis on which the approval was based, and uncertainties regarding the Board’s legal authority to adopt and implement the program,” wrote Weatherford.
Toluse Olorunnipa can be reached at tolorunnipa@MiamiHerald.com or on Twitter at @ToluseO