BAD ACTORS!…A Letter From “John Rollins”

The following letter from Citizen’s board member and actuary, John Rollins, speaks for itself and in my opinion is what Floridians need more of, the truth.   It’s  a response to Sean Shaw, but…to those who claim to care about what’s driving the underlying costs of Florida’s insurance system, the question will be…“What does this letter say to You?”

Scott, I read your recent blog entry, and followed it to the referenced blog entry at the Merlin Law Group’s blog.  Here’s my take.  Sean is right that I’m new to public service, and there are a lot of things I don’t understand.  Here are some issues on which he could help me.

First, I don’t understand why it’s “news” that a company asked to grow rapidly from 2007-2010, and which reached a head count of nearly 1,300, hired a few people over that time who had episodes of poor judgment.  Frankly, I don’t see the relevance to fixing the Florida property insurance market of naming former employees publicly who were investigated several years ago, and in some cases exonerated by multiple independent sources.   If the overture of Citizens to highly talented prospective employees becomes “Twice cleared, once smeared”, I don’t think it will help assure Floridians they are getting the best service from the best people when they rely on a Citizens policy.  More simply, how does any of this discussion of closed cases help us work to find new options or price stability for consumers?

While we’re on the subject, help me understand why hours of public discussion of these issues, an internal auditor’s report at every Board meeting, and over two dozen news stories on the topic constitutes “ignoring gross mismanagement” in his words.

Second, I don’t understand why attorney and public adjuster involvement in routine, non-catastrophic insurance claims under a standardized, highly regulated, two-party contract has increased so much in the past five years.  Are consumers being “wronged”, as he says, by washing machine hoses breaking more often?  Are they being “wronged” by more kitchen fires?  The Florida statewide average policy funds nearly $600 in these typical losses, up from $250 five years ago.  When adjusted for taxes and commissions, that’s over $400 extra out of the pocket of every policyholder in the state, every year.  Since his firm is one of the larger property insurance law firms, maybe he could help me understand why every neighbor on a block should pay hundreds of dollars extra per year so that the one who files a claim can allow an attorney or public adjuster to inflate and take part of his settlement.

Third, I don’t understand why it’s “not in [his] own financial interest” to have more Citizens policyholders and more Citizens claims, when these firms work on a contingency basis.  I provide professional services as well, but I am paid only an hourly fee.  I don’t find it necessary to set up a for-profit messaging operation, or to be represented by a public relations firm that Tweets “Lies, lies, lies” as I’m recounting facts, backed by publicly available regulatory data, during a Board meeting.  Isn’t there a better way to assist consumers without encouraging middlemen to inflate costs, which are charged back to everyone in higher rates?

Fourth, I don’t understand why, if he’s concerned about “beating back rate hikes”, he’s not as alarmed as I am by these cost drivers, which are the direct reason for the double-digit rate hikes in the past few years.  Consumers want to know why their rates are inexorably rising when there have been no hurricanes and reinsurance costs have been stable.  He should be telling them the whole answer – in part, because of profit-seeking firms like his.

Fifth, I don’t understand why, if he wants to “give policyholders a voice”, he doesn’t speak directly with Citizens Board and staff at our many public meetings and offer his ideas.  Many other self-described consumer advocates have done this, and it has been helpful, but he offers a “money quote” for seemingly every news story rather dialogue and solutions.

Finally, to quote him, “I am unable to divorce my passion for good insurance public policy.  It’s simply who I am.”  I couldn’t say it better myself.  I joined the Board in late 2011, long after the timeframe covered by the recent news stories which concern him so much, and like other Board members I spend hundreds of hours per year on the job for free.  As he says, I’m a numbers guy, I call it like I see it, and I represent only the interest of Florida property insurance consumers – I don’t make a dime more or less from any decision of the Board.  Floridians’ insurance rates are going up for a very simple reason, and it’s not because someone got a little tipsy at a company picnic four years ago.  I challenge all consumer groups to help me figure out how to bring those costs down, even if it’s not profitable for some actors in the system.

John W. Rollins, FCAS, MAAA

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