Florida’s state-backed Citizens Property Insurance Company is continuing its effort to move its policies to the private sector.
But over the past week, critics have blasted Citizens over a deal with Heritage Insurance.
The deal – worth $52 million dollars – moves as many as 60,000 policies to the private insurer. As part of the agreement, Heritage has promised not to raise rates more than 10 percent a year for the next three years. Also, Heritage will not award dividends for the same term.
The effort to steer policy holders into the private market, is known as depopulation. Barry Gilway, president of Citizens, says depopulation is in keeping with the company’s mission.
“Depopulation is a way to get the best out of Citizens. It is a way basically for companies to identify the very best policies that remain. Why? Because at the end of the day Citizens’ responsibility is to be the insurer of last resort,” Gilway said.
However, Gilway did not address why Citizens should pay a private insurer for assuming only the most lucrative policies.
While Gilway was attempting to silence critics, Florida Governor Rick Scott was signing a bill aimed at reforming Citizens' operations.
The bill, designated SB1770, creates a clearinghouse that will automatically shift consumers to a private insurer if their rates are comparable to those offered by Citizens.
In addition, the bill creates a new post known as Inspector General within Citizens. The Inspector General's charge is to report on misconduct at Citizens for the State Cabinet.
The bill also prohibits Citizens from insuring newly built waterfront real estate, and places a $700,000 cap on private home policies.