TALLAHASSEE, Fla. - A backlash is quickly growing against the decision of Florida's largest property insurer to shift thousands of policies to a start-up insurance company.
Just two days ago, Citizens Property Insurance Corp. narrowly approved an agreement that calls for paying $52 million to Heritage Property Insurance and Casualty to absorb 60,000 policies. Many of the policies belong to homeowners living in South Florida.
Citizens CEO and President Barry Gilway called the arrangement with the St. Petersburg-based company a "bold and reasonable" step to shrink the size of the state-created insurer. Citizens currently has nearly 1.3 million policyholders.
But the timing and speed of the deal is drawing fire.
Florida House Speaker Will Weatherford said Friday he had "serious concerns" about the agreement - which was approved just days after it was publicly unveiled. He said the Legislature was not given much advance notice and it was "hastily pushed" through the Citizens board by a 3-2 vote.
"While we want to provide the legislatively created Citizens Insurance Corporation the flexibility to take advantage of ideas and initiatives that will reduce risk to Florida, there is a growing concern about their lack of understanding that Citizens has a greater responsibility to the public," Weatherford said in a statement.
Weatherford isn't alone in his criticism.
Rep. Mike Fasano, R-New Port Richey, is already raising questions as to how Heritage is carrying out the transfer, which he blasted as "corporate welfare." Fasano sent a letter to state regulators asking if Heritage had violated state regulations by contacting potential customers before the deal was even finalized.
Heritage officials said they had not done anything wrong. Ernie Garateix, an executive vice president for Heritage, said one of the examples cited by Fasano was connected to an April deal between Heritage and Citizens and not the one approved this week.
Garateix said that the other customer had not been contacted by Heritage but had been told by his agent about the potential for a transfer. That customer, who was Pasco County Supervisor of Elections Brian Corley, wrote Heritage telling him he had no interest in transferring his policy. Heritage says it sent Corley an automatic reply explaining why he should switch companies.
Citizens, which was the insurer of last resort in the state, has been trying to aggressively to shrink its size since the start of 2012. Gov. Rick Scott and others have pushed to reduce the size of Citizens out of fears that it could not handle the damages associated with a major storm.
But the Heritage deal is unique in several aspects. Normally Citizens does not pay companies to absorb its policies. Instead Heritage is being paid to assume any claims associated with policies going back to January. But since Heritage gets to pick the policies it wants, it is unlikely they will chose any that have claims pending.
The deal is also drawing scrutiny because of all the political connections. One of those lobbying on behalf of Heritage is former Insurance Commissioner Tom Gallagher. Gallagher, who ran unsuccessfully for governor in 2006, helped create Citizens.
Additionally, Heritage in March donated $110,000 to a political committee that Scott controls. Heritage didn't go into business until last year.
Dan Gelber, a former state senator and leading Florida Democrat, sent a letter Friday calling the deal "foul" and demanding Scott return the campaign contributions.
"In truth, the whole thing smells," Gelber wrote. "Floridians will rightfully wonder if Heritage gave you the money because they support you or because they were, literally, trying to get a $52 million gift from an agency over which you have great sway."
Earlier this week Scott's chief-of-staff Adam Hollingsworth questioned the Heritage deal as well - and called any suggestions that Scott had anything to do with it "outrageous."
The Republican Party of Florida quickly jumped to Scott's defense. They maintained Gelber sent the letter in order to do "dirty work" on behalf of former Gov. Charlie Crist. Crist, who switched to the Democratic Party last year, is considered a potential candidate for governor next year. Crist and Gelber are friends.
"It's no surprise that Dan Gelber is making a false, partisan attack on Governor Rick Scott," RPOF chairman Lenny Curry said in a statement.
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