December 13, 2018

Here comes the Grinch who stole Christmas. The board of Citizens Property Insurance Corp. recently approved a plan that would raise residential insurance rates by an average of 8.2 percent starting in September 2019 – with the hikes hitting almost all customers of the state-backed insurer.  That’s the Citizens way.

Citizens is Florida’s largest residential property insurer. Because the insurance company was created by and is backed by the state, they get to play by a different set of (advantageous) rules. For example, Citizens uniformly low-balls claims or improperly denies claims because, as a quasi-public corporation, it is not subject to the “bad faith” laws that apply to private insurance companies. Under that law, if a policyholder can prove that an insurer intentionally refused to negotiate the claim fairly, he or she can recover damages. That means Citizens can act irresponsibly and unethically, and there’s no law to protect the policyholder from such egregious behavior. Wake up, Tallahassee!

Citizens and its President/CEO Barry Gilway is waging a public relations war over increases in lawsuits, but maybe they should go back to the drawing board and first figure out their finances. You can’t pass litigation costs on to your policyholders. If the new recommendations are ratified – the rates still need to be approved by the Florida Office of Insurance Regulation to go into effect – here’s what Citizens policyholders can expect:

  • Average premium increases for multiperil single-family homeowner coverage will be higher in 53 counties compared to the June proposals, while the statewide average premium will be $43 higher — or $2,851 — than proposed in June.
  • Homeowners with wind-only coverage from the state-run Citizens Property Insurance Corp. would pay 8.4 percent more on average for that coverage compared to the 7.9 percent increase recommended in June.
  • Condominium owners with multiperil coverage would pay an average 8.3 percent more compared to the 7.9 percent increase recommended in June.
  • Condo owners with wind-only coverage from Citizens would pay an average 8.0 percent more compared to the 7.2 percent increase recommended in June.
  • If approved, the hikes would begin in September and fully take effect over the following year as policies renew. Citizens has about 435,000 policies.

Citizens rates are poised to rise even higher than the company proposed in June 2018 (7.9 percent statewide) despite a six-month delay allegedly meant to give the company time to figure out how to protect its customers and avoid a huge rate hike. Mission not accomplished.

The Citizens Board of Governors baselessly blames lawsuits that officials say are driving up costs in the property insurance market. Citizens wants its policyholders to believe the reason for the enormous rate hike is due to increased litigation over water damage claims primarily in Miami-Dade, Broward, and Palm Beach counties. Nothing could be further from the truth.

Citizens’ narrative and alternative facts do not pass the smell test. Citizens is overrun with corruption and mismanagement of funds. A report in the Sun Sentinel showed lawsuits against Citizens declined 23 percent in 2017. Thus lower rates should follow. Moreover Citizens collects over $2 billion in annual premiums and has an administrative operating budget of $205 million. (The aforementioned data was compiled by the state-run insurer at the request of Rep. Frank Artiles, R-Miami, a licensed general contractor and appraiser who has been one of the Legislature’s most vocal critics of Citizens.)

If it turns out that litigation expenses have been decreasing, one would hope Citizens will let their Board of Governors, the public, lawmakers, and regulators know. They have been espousing alleged increases for years but the data simply doesn’t support their claims. Why does Citizens misrepresent the decline in lawsuits while contending that more claims are entering litigation and millions of dollars need to be spent to fight litigation? I suppose if you don’t have facts to bolster your actions, you make up whatever “facts” you want. Either way, the policyholder gets hoodwinked unless they have someone fighting for their rights.

It is almost poetic that this blog will wrap up our law coverage on CBTG for 2018. Earlier this year Corless Barfield Trial Group slapped Citizens with one of the largest verdicts ever against the state-run insurer — $12.7 million. “‘We absolutely killed it,’ said a jubilant Ted Corless, the attorney who represents the association,” the Tampa Bay Times noted in an article published on May 1, 2018 regarding the Cloverplace case.  Citizens was required to pay claims up to the policy limits for repairing over 100 homes in the complex. Because the verdict covered estimated costs for just 83 of the homes, the settlement amount was substantially higher than $12.7 million.

“The people of Florida have a right to expect an insurance company operating in our state, especially a government-backed insurance company, to live up to their obligations,” remarked Rep. Chris Sprowls, a Palm Harbor Republican, regarding the Cloverplace litigation. It is unconscionable how Citizens can increase its policyholder’s premiums when they are wasting away those premiums in litigation that should have been resolved by Citizens years ago.

Citizens is spending tons of policyholder premiums to pay its lawyers to wastefully fight insurance claims it clearly should be covering as in the case of Cloverplace, where 500 people who own property suffered from a claim that languished since 2007. Citizens will try to give you the least amount possible when reviewing your claim or they will improperly deny your claim or delay coverage.  You should have a property insurance attorney on your side. If you have a claim with Citizens, give us a call at 877-517-5595 or 813-258-4998 to help get you an amount that you deserve.