Thursday, July 21, 2005

Depopulated to a Dog?

Citizens Property Insurance, the state-owned insurance company, "depopulated" a large part its Pensacola Beach wind insurance portfolio over the past few months. What that means is, if you are a Pensacola Beach resident and if you were insured by Citizens for Hurricane Ivan last year, you might not be a Citizens customer now for Hurricane Dennis.

Under state law, Citizens is required to hand off policies to just about any private insurance company that "bids" for them, whether the company is well established or newly created out of thin air. Moreover, the law says Citizens has to pay cash up front to any private insurer that takes the policies off its hands.

Never let it be said that Florida isn't friendly to private enterprise. Why, we love 'free' enterprise so much we actually use public funds to subsidize it! (Kind of undermines the point, doesn't it?)

Of course, the hope is that solid, mainstream companies will be induced to handle more wind storm policies than they otherwise might. But, perversely, the same incentive system can attract a lot of fast-buck artists to start up an insurance company on paper, collect a large "depopulation" fee from Citizens, pay themselves handsome salaries and bonuses, and leave just enough left in the company coffers to hire a bankruptcy lawyer when a hurricane hits.

Some customers who have been "depopulated" by Citizens in the last month or two report they're having trouble finding their 'new' wind storm company in order to file a Hurricane Dennis claim. That could be because so many were still mere 'paper' companies with not much more than a post office box when Hurricane Dennis came ashore on July 10.

Citizens Property Insurance now has posted on its web site the names and web sites for all the 'new' insurance companies that took over "depopulated" policies. Having a web site means next to nothing, of course. As the cartoon caption goes, "On the Internet, no one knows you're a dog."

But maybe you're lucky. Maybe you've been "depopulated" to a company that still has some assets left. Let's hope so....


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