Citizens policyholders ask for help deciphering 'take-out' letters

State-run company shrinks to under 500,000 policies

PEMBROKE PARK, Fla. – Local 10 News viewers Called Christina after fielding letters from Citizens Property Insurance Corporation asking if they wanted to drop the state-run coverage.

As of January, the state-run company has shrunk to under 500,000 policies, the lowest level in more than a decade.

This comes on the heels of an aggressive campaign to reduce exposure by reducing the rolls.

Some complain the letters look like junk mail, and others spoke of a confusing process. Some just wanted to know how to evaluate the private insurer, or "take-out company," being recommended to them.

Local 10 News consumer advocate Christina Vazquez dug into the issue for you.

VIDEO WEB EXTRA: Chris Hackett, director of Personal Lines Policy for Property Casualty Insurers Association of America (PCI), speaks about on how to evaluate an insurance company.


"I was with State Farm for like 25 years and then they pulled out, they dropped me," Sunrise retiree Ronald Smiley said. "My State Farm agent said we could write you for Citizens and that's the way we went."

Citizens Property Insurance Corporation was created by the legislature to provide coverage to people like Smiley who couldn't find comparable coverage in the private market.

Then four years ago the letters started coming.

"I believe I have gotten 12 of these opt-letters," Smiley said.

According to Smiley, he received 12 letters in four years, asking him if he would like to dump his Citizens policy to opt for a private insurer or so-called "take out" company.

Each time he has to sign an opt-out document to keep his Citizens policy. If you don't sign the opt-out letter, than you are automatically transferred to the take-out company.

According to a spokesperson at the Florida Office of Insurance Regulation, the opt-out period ends 30 days after the date the policy is assumed by the private carrier. Policyholders have another opportunity to return to Citizens at their normal renewal date, but they must go through a Clearinghouse to see if they are eligible for coverage.

"To me, what it meant was that they were trying to get rid of me, out of Citizens," Smiley said. "They wanted to cut down their exposure."

That is exactly what is happening. The state is trying to limit its exposure by reducing the rolls.


Being inundated with take-out letters is just one of the facets of the so-called Depopulation Program, championed by Gov. Rick Scott (R) that has Democratic State Representative Jose Javier Rodriguez of Miami (D-District 112) worried.

"I myself have received take-out offers," Rodriguez said. "I live in an older neighborhood in Miami where most private insurers will not insure and I have received take-out offers, and I have the same reaction that many of my constituents do. I am an attorney and a legislator and I see these letters, the initial ones at least, that do look like solicitations. They are confusing...to be honest with you the formatting was even terrible. It was a strange looking document and that's why I sat and looked at it the first time I got it."

Rodriguez is the co-sponsor of a bill which the Florida House Representative describes as "basic protections for policyholders and it deals with the take-out program."

The law would standardize the way you receive the letter and limit the number of take-out offers you get to one every six months.

"Probably most important is if the premium goes up more than 10 percent over the next 36 months, you have the choice to go back to Citizens and you don't have to stay with that take-out company."

Gina Clausen Lozier, an associate at Berger Singerman law firm, told Vazquez that policyholders need to carefully weigh their options.

"Due to Citizens' statutory makeup, a consumer's rights are already limited when insured by Citizens. For example, Citizens is immune from certain extra-contractual claims-- commonly known as bad faith.  But the grass is not always greener on the other side," Lozier said. "Private cost cutting insurance companies will give you certain rights, but you may risk having coverage with a financially insecure company.  Also, many private carriers are moving toward repair/maintenance contracts, where the carrier opts to repair your property after a loss."

"Another risk is that private carriers often hike the premiums upon the renewal of a take-out policy leaving the consumer with few available options. Consumers need to carefully review their choices when receiving a take-out letter and not immediately jump ship," Clausen Lozier, who is a member of Berger Singerman's Dispute Resolution Team, with a practice focus on first and third party claims and coverage analysis, said.


The proposed legislation mirrors what the legislature passed last year, a bill, however vetoed by the governor.

"What makes you think the governor will change his mind this time around, should it pass the legislature?"  Vazquez. asked Rodriguez.

 "The overwhelming support that these basic measures have in the legislature give us hope that the governor will change his mind," he said.


Rodriguez also worries if the private insurers absorbing Citizens policies can quite literally weather a storm.

"The governor and the state are so hard-charging to try to shrink Citizens that we are not watching closely on where we are sending people, potentially creating a repeat of what we have seen in prior years with undercapitalized and small companies," Rodriguez said.

Last October, the Florida Office of Insurance Regulation completed its stress test that found the Florida property insurance market can withstand significant catastrophic loss.


"The Florida OIR has a very experienced, capable staff that do a thorough analysis of these particular companies before they are able to participate in the take-out program," Chris Hackett of PCI said. "Know that these companies have been vetted by the Office of Insurance Regulation to either meet or exceed the financial standard necessary in order to do business in the state."

The "Call Christina" team spoke with Hackett, the Director of Personal Lines Policy at Property Casualty Insurers Association of America, to address viewers' other question, which was how to evaluate what is the best option once you get the offer.

Hackett recommends comparing the coverage options, inquiring about discounts, staying in contact with your agent and, "looking at the A.M. Best rating for that particular company that would give you a good snapshot of the financial health of that company and their ability to meet the needs of their policyholders should a large event occur like a category 4 or 5 hurricane."


Citizens is certainly shedding policies. It has shrunk from 1.5 million policies in 2012 to 484,788 on Jan. 19.

That said, state figures show while more than a million citizen policies were approved for removal in the first 11 months of last year, just over 19 percent were actually removed.

Turns out some people, like Smiley, would rather stick with Citizens.

"When Wilma came through I saw so many people with insurance companies I have never heard of before fighting to try and get their benefits," Smiley said. "I didn't want to opt-out. I wanted to stay with Citizens because Citizens seems to be a good company. I still rather be with a company that I know that will pay-off rather than the one that says we will cover you and then you have to fight with them to get your money."

"I think my message has been the basic protections that would have passed has the governor not vetoed it to help the governor's objective," Rodriguez said. "If the governor's objective is to shrink the size of Citizens, you have to give consumers confidence that they are not being scammed."


The house bill had its first reading last week.

A spokesperson for the governor's office said that Scott reviews any legislation that makes it to his desk.

The next "take-out" period is in March.


Florida Office of Insurance Regulation

Take-Out Companies

Catastrophe Stress Test

Citizens Property Insurance Corporation

Depopulation / Policy Takeout Information

Read: HB 289

Read: SB 1630