A committee chairman blasted regulators and Citizens Monday for what he called a brazen failure to comply with a law requiring the state-run insurer to offer a lower-coverage policy in 2013 — one that costs up to 23 percent less.
There’s nothing in the law that lets the state impose severe restrictions on what’s known as an HO-8 policy, said state Rep. Mike Fasano, R-New Port Richey — such as cutting out homes less than half a century old.
“I believe you are not in compliance,” Fasano said. “I believe you are in violation of the law if you don’t offer everyone a choice.”
Officials appearing Monday before the Joint Administrative Procedures Committee that Fasano chairs were hard-pressed to cite anything in state law that mentions the restrictions regulators imposed — allowing it only for homes 51 years or older and valued at less than $200,000. That effectively makes it unavailable to about 1 million of the company’s 1.3 million customers.
Representatives with the state’s Office of Insurance Regulation and Citizens acknowledged missing a Jan. 1 deadline to offer the policy. Regulators approved a rate Jan. 3 and Citizens plans to roll it out it later this month.
“It’s my understanding they will implement it in February — Feb. 28,” said Richard Koon, OIR deputy commissioner.
Koon cited concerns about “market disruption” and said regulators tried to take into account industry practices that typically see the policies used for older, modestly-priced homes.
“We were trying to comply with the intent,” said Christine Ashburn, director of legislative and external affairs for Citizens. “I appreciate this committee does not agree with that.”
Fasano scoffed at the notion Citizens was just looking out for consumers: “I laugh at that,” he said.
Ashburn said she would take the committee’s concerns to her board. Koon said the state would consider any revised filing Citizens wishes to make.
Before the hearing, Fasano said reporting in The Palm Beach Post brought the issue to the attention of legislators.
Regulators decided the policy should cost 22.9 percent less than a standard HO-3, but Citizens officials protested it might become too popular and consumers might not understand what they were buying. Regulators eventually agreed to impose restrictions.
An HO-8 policy gives customers a choice to buy coverage at a lesser amount than the full, standard replacement cost. It covers many of the same perils such as a standard HO-3, including windstorm, fire, explosion, riot, vehicles, aircraft, smoke, vandalism, theft and catastrophic ground cover collapse. The biggest single thing it doesn’t cover that affects the rate, state officials said, is accidental release of water.
As for state regulators, Fasano said, “With all due respect, I think you guys missed it on this one. I think you let Citizens get away with it.”