Citizens Insurance Delays Start Of Policy Dump

TALLAHASSEE (CBSMiami/NSF) – Plans to start dumping a large number of homeowners' policies from the state-backed Citizens Property Insurance Corporation have been temporarily put on hold.

A three-week delay has been set for the rollout of a legislatively approved insurance clearinghouse that is expected to help reduce the number of homeowners' policies in the state's insurance of last resort.

Earlier Tuesdsay, Citizens was predicting it would be down to only 750,000 policies by the end 2015.

Citizens CEO Barry Gilway credited a "depopulation" effort to shift policies from Citizens into the private market through the Office of Insurance Regulation approved "take-outs" of the least-risky policies.

The decrease is projected to continue through a clearinghouse that will shop new and renewed policies to private firms when started next year, he said. "We're launching 2014 in a very positive way," Gilway told Gov. Scott and the Cabinet on Tuesday.

Then late Tuesday, a delay was implemented. The delay is needed in part to respond to questions about the privacy of policy holders as their applications to Citizens are marketed to private insurers.

"When we introduce this, we want to make absolutely sure that it's going to be successful," Citizens President and CEO Barry Gilway told the Senate Banking and Insurance Committee on Tuesday. "By moving this date by three weeks, it gives us the opportunity to conduct far more user-acceptance testing, and, with a much more degree of confidence when we launch this system, that it will operate as advertised."

The clearinghouse system had been scheduled to begin comparing new policies on Jan. 2, but is now expected to go into use Jan. 27, Gilway said.

Through the clearinghouse, all new applications to Citizens will be shopped to private firms. If coverage is found within 15 percent of Citizens' premium, the policy would go to the private carrier. For Citizens customers, renewals will have to go to the private market if comparable coverage is found at or below the state-backed insurer's rates.

The clearinghouse was part a sweeping insurance package (SB 1770) approved by legislators during the 2013 session.

In August, the Citizens board approved a five-year contract with Bolt Solutions, Inc., to design the software for the clearinghouse. The contract, which has an option for an additional five years, could total $44.9 million over the decade.

"If three weeks is not enough, please take the time that you need, I'd rather you roll it out right," said Sen. Jeff Clemens, D-Lake Worth.

However, committee Chairman David Simmons, R-Altamonte Springs, said that while the delay is understandable, the agency needs to "give it your all."

"I don't know some of us will be so forgiving if it gets to be Jan. 27 and it's not there," Simmons said.

Jay Neal, director of the advocacy group Florida Association for Insurance Reform, prefers Citizens takes its time setting up the system to ensure consumers are also able to judge the different companies that may be competing for their business.

"When these offers come back, it's not just important that the consumers know the policies are similar, consumers need to know other things, they need to know the relative financial strengths … they need to know if the companies are going to be around when the wind blows," Neal said.

Neal expects even with the extra time there will be "bumps" for consumers. But he remains "cautiously optimistic" the system will work.

The delay comes as the state Department of Economic Opportunity's $62.8 million "Connect" system, which overhauled the unemployment computer system, continues to cause consternation for many users.

Connect was introduced on Oct. 14, a couple weeks after the federal government's problem-plagued health-care website had its own not-so-spectacular introduction.

Gilway said after the state Cabinet meeting on Tuesday that the clearinghouse system "is far more complex than Healthcare.gov."

"The property casualty product is far more sophisticated than the health care," Gilway said. "The challenge is that every single company is different and the challenge with every company is different. Some companies use credit scores, some don't. We're trying to come up with a system that meets the needs of every carrier across the board, but also meets the individual needs of every carrier, because that will make them more aggressive."

Gilway added that the delay will allow Citizens to expand the number of private carriers from three to seven that will get a chance to review each policy when the system goes live.

The inclusion of renewals of Citizens policies into the clearinghouse remains on schedule to begin July 1.
"The News Service of Florida's Jim Turner contributed to this report."