Citizens Property Insurance Corp. on Tuesday opted to temporarily delay approval of a controversial $350 million loan to private companies, but also indicated it might not comply with a request from a top lawmaker calling for legislative review of the program.
After incoming House Speaker Rep. Will Weatherford, R-Wesley Chapel, wrote a letter questioning the board’s authority to implement the $350 million loan program without approval from lawmakers, Citizens President Barry Gilway said that the company would slow down and bring in a third-party financial firm to review the program.
But Gilway and several board members stopped short of complying with Weatherford’s request that Citizens hold off on approving the program until the Legislature held hearings about the loan.
“Time is a factor, we have a clock in this game,” said board member John Rollins, expressing concern about delaying the program to allow for legislative review. “Running out the clock is not a good [depopulation] strategy.”
Weatherford’s office said that Citizens had not addressed his main concern — that the state-run insurer might not have the authority to implement the massive loan without approval from the Legislature.
“The letter raised specific concerns, which Citizens has not addressed about the Legislature’s authority,” said Ryan Duffy, a spokesman for Weatherford. Incoming Senate President Don Gaetz, R-Niceville, said he “support[s] Speaker Weatherford’s position on this issue.”
Citizens’ decision to move ahead with the controversial loan sets up a potential showdown between the increasingly independent board of governors and the Florida Legislature, which created the state-run insurer in 2002.
Gov. Rick Scott, who sparked Citizens’ ambitious plans to shed policies, weighed in on Tuesday as well, stating that he believed the board had the authority to implement the $350 million loan. The money would go to private companies that agree to take over policies from Citizens.
“I think the structure is that there is a board, and this is the purview of the board,” said Scott, when asked if he agreed with Weatherford’s call for legislative review. “The board has the right to make the decision.”
Board members indicated Tuesday that Citizens planned to approve the program as early as December, months before state lawmakers converge in Tallahassee for the 2013 lawmaking session.
But Weatherford’s office said that the Legislature’s committee’s would not start meeting until December at the earliest, making it unlikely that Citizens’ schedule would comply with the Speaker’s request for legislative hearings.
Citizens said it would work with Weatherford’s office on a compromise, but it insisted that launching the program this winter was key to getting it in place before the next hurricane season.
The $350 million program would provide low-interest loans to private insurers who take over policies from Citizens and agree to keep them for 10 years. It could help shrink the insurer of 1.4 million by up to 300,000 policies, potentially saving taxpayers money in the event of a massive hurricane.
But Chief Financial Officer Jeff Atwater, Insurance Consumer Advocate Robin Westcott and some Republican lawmakers have raised questions about the financial soundness of the program.
All have called for more vetting of the loan, which was unveiled in September and approved, in concept, within 48 hours.
“The insurance industry thought they could just slip a multi-million dollar corporate welfare initiative by policyholders and lawmakers, without even going through the legislative process,” said Sean Shaw, founder of Policyholders of Florida, a consumer advocacy group. “It’s refreshing to see more and more lawmakers beginning to stand against insurance industry lobbyists.”
Toluse Olorunnipa can be reached at tolorunnipa@MiamiHerald.com or on Twitter at @ToluseO.