Well, sometimes ‘opt out’ means ‘maybe later’ p4
Last week, the Florida Office of Insurance Regulation announced that another 66,500 policies with Citizens Property Insurance Corp. will be eligible for take-out in April. If the same depopulation process we have been talking about has not changed, those 65,000 homeowners and 1,500 commercial property owners will receive “encouragement letters” from Citizens notifying them that they have the option to purchase coverage from private insurance companies.
In all, nearly 345,000 policies have been tagged for take-out this year. As we have learned, that does not necessarily translate into that many policyholders actually leaving Citizens. According to the OIR, a total of 1.3 million policies were approved for take-out in 2015, but only about 20 percent of them chose alternative coverage.
The question is, how many of that 20 percent actually meant to switch carriers? The process has resulted in a number of policyholders surprised to find out they had left Citizens.
After the encouragement letter, each policyholder will receive a take-out letter from one of the approved private carriers. A sample take-out offer letter explained the process as follows:
You are not required to accept this offer from [private insurer]. If you reject this offer, as described below, you will continue to receive coverage through Citizens. To reject this offer, complete and sign the enclosed form and return it to [private insurer] by January 12, 2016.
This paragraph is followed by a notice in bold type of the potential risks associated with remaining with Citizens. The actual opt out form is attached, though the title (“Opt Out Form”) seems no more than a whisper. Citizens and the OIR, however, remain surprised that policyholders are confused when they learn that their Citizens policy has been canceled.
A number of policyholders, however, have followed the instructions carefully, returning the Opt Out form as directed. For them, the surprise is that their policy can come up for take-out again.
It turns out that opting out is not a one-time deal. Depopulation is such a high priority for Citizens, it seems, that once a policy comes up for take-out it remains on the list. The policyholder must opt out every year. The language that should have tipped them off to this? The last item in the opt-out forms bulleted list of the risks of staying with Citizens:
[I understand my] Citizens renewal will be submitted through the Property Insurance Clearinghouse to determine whether private market coverage is available.
As the OIR said, it all complies with the statute.
Source: Miami Herald, “Citizens policyholders face multiple ‘opt out’ notices,” Leila Miller, Jan. 9, 2016
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