Property insurance for a coastal community
ADAM TEBRUGGE
Guest Columnist
opinion@lbknews.com
The story is a familiar one. After paying premiums for 20 years without making a single claim, I was unceremoniously dumped by my property insurance carrier in 2006. Lots of phone calls later, it was apparent that the only carrier willing to cover my home was Citizens.
Citizens Property Insurance Corporation (Citizens) was formed by the Florida Legislature in 2002, precisely to address these situations. The private insurance market had begun to dry up, and thousands of homeowners were unable to purchase property insurance to protect their homes. Since mortgages require a property insurance backstop, the lack of private carriers threatened to destroy the real estate market as well.
Now the legislature has decided that Citizens must be “depopulated” in order to entice the private market back into our state. Led by Rep. Jim Boyd, the legislature has directed Citizens to provide less coverage and charge consumers more money in an effort to make the private market appear more competitive. But will these efforts really get at the real problem of insurance for our people?
The Sarasota Herald Tribune published a series of articles in 2010 that led to reporter Page St. John winning the Pulitzer Prize for journalism. In these articles, St. John exposed the reinsurance market that was treating Florida consumers like an ATM machine. The first paragraph of the series was telling: “Never before have Floridians paid so much to protect themselves against hurricanes. And never have they received so little benefit.”
As documented by St. John, two-thirds of property insurance payments were leaving the state to unregulated offshore companies. She estimated that by June 2011, the tab would reach $19 billion. This money was not being held for the benefit of Florida consumers, to pay off claims in the event that disaster struck. This money was going to pay off shareholders and corporate executives. Additionally, overhead for Florida-based insurance companies was more than double the national average.
Not content with looting our state over the past five years, now the private market has its eyes on the reserves that Citizens has built up. As reported in the July 27 edition of the Tampa Bay Times: “Citizens Property Insurance Corp. has built up a massive cash surplus of about $6.1 billion. And private insurance companies want to get their hands on it.” Essentially, the private market is proposing that they will take over thousands of policies from Citizens if they are paid millions of dollars and allowed to raise their premiums. This is a terrible deal for Floridians.
Instead of standing up for consumers, Gov. Rick Scott and Rep. Boyd are punishing Florida citizens. Boyd was one of 23 legislators who recently signed a letter urging the Citizens Board to significantly raise rates for new customers. Meanwhile existing customers are subject to repeated “inspections” that have resulted in rate increases for three out of four policyholders. Furthermore, Boyd was the sponsor of a bill that would have allowed unregulated “surplus line” carriers to take over policies without the consent of the property owner.
While the private market claims they can’t compete with Citizens, they also reported a 40 percent increase in profits for the first quarter of 2012. What is becoming increasingly clear is that the private market has no interest in providing insurance in the traditional sense of the word. Instead it seems content to kill the golden goose after wringing out every last bit of profit for the benefit of its shareholders.
There are a few common sense solutions that would benefit consumers, the industry and the state of Florida. First there must be transparency when it comes to the reinsurance market. There should be no more accounting tricks when it comes to state regulators reviewing property insurance rate increase requests. The state should insist that private companies have adequate reserves to pay a substantial percentage of claims and not rely solely on unregulated reinsurance companies.
Finally, we should face the possibility that Citizens will be with us always, and therefore we should focus on improving and strengthening its business model. What we can’t do is allow private insurance companies to continue to dictate policy for the state, or allow Citizens customers to be treated like second-class citizens.
Adam Tebrugge is a Democratic candidate for the Florida House of Representatives in District 71, which includes Longboat Key. Tebrugge lives in Sarasota and practices law in Bradenton.
Effective lobbying is only a large political donation away from reality in America, where we sell injustice to the wealthy and force it on the poor. Only those who’s IQ can be measured on a tire pressure guage still believe that America has honest government and the tooth fairy. Of course the bankers are ripping everyman, every day, in every way. Have you seen any bankers go to jail lately? And still the American “sheeple” go on voting red or blue, while being continually screwed by both parties. We live in a country where it literally pays to be rich. In a country with as many citizens with as many guns as America, you do not want to see things go badly.
