Insurers Seeking Citizens Cash Cited
|By Charles Elmore, The Palm Beach Post, Fla.|
|McClatchy-Tribune Information Services|
Citizens executives say their
But state officials on Friday approved nearly
"These are the last companies we would want to be loaning any money to," said state Rep.
Another question is whether the results of loan programs match advertised benefits. Thirteen companies taking
As the Citizens board prepares to meet Friday, its executives last week told a legislative panel why it makes good sense to spend what amounts to virtually all its projected money left after expenses in 2013,
In September, the state's
For those who took part, complying with the surplus provision of the earlier state program is a requirement for participating in the new plan, Citizens spokeswoman
"Citizens will absolutely not allow any company to participate without being in full compliance," Bunker said. "This is an ironclad requirement that will not be weakened."
Citizens received inquiries and an indication of potential interest from several insurers though Tower Hill was the only group that "formally expressed an interest," Bunker said. The program is modeled so that 350,000 policies would be removed, she said.
Nearly 400,000 Citizens customers are already getting the chance to move to new carriers late this year and early 2013 without loan incentives, the largest potential exodus in at least four years.
Citizens officials proposed moving ahead with the "surplus note" plan to mixed reviews before a House subcommittee last week. Some board members have called for moving ahead with the program, with or without further legislative involvement, by early 2013. One of two outside financial reports on the plan may not be ready until January.
Tower Hill completed its purchase of one of the 13 participants in the 2006 plan,
The company fell short of the
"As part of the turnaround of this troubled insurer, this company did fall below the minimum requirement of the loan program of
"Tower Hill's acquisition, management and infusion of capital is returning the company to profitability and prevented the total bankruptcy of the insurer and the capital build-up loan from being permanently unpaid to the state," Curran said.
Unlike the state loan program, the Citizens proposal is "designed to attract fiscally sound, proven carriers rather than attract unproven new carriers as the
For its part, American Integrity "consistently and timely repaid over 20 loan payments over the past five years except for one that was inadvertently paid a few days late over a year ago," company spokeswoman
American Integrity paid about
If companies haven't always met growth projections, a primary reason is that "in many areas in
Some companies say the 2006 loan program has achieved useful things, such as requiring companies to match loans with their own money, bringing more private capital to the market. But economic conditions worsened and the playing field changed after the state froze Citizens rates for several years and doubled homeowner credits for storm-resistant features among other moves, they say.
"Each year we lose about 25,000 customers to Citizens and other competitors," said
At least one insurer, Universal Property & Casualty, appeared to surpass expansion goals of 150,000 customers and grew to 555,000 by mid-2012. But for the vast majority, the net result fell short of projections.
Citizens would offer low-interest, 20-year loans that could be forgiven 20 percent each year a named storm hits
Customers could choose to go back to Citizens, however, particularly if new insurers raise their rates substantially after three years.
To help block a revolving door of returning customers, Citizens has proposed that companies must keep or replace customers or face such penalties as higher interest payments or even a demand for full repayment. The fact that Citizens will be in the fourth year of rate hikes up to 10 percent annually may "potentially reduce the gap" between it and private insurers, Bunker said.
Even some legislators who support shrinking Citizens expressed skepticism about the "surplus note" plan last week. Rep.
Citizens officials say the point of all this is to reduce the risk of assessments to all
But fronting money to private insurers only adds to
"If Citizens' loan program, which looks more like a Christmas present than a genuine incentive program with an ironclad guarantee, is going to move forward-- then I'm going to do my part to insure we know the types of companies we are dealing with and understand their business practices," Artiles said.
State-run insurer Citizens proposes spending
Insurer /New customers projected 2007/Total 2012 customers/Money received
American Integrity Ins. Co. 149,000 111,662
Cypress P&C 95,000 71,937
Privilege Underwriters Reciprocal Exch. 3,500 4,143
United P&C 142,000 103,429
Universal P&C 150,000 554,895
Totals 1 .7 million 1.3 million
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