The board of directors of Citizens Property Insurance Corp. opted Friday to reform its unpopular reinspection program, hire an external auditing firm and overhaul its customer relations program.
The board also approved a controversial new $350 million low-interest loan program aimed at drawing private insurers to take over some of its more than 1.4 million policies.
The changes to the reinspection program were in response to complaints from scores of property owners and a series of stories jointly published by the Miami Herald and Tampa Bay Times. The newspapers documented how hundreds of thousands of Floridians saw premiums soar as the state-run insurer intensified its plans to raise rates through reinspections and reduce coverage.
Property owners who lost insurance discounts during the aggressive home reinspection program now have new options to dispute the premium hikes. They will have a year to request a second inspection, free-of-charge. Those who lost insurance discounts because an inspector could not get into their attics to verify the strength of their roofs can also receive a new inspection.
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So far, more than 257,000 properties have been inspected this year, with three out of four seeing premium hikes after an inspection. On average, homeowners who have lost discounts have seen premiums increase by about $800.
The other decision by the Citizens governing board to offer low-interest loans to private insurers has also drawn criticism.
Under the new “surplus note” program, Citizens would take capital from its 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.
The 20-year loans require interest-only payments during the first three years and are forgivable, in part, if hurricanes hit the state. Citizens acknowledges that the interest rate of about 1.6 percent “does not approximate the true market rate” for similar loans and that Citizens could be left unpaid if an insurer goes belly up after receiving a loan.
Critics, including several state lawmakers, called it a “sweetheart deal” for insurance companies and “corporate welfare” funded by the premiums collected from Citizens’ customers over the past several years. With no hurricanes hitting the state since 2005, Citizens has saved up a massive treasure chest of $6.2 billion, money that private insurers find attractive.
“I sat here and listened to the board today give out one of the biggest bailouts. Corporate welfare, I call it,” fumed Sen. Mike Fasano (R-New Port Richey), blasting Citizens for quickly approving the controversial plan without legislative input.
The plan, which was unveiled to the public on Thursday, was approved by the board on Friday in a unanimous vote.