Florida’s Citizens Promises Changes to Mitigation Savings Program

Responding to criticism over its home inspection program, officials of Florida’s policyholder-backed insurer said they will no longer immediately raise the premiums for property owners who dispute the inspection findings or take steps to upgrade their homes.

Citizens Property Insurance Corp. has been rescinding the premium credits for mitigation for many policyholders after inspections raise questions about their eligibility, resulting in premiums going up in some cases by thousands of dollars.

This activity, along with Citizens’ renewed emphasis on depopulation that has meant a pullback in coverage, has led some to claim that the program is deliberately aimed at generating additional premiums.

According to Citizens documents, as of July 31, the insurer has conducted more than 247,000 home inspections, out of which 74 percent resulted in an average increase of $600. In total, those inspections have increased the insurer’s premiums by $154 million.

At a press conference last Friday, Citizens President Barry Gilway, reacting to the criticism, said succinctly, “The reality is it is time to respond.”

Gilway said Citizens will stop removing the premium credits and offer a free second inspection in cases where a homeowner disputes the results of an inspection or vows to take steps to meet the mitigation credit standards.

The credit removal will also be suspended in cases where an inspector doesn’t have access to an attic and the homeowner is able to provide access at a later date.

“The message is the program is not designed to increase premiums,” said Gilway. “The object is to provide policyholders with every opportunity to get the credit they deserve.”

Citizens began the inspection program in 2009 as part of efforts to validate wind mitigation credits that reduced premiums by $700 million for 400,000 Florida policyholders.

Citizens said it is also going to do a better job of informing policyholders and agents about their rights to dispute the results of an inspection.

“Most policyholders don’t even know they have the right to dispute the findings,” said Gilway. “We absolutely have to fix that.”

One change is to provide policyholders and agents with a form that lists the individual credits and the findings of the inspectors. Insureds would then be able to contact Citizens directly by phone or through its website or through their agent if they dispute the credit change and request the free second inspection.

Gliway said that the Citizens inspection program is not arbitrary and that one of the major reasons for the credit changes is that the mitigation forms approved by the state have been altered twice over the last two years.

For example, previously if 50 percent of a home’s roof is flat, which is common among older homes in south Florida, homeowners were eligible for a premium credit. That standard, however, has now been reduced so the credit only applies if the flat room only covers 10 percent of the home.

Second, the standard was that straps held down by two nails qualified for the credit, but now the standard is three nails.

The bad news for policyholders who have already seen their premiums go up due to a removal of a mitigation credit, even if they successfully disputed the inspection or upgraded their home, is that the insurer is not going to return any premiums.

Said Gilway, “It’s just not realistic for the program to work retroactively,”