Hurricane Wilma flooded Flagler Avenue in Key West. Many coastal homeowners in southern Florida signed up for policies with Citizens following the destructive 2005 storm. (Photo courtesy of State Library and Archives of Florida.)

By Ralph De La Cruz
Florida Center for Investigative Reporting

Paige St. John of the Sarasota Herald-Tribune covers the insurance industry so well that she received the Pulitzer Prize this year for a series — two years in the making — on predatory insurance practices in Florida.

She knows her stuff.

Her latest piece about Florida insurance is just as much of a must-read, and just about as outrageous.

These days, when you say “outrageous” and “Florida,” the next two words are usually “Rick Scott.”

And that’s the case with this story.

Thanks to some digging and public records requests, St. John has found that Scott, the self-proclaimed state CEO, is secretly pushing to shut down Citizens Property Insurance.

As she explained, it’s “a goal that alarmed even representatives of private insurance companies seeking to remove Citizens as a competitor.”

So basically, Scott is not simply giving insurance companies free rein to do whatever they want in this state. He’s pushing their interests beyond what they even want.

When even insurance companies think you’re going too far, you know you’ve gone clear over the edge.

“We’re going to make this the state for everybody in business,” Scott told Bloomberg News in February.


He’s working real hard to keep BP and insurance companies pleased.

The reasoning: deregulation of businesses will allow corporations to make more money and, in turn, create jobs and make things better for consumers.

Hey, don’t you trust BP? Don’t you remember how property insurers stepped up for Floridians after hurricanes hit five to six years ago?

Actually, it was the insurance industry’s shenanigans that led to Citizens creation in 2002, giving an alternative to Floridians who couldn’t obtain affordable insurance on the private market. After the wave of hurricanes from 2004 to 2006, Citizens became a lifesaver for coastal residents. More than 1.3 million Floridians, mostly in coastal areas, are now insured by Citizens.

So why are politicians messing with Citizens? Why would Scott want to kill it?

Must be losing money, right?

Quite the contrary.

As St. John points out in a separate story, Citizens has been wildly successful.

Citizens has accumulated a $5.1 billion surplus, while private insurers, pumping money to their parent companies and re-insurers, are struggling to survive.

In 2010, St. John reports, 42 of the 57 carriers operating in Florida reported losses of $522 million. Meanwhile, Citizens posted profits of $813 million.

And a man like Scott, who’s alleged to be a smart businessman, wants to shut down this operation? It doesn’t pass the smell test.

Sen. Alan Hays, who represents inland Lake County, is the button man for the insurance industry. He’s sponsoring insurance industry-authored legislation that would force Citizens to reduce coverage and raise rates as well as other bills that would deregulate private insurance carriers. According to Hays, Citizens doesn’t have “respectful” reserves.

You might remember Hays as being the author of another snazzy piece of legislation this session: the anti-Sharia law bill — although Hays couldn’t name a single case in state court in which Sharia law had been a problem.

The Orlando Sentinel observed that watching Hays in the Senate “is like watching Moammar Gadhafi set loose in a gun shop with an unlimited gift card from Grandma. Hays is running wild, and it promises to be a fully automatic, double-barreled Christmas for the insurance and development industries, among his biggest backers.”

Voters of Umatilla, why have you done this to the rest of us?

By the way, the reason the industry wants Citizens to raise rates is so they can raise theirs.

Seems I’m using this phrase almost weekly this session but … this is scandalous.

And does anybody still remember the promise that barely nudged (along with $73 million of his personal fortune) Rick Scott into the CEO’s mansion in Tallahassee? Something about creating 700,000 jobs in seven years?

What, you have to wonder, does all this have to do with creating jobs?



7 Responses

  1. christine newell

    when our insurance bill for 2010 went up to almost $8000 a year with a huge deductible our mortgage was nearly at term, so we dug deep and paid it off. Now we are not “forced” to take insurance and so we have none. I guess you could say we are “self-insured”. If a hurricane hits us and destroys our home…oh well. I guess this is what it has come to.

  2. Frank Alexander

    “What, you have to wonder, does all this have to do with creating jobs?”

    About as much as this report on a reporter writing about insurance has to do with responsible journalism. I am not overly impressed when an institution such as Columbia University is charged with doling out prizes for work on subjects they know little about. Columbia has been detached from any private enterprise for years. Even though a reporter with a bias against private insurers – and clearly in favor of government control of insurance – spends a lot of time bending facts to fit her predetermined conclusion, it’s no reason by itself to say the work is worth recognition.

    Governor Scott’s move to dismantle Citizens is anything but a secret plan; it was one issue he promised to tackle if he was elected govrnor, and it’s one of the reasons I voted for him. It’s also no great effort to figure out why Citizens has a surplus; every private insurance policy (including mine) is assessed a surcharge to fund Citizens. So, in effect, we all pay for our insurance and fund claims payouts for another insurance company as well, one that exists by state fiat. Another stretch is St. John’s observations that private insurers are underfunded to pay out claims while they are asking for yet another premium increase. Hello? They are underfunded because they can’t charge what they need to to pay out the claims – legitimate and fraudulent – they are contracted to pay. I’m curious myself what those companies actually do with their money, aside from pay claims, but it’s their business.

    Frankly, if the insurance industry wasn’t so regulated premium rates would come down eventually. In the meantime, it’s part of the price we pay for living in Hurricane Heaven. Government has no business being in business to compete with private businesses; it’s time to get rid of this boondoggle now – or watch it continue, year after year, to add just a few more covereds, cover just a few more contingencies, and hire a few more ex-politicians.

  3. Charlie Adkins

    Touché Frank. The inflammatory language in the headline and body, together with a concern I already have for a state run insurance program (like Social Security Insurance) competing with private industry, confiscating private premiums and creating artificially low rates has been a concern.

    I ran away from Citizens as quickly as possible when offered the opportunity after a neighbor told me Citizens reimbursed only $100 for the replacement of his entire roof and water damage.

    This kind of “Journalism” rarely defines the legislated market conditions in existence because that take work. In free markets, if profits are too high, then competitors enter the market. When government supports crony capitalism, rates are high and service is poor. Proof of these principles are easily demonstrated in the de-regulation of the airline and trucking industries.

    In this case, new carriers will enter the market and rates will begin to drop.


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