TALLAHASSEE, Fla. (AP) — Florida's largest insurer could be shifting thousands more of its policyholders away from the state-created company and into private insurance companies.
The head of Citizens Property Insurance Corp. announced Friday that as many as 200,000 customers from across the state could be moved over to eight private insurers in December if state regulators sign off on the plan.
This move comes shortly after state regulators quietly agreed last month to let 10 different insurance companies absorb nearly 400,000 Citizens policyholders this November.
"We continue to have unprecedented success in reducing the size of Citizens," said Barry Gilway, president and CEO of Citizens.
Customers are automatically shifted to a new insurer unless they object.
Citizens is currently the state's largest residential property insurer in the state with 1.2 million policyholders.
As many as a third of Citizens customers traditionally balk at moving, especially since some of the companies that have absorbed Citizens policies are smaller. Several companies that previously absorbed Citizens policies went insolvent, although Citizens officials point out that hasn't happened in the past three years.
There have also been complaints that customers aren't getting enough information about the pending transfer of their homeowner policies.
Gilway acknowledged some of the criticism and said the company needs to do more to make sure policyholders are making an "informed decision."
Gov. Rick Scott and other politicians have been pressuring Citizens to scale back its size due to fears a major storm could wipe out its reserves. Citizens has the ability to place a surcharge, or what some call a "hurricane tax," on most insurance bills, including auto insurance policies, if it can't cover its claims. But Citizens has been able to build a sizable surplus in the past few years due to an absence of hurricanes.
Citizens is getting private companies to absorb policies without paying them up front even though earlier this year it agreed to pay millions to get a start-up company to take up as many as 60,000 policies.
Heritage Property Insurance and Casualty was approved to receive up to $52 million - although the payment has been limited so far to $33 million because only 39,000 Citizens customers agreed to change companies.
Senate President Don Gaetz has already promised to have the Florida Legislature review how the transaction was constructed.
Some have also questioned the deal because of campaign contributions. Campaign finance records show that Heritage and affiliated companies have donated $176,000 in contributions since last year. Those donations include $110,000 to a political committee controlled by Scott and more than $40,000 to the Republican Party of Florida. Contributions to Scott's committee came in March.
Michael Peltier, a spokesman for Citizens, continued on Friday to defend the arrangement with Heritage, saying that it took "risk off the books" for Citizens during this year's hurricane season.