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The push by Florida’s largest property insurer to transfer a record number of policies to private firms is sparking calls to offer homeowners more details that will help them make the critical decision about whether to switch.

Customers of Citizens Property Insurance Corp. have to discover for themselves facts such as whether their premiums would increase under a private insurer, a company’s responsiveness to policyholders and its track record on corrective actions from regulators.

“For the consumer, there really isn’t enough information,” said Robin Smith Westcott, the state’s consumer insurance advocate.

Her office is working to collect more comprehensive information on the five companies currently hoping to take over Citizens policies. Westcott hopes to create a website within in the next couple of weeks — before the Nov. 6 deadline for policyholders to move to a private insurer.

In the meantime, she recommended that at the very least consumers Google the companies’ name to see what existing customers have to say about the insurers.

Citizens could lose some 300,000 policies this year — or a fifth of its portfolio — after Gov. Rick Scott ordered the state-backed insurer of last resort to cut its risk. That figure would exceed the total number of policies removed in the past three years combined.

By state law, affected Citizens customers will be notified whether their policies have been selected for removal. Policyholders have 30 days to decline and stay with Citizens. If customers don’t respond, their policies will be assumed by the private companies.

State Sen. Mike Fasano, R-New Port Richey, said the letters that Citizens policyholders receive from private insurers don’t give enough meaningful information. He agrees with Westcott, saying there needs to be more transparency for consumers to make better decisions.

“She’s right on target making sure that happens,” Fasano said.

Already this year, 84,339 policyholders statewide have switched from Citizens to private firms.

The companies scheduled to take over thousands of policies this fall include Boca Raton-based Florida Peninsula Co., one of the state’s 10 largest home insurers. This month, Citizens approved a $350 million plan that would give low-interest loans to encourage private insurers to take even more policies out of Citizens.

The state’s Office of Insurance Regulation has vetted the five companies but only to ensure they are financially solvent and can handle the extra customers, spokeswoman Amy Bogner said in an e-mail. Homeowners can find that information online.

But in past years some insurers declared financially sound still went out of business, said Jay Neal, executive director of the nonprofit Florida Association for Insurance Reform,.

He urged consumers to take those extra steps and do other research, such as checking with the Better Business Bureau on any complaints consumers may have filed against the insurers.

Consumers should look to see how long the company has been in business and check on its financial history, Neal said. They should also press their insurance agents to research the companies proposing to take over the policies.

Some companies taking over Citizens policies have actually lowered premiums, Neal said. But Sean Shaw, president of Policyholders of Florida, an advocacy group, has said that policyholders complained of rate increases after the first year.

“Most people are only interested in whether their premiums are going up,” Shaw said Tuesday. “But there are other things that are just as important, like the ability of a company to pay a claim and how long it takes.”

Citizens customers face steep assessments if the state-backed insurer does not have enough money to pay claims after a major storm. So policyholders who have the chance to switch may be better off in the private market, Neal and others say.

Florida Peninsula started in April 2005 to take over Citizens policies following the busy hurricane season of 2004. It now has 120,000 policies.

The four other insurers — Homeowners Choice P&C Insurance Co., Southern Fidelity P&C, Southern Oak Insurance Co. and American Integrity Insurance Co. of Florida — all are based in Florida and have been licensed in the state since at least 2004.

TALLAHASSEE, Fla. – The Florida Office of Insurance Regulation (Office) today announced the approval of an additional 60,000 policies to be removed from Citizens Property Insurance Corporation (Citizens). This will add to the 84,339 already taken out during this calendar year, as well as the 150,000 policies recently approved to be acquired by four Florida domestic insurance companies beginning November 6, 2012.

Hernan Santiesteban installed hurricane shutters on his home in Westchester, believing it would reduce the cost of his property insurance.

Instead, his rates under Citizens Property Insurance Corp. increased from about $1,500 to $3,000.

