Our Translation of Our Interview with Univision:

Citizens Insurance to Rise 10% a Year.

In 2011 the legislature approved a premium increase of 10% annually over the next decade for Floridians.

Mario Andrés: 

     In 2011 the legislature in Tallahassee approved increases of Citizens’ premium rates of 10% annually for the next decade, given the high vulnerability to hurricanes we have in Florida and that is drawing our attention to property insurance rates for housing.


     There is much confusion as to why rates go up, when Florida has not experienced a hurricane since 2005.   To explain this we have with us: Mr. Waldo Faura, President and Founder of Floridians in Action and Ms. Belen Valladares, Founder and Vice-President of the same organization.   Welcome to both and Happy New Year.

Belen:

     Thanks for having us.

Waldo:

     Thank you.

Mario Andres:

     Belen and Waldo, we are all going crazy with the increases, you, me and everyone. But there are people who have had their premiums increase double that of their 2010 insurance rates. Is that normal? Is that legal?

Belen:

     Yes, premiums have increased almost double.  What is impacting the increases is not so much the approved increase but it’s actually the removal of the discounts we used to get for strengthening the houses.  This is what is called “Mitigation Discounts”, which are the discounts you get for shutters, reinforcing the roof or other kinds of reinforcements in the roof and so on.  By removing these discounts, the policy increases much more than with the approved increase required by new legislation, removal of the mitigation discounts is much more than 10% annually.

Mario:

     Why remove the discounts, Waldo?

Waldo: 

     Well, this has been a manipulation tactic that has been requested by the insurance companies.  Remember that in 2006, consumer laws were passed that benefited the consumer.  At that time, our organization collected signatures, we took them to Tallahassee, and the governor and legislature passed laws that insurance companies had to give consumers a discount that was appropriate for the amount spent by a consumer or a homeowner in strengthening the house, since the home was now strengthened with shutters and the like it represented less of a risk to the insurance companies in case a hurricane hit.

Mario:

     Exactly, and that costs a fortune.

Waldo: 

     Insurance companies now say that the forms used to give the discounts are not realistic and that hurricane-proof windows and the like are not proven technology.

Mario:

     Exactly and again that costs a fortune.
 
 Waldo:

    One of the largest insurance companies built a house called “Hurricane House”, here in Deerfield Beach Fl and that exact same technology used was required for the mitigation discounts, now that same company is saying that that technology is not a proven technology.

Mario:  

     Incredible! as people say, “he who creates the law, creates the loopholes”.  What is happening now that it has become increasingly difficult to find insurance that fits anyone’s budget?  Insurance is ever increasing; wages have not increased for anyone, much less in Florida where unemployment is rampant, then what are you to do?  People come to Citizens as a last resort yet Citizens does not want to write new policies. Am I correct that they are not insuring properties above a certain value?   Am I right? Tell me ...

Belen:  

     Yes, they’re not taking properties over a certain value and what’s worse than that; they want to give Citizens policies out to other companies to make Citizens a smaller company.    But the problem is that when they take you out of Citizens, they put you in companies for which regulations and some Florida laws do not apply; these companies are called “Surplus Lines”.   If you are with a surplus lines company and if God forbid, the State is hit by a very bad storm, homes are blown away and that forces the insurance company to close, you do not have the protection of the Florida government, which is called ”FIGA”, in the same ways that banks have FDIC insurance for depositors, insurance companies have “FIGA” for the insured, now you will not have government backing.

Mario: or simply put, there will be no one to cover you….if they go bankrupt….and that’s a real possibility since that has happened before.

Waldo: 

     Remember that Citizens has 6.7 billion in reserves.  These new companies will be very risky because they are only required to carry 50 million in reserves to cover losses, that’s all. 

Mario:

     But with 50 million in reserves they could only cover 100 or 200 families!

Waldo:

     Yes, and that’s the danger, now the legislature is saying they want to protect the state’s interests and the interests of consumers in Florida, but at the same time, they are placing us in the hands of the wolves...., we will not able to solve anything when we have a claim on our homes and there are no regulations that will require them to comply with any laws to protect you.  At the same time, these insurance companies can raise their rates to whatever they please since there is no regulation in the state of Florida to stop them.

Mario: 

     Incredible! .... We have a few seconds left.   Is there a way to fix this? fight it? or not?  Well, you said they have no regulation to limit the increases.

Waldo: 

     Let me tell, you there is a splurge of money spending in Citizens that has amazed me!  Citizens has spent in litigation over the past 5 years over $ 2.4 billion dollars.  This represents almost 40% of what they have collected in premiums.    It’s been spent on their own attorneys fighting claims they state “are not legitimate”,  yet they have had to pay them out almost always!.  These litigation costs must be controlled so that Citizens becomes more efficient and does not have to require these rate increases, let’s look at how they are spending our money before asking for a raise in our premiums.

Mario: Belen?

Belen: 

     We need more consumer groups badly to protect the interests of the consumers and   to speak for the consumer.   In Tallahassee they listen to all the hired lobbyists who go there to speak (for insurance companies), however, few groups are there to speak for the consumer.  Also the studies that are done are all based on what insurance company information and facts are put out there.   We have almost no independent institutions or anybody to verify their facts and information.    A study was done recently out of New York, which brought very interesting data that shows; that in the last 44 years, only 7 years dividends from insurance companies have been affected due to catastrophes.   So there is no such thing as a property insurance emergency and we have not heard that insurance companies cannot pay their dividends.

Mario:

     Thank you for being with us. It is important to be active and stay in touch with organizations such as yours. Organizations that help benefit the consumer and to protest that these increases do not come; because if not, people will not be able to insure. They will lose their homes because you cannot have a mortgage in your home without insurance.


     Thanks for being with us. This is the end of our program until next week ....