Citizens vs Big Bubba’s Insurance!

Aside from a piece two years back about a public adjuster threatening to sue me, the blog I wrote November 18th, “Big Bubba’s Catfish & Insurer Ratings“, generated more commentary than anything I’ve published over the last four years.

In it I opined on serious flaws with the ratings of Jupiter based Weiss Ratings. Namely that it doesn’t evaluate reinsurance when rating Florida domestic property insurers–if you can believe that.

And secondarily, that it lumps in Citizens, in essence comparing private for-profit entities with assessable government run pools. Citizens is an “A+” and, according to Weiss, one of the top rated property insurer’s in all of America–no differences, no delineations, no asterisks. And, no apparent attempt to compare Citizens to similar pools in other states. (See NOTE #1 below)

I used Daniel Ruth’s article in the Tampa Bay Times as my foundation. Based on Weiss’s mischaracterizations, he cleverly ridiculed Florida’s “takeout” insurer’s using names like “Big Bubba’s Catfish and Insurance Company” 

I referred to Weiss as “Big Bubba’s Catfish & Insurer Ratings.”

What a hoot!

While my piece was intended only to skim the surface, one of the many who responded had this to say about the significance of reinsurance and thus the serious nature of Weiss’s omission:

Don’t forget the carriers that have set up an Off-Shore Reinsurer to establish funds for the Cat Fund retention, Cat Fund- uncovered items- such as short term rentals (DF and Condo, etc.) and private market reinsurance issues/limitations.”!

Additionally, I didn’t focus enough on the inappropriateness of comparing private carriers to Citizens. One reader shared some insights about that as well:

  • Big Bubba’s Catfish Insurance Company is required by the consent order signed when doing a takeout to provide evidence of reinsurance coverage to at least the 100 year event. This is more than the reinsurance coverage maintained by Citizens.
  • Big Bubba’s Insurance Company is required by Demotech to purchase reinsurance to at least the 100 year event for the first event, coverage for at least the 50 year second event, and some 3rd event coverage. That’s more reinsurance than is maintained by Citizens.
  • The policies issued by Big Bubba’s Insurance Company are covered by FIGA for up to $500,000 per claim in the event of a hurricane (or hurricanes).
  • The policyholders surplus of Big Bubbas Insurance Company came from investors and if they lose money that’s not anyone’s problem but theirs. Citizen’s much discussed surplus, on the other hand, came, in large part from the people of the state of Florida who are not insured by Citizens. There was the appropriation of about $750 million directly from general revenue after the hurricanes of 2004 and 2005 and assessments on virtually all insurance policies sold in Florida which I believe has raised about $3 billion for Citizens. This means that about 50% of Citizens surplus has come from taxes on non-Citizens customers. These tax subsidies, in many cases, go to subsidized rich folks living on the beach and non-residents. That’s simply not fair to the 85% of people insured by the private sector.”

All this just reinforces the contentions of my previous blogs; maybe it’s not the domestics, maybe it’s Weiss that deserves a “D” rating.

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NOTE #1: I’m sure as a result of Daniel Ruth’s column in the Tampa Bay Times and not from anything I may have written, Citizens President Barry Gilway wrote a column to assuage legitimate concerns about Citizens communications regarding “takeouts”: “Citizens will communicate better with policyholders.”

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