Be self-insured if you have no mortgage or carry just Fire and Extended coverage with Federal Flood and no wind.
Adam you basically have no clue what you are talking about. It’s populist tribe like you spew that confuse the real life issues that face us all as Floridians. I pray you do not get elected because we have enough politicians in Tallahassee, what we need are more honorable Statesmen!
Nothing is more frustrating than when a newspaper allows a political candidate to write a column… well, other than allowing that candidate to distort reality to malign the opposing political party. The insurance issue is real simple. Insurance isn’t a right, it’s a privilege. And, insurance companies are businesses and should be allowed to insure who they choose and at whatever rate the market will bear. AND, if I were the governor, I would put stipulations on companies that want to insure in our state and tell them if they want to write auto, health, worker’s comp, etc, policies in our state then they are also going to have to write homeowners policies as well. That’s just one thing I would do. Second, I would stop allowing the insurance companies to avoid being sued for bad faith, and I would make the laws extremely tough on them when they do not appropriately pay out claims. Then, I would completely change Citizens and all the loopholes the government gives this entity. Did you know that if a hurricane hits and completely destroys your million dollar waterfront home, Citizens can offer to pay you $100 dollars essentially and there is not a damn thing you can do about it legally because they are immune from punitive damages and they are immuned from bad faith lawsuits and a policy holder has no real recourse in a court of law unless they can convince a lawyer to invest potentially hundreds of thousands of dollars and hundreds of hours of time into attempting to fight the courts, the legislature and the current laws on the books to find you a crack in the system in order to force Citizens to do what they should be legally bound to do?
This is not a Governor Rick Scott problem as this problem started many, many years ago. However, both the Republicans and the Democrats in Tallahassee are completely owned by the insurance lobby and they refuse to part with all the campaign contributions that come there way in exchange for doing the right thing to help the residents of Florida. And, now, this situation plays perfectly for opposing parties to continue pointing fingers at each other while giving little more than lip service to the residents of the Sunshine State.
Adam, shame on you for using your lawyer influence to write this guest column and use it to twist the realities into something that looks like an indictment on the Republicans. The truth is, you’re just another lawyer and another politician with no real idea on how to fix the problem… but speaking heretically about it just may give you a shot at feeding an ego driven political ambition.
We need Citizens to go away altogether so the taxpayers of Florida are not paying the claims of homeowners if/when a devastating hurricane hits. We need Citizens to be allowed to be punished like all other insurance companies are punished when they lie, cheat and steal from policy holders. You have Lexis/Nexis so look up all the case law and charges against Citizens… It’s appalling and if the people of Florida knew how Citizens was screwing policyholders with immunity, then we would all be taking to the streets. What we need is a free market, allowing insurance carriers from other states to come in and compete for our business and when a claim needs to be paid, we need to make sure that the law and the courts hold them to the highest standards and punish them severely when they don’t behave with the fiduciary responsibility they are asking for.
So, get off your soapbox and stop creating salacious talking points and propose a real strategy for fixing the insurance mess without demonizing the insurance companies that have a right to fight for business in a free market economy.
[...] This editorial was published in the Longboat Key News. To continue reading, please click here [...]
ANTI-TRUST EXEMPTION AND OTHER LEGISLATED PERMISSIONS FOR PROPERTY INSURANCE COMPANY COLLUSION SHOULD BE REPEALED. UNTIL THAT HAPPENS (GOOD LUCK) AND WE HAVE A FREE CAPITALIST MARKET IN PROPERTY INSURANCE, WE HAVE TO HAVE CITIZENS.
If these “offshore” companies want to sell policies to citizens of this country they should set up shop here, pay taxes here and employ Americans, otherwise, they should sell their policies to the natives living in grass huts in the third world “offshore” locations they call home.
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