“At this moment, I have no insurance because the cost is going so high,” said Santiesteban, 83. “I know there are many, many old people that cannot afford to have insurance for their home because right now it’s so high.”

Homeowners and politicians — and at least one elected official who is insured by Citizens — spoke Thursday night at a public hearing in Miami, held by the Florida Office of Insurance Regulation, about proposed Citizens insurance rate increases.

Citizens is proposing increases of up to 12 percent statewide, though the figure more common in South Florida is closer to 11 percent. The increase still must be approved by the state’s insurance office, a decision due on Oct. 1.

The state-run insurer has been pushing for higher rates in an effort to get more customers to seek coverage from private insurers — no easy task. Created to be a last resort for homeowners who could find no other insurer, Citizens has more than 1.4 million policyholders and, it says, insufficient money to cover a major disaster.

“We’ve got to have money to pay claims when the hurricane comes or series of hurricanes come,” said Citizens’ chief financial officer, Sharon Binnun. “The premium that we are collecting is not enough to pay claims.”

But more than a dozen people who spoke blasted the company for its reinspection program, which often leads to higher costs; for its own legal costs; and for a controversy over travel spending by its executives.

“This is a company that has strayed from its mission of serving policyholders to one of indulgence and putting its own needs first,” said state Sen. Mike Fasano, R-New Port Richey, who called the proposed rate hike “the epitome of arrogance.”

State Rep. Frank Artiles, R-Miami, a critic of Citizens whose own home is covered by the insurer, said Floridians are already paying too much. He urged the insurance office not to approve any increase until the company’s costs are managed better.

“Their costs are out of control,” he said. “I, as a legislator, cannot get the information as to how much money Citizens is spending on attorneys’ fees.”

Eduardo Gomez, a Coral Gables attorney who represents homeowners in lawsuits against Citizens, said the company’s policies result in a long and difficult process to get money for his clients, even after the cases are settled.

“You cannot continue to say that litigation costs are driving the premiums up because it is the company’s policies that are driving the premiums up,” said Gomez, who is himself facing a rate increase from Citizens.

He told the story of a client who is facing a rate hike that could cost him his home.

“To have a rate increase now with the insurer of last resort would be disastrous for thousands of Floridians and the national economy,” Gomez said.

Florida Insurance Consumer Advocate Robin Smith Westcott, who spoke against the rate increase, said homeowners should try to find other coverage, even if it means paying higher rates.

“Consumers should take away from this: When it’s time for my policy to renew with Citizens, shop,” she said. “Make sure you understand and see the benefit that might be in the private marketplace.”

Miami Herald Staff Writer Toluse Olorunnipa contributed to this report.

Florida’s recent luck with Mother Nature has distracted the state’s media, which is investigating relatively small issues at Citizens Property Insurance Corporation while ignoring the fiscal time bomb that is our property insurance market.

Some editorialists say the Board of Governors of Citizens are either “skirting the law” for considering responsible premiums for new customers, or “offering bribes” for encouraging private insurers to return to hard-hit areas. The senior staff of Citizens is portrayed as “spending lavishly” for not eating fast food while urgently scouring the globe to secure billions to pay claims and avoid “blue tarp Florida” after the next storm. It’s time to refocus on the facts.

Lest we forget, today’s premiums are suppressed by relying on taxes to retire the inevitable future debt. Some claim Citizens can “handle another Andrew without assessments”, due to reinsurance and “surplus” built during the lucky run since 2005. The truth is more complex.

• First, Citizens’ “probable maximum loss,” which means the likely cost of a storm with a 1 percent annual chance of striking, is four times its surplus, around $24 billion. That’s according to scientists, who — with all due respect — have never met an aggressive Florida public adjuster or attorney. Financial projections of recent storms have been underestimated; Wilma’s cost overruns amount to billions in just the past few years.

