Citizens pivots on past-due bills
Insurance company extends moratorium to end of year for customers unable to pay
Citizens Property Insurance Corp. has reversed its decision to resume canceling homeowner insurance policies of customers who haven’t been able to pay their bills because of COVID-19-related hardships.
The company recently announced in a letter to agents and customers that it would resume canceling and nonrenewing policies with past-due accounts on Aug. 15.
But after that news was reported by the South Florida Sun Sentinel on Thursday, Florida Chief Financial Officer Jimmy Patronis
released a statement late Friday urging the company to continue the moratorium it put in place on March 17 at the urging of the Florida Office of Insurance Regulation.
As of July 17, 13,063 Citizens policies were past due, representing about 3% of Citizens’ 481,000 policies and 7.5% of bills due, according to the company. They include 8,107 whose policies were renewed with no down payment since March, leaving customers owing hundreds if not thousands of past-due dollars.
On Saturday, Citizens released a statement saying the moratorium would be extended to the end of the year. Citizens President and CEO Barry Gilway said the decision followed discussions with Bo Rivard, the chairman of its board of governors.
“Our top priority has been and will continue to be our policyholders,” Gilway said. “This extension will provide our customers with further assurances that we have their backs during hurricane season and beyond. I thank CFO Patronis and Chairman Rivard for their input and support.”
The suspension, Gilway said Friday, addressed a “significant uptick” of past-due policies in March, but he said the percentage had since fallen to pre-COVID-19 levels.
Nevertheless, concerns linger among insurance agents about homeowners’ abilities to maintain coverage as a surge in infections coincides with the worst part of the hurricane season.
After Citizens first announced that it would begin dropping policies, some agents voiced concerns that continued high rates of unemployment will prevent many of those homeowners from resuming making payments next month.
Homeowners with mortgages would then face having their lender force-place an insurance policy, a more costly option that would increase the debt and possibly lead to foreclosure. Homeowners without mortgages would bear the cost of their own repairs — if they could afford it.
Making matters worse, the resumption of cancellations and nonrenewals would have come amid skyrocketing renewal rates, a result of heightened hurricane activity, claims fraud and rising costs for insurance that insurers must buy.
“Payments have been deferred and people are still not working. How are they going to pay?” asked Dulce Suarez-Resnick, vice president of NCF Insurance Associates in Miami. “We all thought this pandemic was going to last two or three months. But it’s been much longer and we don’t know when it’s going to end.”
Patronis’ statement late Friday afternoon urging Citizens to reconsider said customers should not face loss of their policies in the midst of two crises.
“Hurricane season is just beginning to heat up and we are in the middle of an unprecedented health and economic crisis,” the statement said. “This is not the time to cancel Citizens’ home insurance policies. Citizens is the state-created insurer of last resort.”
As chief financial officer, Patronis oversees numerous insurance functions, including licensing of insurance agents and agencies, investigations into insurance fraud, and investigations into complaints about insurance companies. He appoints two members of Citizens’ nine-member board of directors, including its chairman. However, Citizens is overseen by the Office of Insurance Regulation, which is not under the CFO or the Department of Financial Services.
Patronis said that while policyholders must still pay what they owe, “canceling their policies during hurricane season should not be an option.”
In response on Friday, Gilway initially stopped short of complying with the Patronis’ request, saying the decision to end the temporary moratorium on Aug. 15 “was made with our policyholders’ best financial interests in mind.”
It’s not known how many customers of other insurance companies are in similar situations. Most companies did not follow Citizens’ lead by suspending cancellations and nonrenewals across the board. Instead, they required their customers to contact them individually and make arrangements on a case-by-case basis.
Jeff Grady, president and CEO of the Florida Association of Insurance Agents, says he’s been pleasantly surprised by how insurers have been willing to work with customers who have asked for help.
“It’s remarkable how many insurers volunteered to make midterm adjustments,” he said.
Citizens customers with mortgage loans are unlikely to be in arrears with the insurer. That’s because their insurance payments are rolled into their escrow accounts and paid by their mortgage servicers.
Under pandemic relief laws enacted by the federal government in March, about 70% of mortgage borrowers were allowed to temporarily stop making their mortgage payments if pandemic affected their income.
In those cases, their mortgage servicers were required to continue paying taxes and insurance on the borrowers’ behalf.
Those missed payments will be made up, along with the missed mortgage payments, over time after customers resume making payments or get those missed payments added to the end of their loans.
Customers who own their homes outright and pay their insurance directly to Citizens are more likely to face trouble bringing those payments back to current status, Suarez-Resnick said. Many might have paid 40% at the beginning of their current term and now have missed two payments of 20% each. If they have South Florida’s average $3,500 policy, they could be $1,750 past due, she said.