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Citizens' plate full of problems

The insurer's board of governors will strive to hash them out today.

By Tom Zucco, Times Staff Writer
Published April 26, 2007

Like the only air traffic controller at a busy airport, the Citizens Property Insurance Corp. board of governors will have its hands full today.

Gov. Charlie Crist is pressing hard to make it easier to get a Citizens policy, asking the House Democratic Caucus Wednesday to let homeowners switch to the state-run insurer if a private company charges 15 percent or more above Citizens' premiums. The current threshold is 25 percent.

While that is being debated, Citizens is being swamped with new residential policies as homeowners switch from the private market. The company has estimated it could have 2-million policyholders by the end of 2007, meaning it would have doubled in size in less than a year.

The governor's office also has proposed freezing Citizens' rates until January 2009, something that could dramatically affect the amount of money Citizens has to work with.

Against that backdrop, the eight-member Citizens board will meet in Tallahassee to discuss still another pressing issue: the expected onslaught of commercial policies starting June 1 because of legislation passed in January that gives business owners greater access to the company.

Citizens gets its marching orders from the Legislature, but the company has to implement those directions as best it can.

"This has never been done anywhere by any insurance company," Citizens spokesman Rocky Scott said Wednesday, referring to the policy changes and rampant growth. "There is no blueprint.

"We're trying to maintain an actuarially sound stance as we go through it."

First on the list for Citizens, Scott said, is the expansion of its commercial account, which will be based in Tampa.

If the board agrees, Citizens will begin to insure commercial properties throughout the state for up to $20-million. Previously, Citizens could only insure businesses in a small area along the coast for up to $1-million each.

The company has about 65,000 commercial policies, but that could quickly double.

"We don't know how many policies we'll get," Scott said, "but we know there's a huge need for it. We're trying to make coverage more available to businesses that are going bare right now without insurance, and do it before the height of the hurricane season."

But as Citizens grows, so grows its exposure to risk and the corresponding need to have the money to pay claims.

Policyholders from any insurance company would have an assessment tacked on to their bill if Citizens runs a deficit, as it did in 2004 and 2005.

But Citizens board chairman Bruce Douglas said Citizens has claims-paying ability this year of about $8.8-billion, or about $3-billion more than the total of all claims Citizens paid in 2004-05.

At a meeting of Citizens' finance and investments committee Wednesday, Douglas said the company has retired some of its debt, saved itself about $80-million, and is "moving ahead with our financing."

Citizens' total exposure to risk is a staggering $434-billion. By comparison, Florida's budget for fiscal year 2006-'07 was a mere $73-billion.

"Getting bigger isn't the answer," Scott said. "It's getting bigger carefully. We don't want to cause any problems for the people of Florida."

Tom Zucco can be reached at zucco@sptimes.com or (727) 893-8247.

[Last modified April 25, 2007, 22:42:38]