• Second, $7 billion of Citizens’ reinsurance is provided by the Florida Hurricane Catastrophe Fund. But the Fund finances its promises with assessments on the same Floridians. You’ll pay the same hurricane taxes whether the money is borrowed by the Cat Fund or Citizens; only the name on the bill will be different.

All this means the odds of future assessments are greater than you might think — better than 50/50 over the typical mortgage term.

• Third, Murphy’s Law could apply. The current arithmetic depends on the bond markets’ willingness to lend billions quickly after a big storm to a state whose economy will soon be burdened by billions in new taxes. It further presumes every homeowner, driver, and business owner will pay those assessments without delay, objection, or avoidance. Is anyone sure everything will go just as planned?

• Finally, the big question the critics avoid. Even if we defer funding the risk, and assume everything goes well after the storm, what do we do then? Citizens and the Cat Fund will start over broke, Florida will be further in debt, future generations can anticipate decades of assessments, and all those property insurance policies must still be renewed using someone’s money to back the promises. Sounds like the “plan” right now in Washington, doesn’t it?

Political and media leaders should respect Floridians and tell them the truth. Property insurance is expensive for two reasons.

First, Florida holds 60 percent of the hurricane risk in America. Billions must be ready on demand to pay claims when the wind blows. Nobody risks that kind of money without charging up front. If you disagree, you should guarantee your neighbor’s mortgage for free, since it “costs” you nothing now. That cost of capital, around one-third of your premium, can only be lowered by loss mitigation – not encouraging coastal overdevelopment with low Citizens premiums.

The second reason is that premiums must also fund routine claims, which have skyrocketed. Except for its coastal pool, Citizens actually lost money last year despite no hurricane strikes. It was inundated with claims for sinkholes and water damage, often pursued with help of third parties gaming the system. It takes many premium checks to pay for one big claim, and regulated rates follow costs — it’s that simple. The solution is fewer middlemen and law changes to stop the claims “lottery”.

Those truly unable to afford property insurance should be compassionately assisted by means-tested programs, not fantasy rates. It is unfair to subsidize waterfront residences by millions each year and penalize most Floridians, who cannot afford to pay their own property insurance bill and part of another’s.

Citizens volunteer Board and staff are diligently vetting many ideas to attract private sector capital and heal our property insurance market. It may be cathartic to criticize oversight and question expense reports, but responsible leaders should know it’s more productive to educate Floridians on the risk and options for handling it.

Chief Financial Officer Jeff Atwater wants Citizens Property Insurance Corp. board members to take a slower approach to moving forward with a program that would use surplus funds to give low-interest loans to private companies that will take over large numbers of the state-run insurer’s policies for at least 10 years.

“I’m glad they’re pausing and they’re going to come back and show this is mathematically the right thing to do and there is marketplace interest in taking these accounts and it makes sense for us to go that route – or, keep going the route we’re going. Maybe more players will step up with a desire to work with the present program,” Atwater told reporters after a Cabinet meeting Tuesday.

Under the surplus notes program discussed by Citizens board members this month, private companies would be given up to $350 million in 20-year loans with the interest rate tied to the 10-year U.S. Treasury note. Companies would be required to be meet minimum financial requirements and be established in Florida for at least two years, but would be able to have up to 20 percent of their principle forgiven in each of the first five years of the loan if a hurricane were to hit.

Republican lawmakers Rep. Frank Artiles of Miami and Sen. Mike Fasano of New Port Richey have spoken out vociferously against the plan, saying surplus from Citizens customers shouldn’t go to private companies.

Citizens CEO Barry Gilway, however, contends that using a maximum $350 million in surplus to reduce the amount of possible assessments on policyholders by as much as $1.17 billion would save the company money, considering that much of that surplus would be used to buy reinsurance or pre-event bonds to cover the extra exposure. He is drafting a letter to Artiles and Fasano to be sent this week that outlines the rationale behind the program.

