MIAMI (CBSMiami) – Citizens Insurance has been the focus of a lot of criticism over the last few years from state leaders and taxpayers. Now, an exclusive CBS4 Investigation has discovered that hundreds of thousands of policy holders may have been overcharged by Citizens.
Some insurance industry insiders believe the consumer losses could be in the millions of dollars with South Florida being ground zero for a massive state-wide problem.
Private insurance adjuster Belen Valladares said for years she’s been seeing Citizens Insurance manipulating their insurance premiums using popular insurance industry software.
“The consumer is the loser for sure and the winner is definitely the insurance company because they are manipulating everything,” the private adjuster explained.
South Miami-Dade homeowner Mindy Cohen wondered if that’s why her insurance bills almost doubled the past few years.
“Right now, it’s pretty difficult to make ends meet to pay the insurance bills,” Cohen said. “It went up $4000. I’m not very happy about it. Nothing is being done about it. They’re still getting away with it.”
Cohen’s not alone complaining about Citizen’s seemingly endless insurance premium increases. Rates for the state’s biggest insurer have been rising for years. The CBS4 Investigation has raised serious question about whether homeowners’ insurance bills may have been intentionally over-inflated.
So what is behind the potential over-charges?
Citizen’s repair estimating software is believed to be the potential culprit. The estimating software is computer software insurance companies use to determine the repair costs on homes in the event of a storm hit and major damage.
The larger the estimate that comes out of the computer program, the larger your insurance will be.
According to a pending class action lawsuit, Citizens’ software, “can be manipulated to artificially inflate the replacement cost of a home.”
Belen Valladares said that’s what has been driving up insurance bills across the state.
“I think they have manipulated the price lists, manipulated the depreciations,” Valladares said.
Dulce Suarez Resnick, a long-time Miami insurance agent, thought something was wrong with her Citizen’s Insurance quote. It recently came back much higher than several other private companies. She believes she was overcharged.
“In my case, I had three different cost-timators done from three different types of software, and my houses’ replacement cost ranged from $364,000 thru $519,000,” Resnick said. “If you’re paying $3000 for $364,000 worth of coverage; you’re going to pay $4900 or $5,000 dollars for $519,000 worth of coverage.
Suarez-Resnick continued, “It’s a big difference in your premium.”
Citizens reportedly modified its software last October following the lawsuit alleging it intentionally drove up customers’ bills.
State Representative Frank Artiles, a long-time critic of Citizens’ Insurance program, charged, “It was intentional. Yes, they were overcharged and I believe that the costs to consumers is in the millions of dollars, especially here in South Florida.”
CBS4’s Al Sunshine asked, “Were we ripped off?”
Artiles answered, “Absolutlety, Positively, 100% Yes.” Artiles continued saying most of the victims of the overcharges were, “from West Palm Beach down…We are ground zero.”
Last year, state lawmakers passed a new law allowing homeowners to submit independent repair estimates in an effort to help them get more accurate estimates and possibly lower their insurance bills. But some critics said Citizens is not passing that information along to its’ customers or agents.
Artiles said, “I don’t think that information has trickled down; and I truly believe that Citizens does not tell its’ customers or their agents, and it could be a savings of millions of dollars throughout South Florida.”
Homeowner Mindy Cohen said she’s not surprised and added, “It means we’re all screwed, because we need them. We need insurance, we have to have insurance and we’re screwed.”
Citizens’ declined comment on the pending class action lawsuit.
The software company Citizens’ uses to estimate rebuilding costs was originally named in the lawsuit, but has since been dismissed from the case. It declined to comment on the lawsuit against its customer Citizens’ successfully argued the trial needed to be moved from Pinellas County to Tallahassee, and the court agreed.
Citizens’ is expected to ask that the entire case be dismissed.
In the meantime, homeowners can ask their agents for new rebuilding cost estimates when it comes time to renew their insurance policies. If you don’t like what the software reports, try another company with a different software program. You may be able to save several hundred dollars off your next bill.