insolvent. This isn’t the solution.”
Shaw isn’t comfortable with the fact
that surplus carriers are not covered by
FIGA, and he doesn’t trust the freedom of
rate and form they enjoy.
“Upon renewal, rates are going up—and
no one has any say about it,” he says.
Instead of giving homeowners the option
of opting out once approached with an
continued from page 21
offer from a surplus carrier, “why not give
homeowners the option to opt in?” Shaw asks.
In other words, Shaw suggests that
policyholders should have to proactively
indicate they are willing to leave Citizens
before a surplus carrier could approach them.
‘NO ONE WILL BE FORCED’
GeoVera Insurance, currently one of
the top writers of surplus homeowner’s
insurance in Florida (primarily insuring
homes whose value exceeds the $750,000
cutoff that Citizens imposes), is supportive
of the bills, says Tim Meenan, the carrier’s
lobbyist and an attorney with Blank and
Meenan in Tallahassee.
■ NEWS ANALYSIS
I believe there will be
a big problem if one of these
companies goes insolvent.
This isn’t the solution.”
Sean Shaw, Attorney with Merlin
Law Group and Former Florida
Insurance Consumer Advocate
AS FLORIDA OFFICIALS came to realize theyhada seriousoverexposureproblem with Citizens, the state’s insurer of last
resort, the legislature took steps in 2007 to
depopulate Citizens: The law written then, still
on the books, permits admitted depopulation
companies to take approved batches of policies.
And this approach worked…for a while. For
several years after removing the policy from
Citizens, a take-out company was required
to keep rates at or about the same as the
homeowner was receiving at Citizens.
But the measure only served to create
a revolving door. Many policies that left to
the private market returned, once private
insurers attempted to raise rates when they
could in order to achieve some modicum
of actuarial soundness. After all (and few
could argue), Citizens’ rates are significantly
below actuarial soundness.
That’s the danger: Citizens never goes
bankrupt. It always has money, so long as
there are insurance-holding residents against
whom it can levy assessments. NU
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