Other board members want to implement the loan program before their next scheduled board meeting in December. They’ve scheduled meetings for the Depopulation Committee in October to develop more details of the loan contracts. Atwater, however, doesn’t think they’ll be able to address the concerns of skeptical lawmakers, policyholders and newer companies that want to be included in the program before December.

“I haven’t had discussions on what their target date is, but my guess is it’s going to be probably a December timeline,” Atwater said.

Maryland insurance executive Barry Gilway joined Citizens Property Insurance Corp. in June, and was immediately inundated with controversies. The Citizens’ board’s decisions to reduce coverage on secondary structures and buildings under construction, to rigorously reinspect wind mitigation measures that often result in an increase in premiums and to consider breaking a cap on rate increases for some policies have sparked outrage from policyholders and several lawmakers. He spoke to The Florida Current about coming to the U.S. from the United Kingdom as a teenager, coming to a public company from the private sector and the need to educate the public on the need for rate increases.

Tell me a bit about your background and how you got into the insurance business.

Well, I’m a Brit by birth. I came over when I was 13. I went to Akron University on a football scholarship and played for the Akron Zips from 1964 to ’68. I’m a Vietnam vet, I was drafted in ’68 and was an infantry platoon sergeant in Vietnam for a year. I got out in 1970 and joined Insurance Company of North America. That shows how old I am – it’s not around anymore.

How did you get involved in American football coming from the United Kingdom?

I got my citizenship in 1965 and was drafted three years later. I played rugby in England and when I came over I was 13 so I was about ready to go into high school. I converted from rugby – you know you don’t play with pads, football you play with pads. So I was a high school jock and did the four sports and had some real success in high school and then got a scholarship to Akron. I was a linebacker; started four years for varsity at the Zips.

What was your first take on Citizens, a public-sector company, coming from the private sector?

The first thing I would say – expecting something different – Citizens has some really, really, really exceptional talent. People like (chief financial officer) Sharon Binnun. We just put together the largest single placement pre-catastrophe event bond in history, I mean, internationally. You don’t expect that kind of innovation in a company like Citizens, you just don’t.

Obviously, there are many decision makers in this role. You’ve got the legislators that really, ultimately dictate the rate that you can charge, which has massive implications on how you run your business.

Since starting at Citizens, you’ve talked about the need for better communication. What is the number one thing Citizens customers and the public should know but don’t?

People don’t understand the issue of rates. They don’t understand reinsurance, we talk in Insurancese and they don’t understand the issue of rates. There’s a reality in Florida we’ve got to get across: There’s only two ways to reduce assessments. The first way is to raise rates. And if you raise rates significantly, then the private market will come in and they’ll start writing the business. That is not on the agenda of any legislator. The second way – and a much more economical way and acceptable way to the consumer – is the depopulation plan that we have proposed.

Do you think some of these actions – reduction in coverage, the reinspection program, raising rates – would be easier for policyholders to accept if there was some reciprocal benefit them, instead of simply less coverage for more premium?

They don’t see it, but the benefit is there. The reality is if you don’t take the coverages away, if you don’t get the right premium developed through reinspections, then what’s the result? The result is you have to increase rates more.

What do you do on your off time when you’re not working on Citizens issues?

I’m a Harley-Davidson nut. I still ride Harleys, I ride them frequently and I go on trips.

I do a big charity ride every year with one of the insurance agency groups. I’m an avid scuba diver, so I love to dive, which is another benefit of being down here close to the Keys. I’m not a golfer, I’ve never had time for golf – I sure don’t now, I’ll tell you that!

Have you ever been down to Daytona for Bike Week?

Absolutely, I’ve been out to Bike Week many times, I’ve been out to Sturgis, South Dakota, many times and up to Weers Beach up in New Hampshire. I’ve been to all the Harley get-togethers around the country at one point or another. Riding bikes and going on long trips on bikes, that’s been part of what I love for over 50 years now, and I’m going strong.