Okay, I’m gonna go out on a limb here. I don’t understand what’s going on with this “new” (so called) idea of privatizing Citizens. Nor do I think those proposing it understand what they’re proposing.

But, first–I favor privatization, generally, and think it a viable option for many government functions, especially Citizens. However…applying the term to Citizens reflects a fundamental misunderstanding of its function; most especially its relationship with the private market.  More telling, it overlooks the fact that Citizens has been virtually privatized in the past and could be again “IF” Citizens board and Chairman would merely do what they can already do.

In proposing privatization Chairman Jim Malone said:

“My experience would say that any organization that has 1,400,000 customers, that has a premium revenue stream of close to $3 billion a year and a nice chunk of liquidity sitting on its balance sheet potentially has some value to the private world.” Emphasis Added.

Later Governor Scott expressed his support for Malone’s comments but, he’s new, and as a renowned slasher of budgets throws the term “privatization” around like a Frisbee. He gets a bye on this one.

Citizens experienced Chairman, however, doesn’t get off that easy.

He’s right though, there is a lot of value in Citizens annual premium income. Unfortunately…not enough to overcome what’s been done to the private market. If it were enough, then that “value” wouldn’t have gone to Citizens in the first place. Besides, what “value” is $17 million in sinkhole premium when it has to be spent on $90 million worth of sinkhole losses?  What value is there in $6 billion in surplus with nearly $500 billion in exposure?  What good are deficits to private carriers unable to assess other policyholders?

This is the kind of thing the guy who invented the word nonsensical must have had in mind.

And, there’s irony here, too:  “privatizing” government to fix what government (via lawmaker votes) created in the first place. Also…without any malice to Mr. Malone, whose heart I’m sure is in the right place; his privatization idea is to repair something his past votes are partly responsible for.

Keep in mind, without even the mere mention of the term, Citizens has been virtually privatized in the past.  It’s predecessor had 936,000 homeowners policies in what is today called the PLA (Personal Lines Account).  That policy count was reduced to just 60,000– exactly 876,000 worth of privatization! Partly possible because Citizens front door, unlike today, wasn’t open to 1000 new residents every day, including weekends; over 40,000 applications a month.

If Jim Malone and the Citizens staff and board wanted to they could move towards privatization by just doing what they can already do.

Chairman Malone could propose that his board reduce Citizens coverage to roughly that of an HO-8 as the law specifically authorizes them to do.   He could “decertify” counties for Citizens coverage whenever there’s an able and willing private market as they are also already specifically authorized to do.   He, the board and staff can, at any time, stop appointing new agents instead of complaining about having too many.

Since the things Citizens is already permitted to do  would have industry support, they can be done without waiting for a non-election year legislature to convene in 2013. And, doing them would send a good message to the capital markets and/or those who may be interested in removing some policies.

Keepout, depopulation and privatization are synonyms.  So, when I’m asked if privatization is possible…for me it starts with the board chaired by the man who suggested it in the first place.






  1. ForTheLoveOfFlorida says:

    There is nothing I can write to make this any better. Nice work!

    • Thanks. I do think a lot of people don’t understand that the above suggestions for closing Citizens front door (privatization?) are authorized today and yet are ignored by the staff and board. Making these changes also makes passing other helpful things more easy to accomplish. My 2 cents.

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