Cross your fingers. A new online "clearinghouse" system for property insurance is set to launch on Jan. 27. Given the way things have gone recently with the state's revamped unemployment system (a disaster) and the federal Obamacare enrollment site (a debacle), there's no telling what could be in store for consumers.
Michael Peltier, spokesman for state-run Citizens Property Insurance, told me that the vendor, Connecticut-based Bolt Solutions, has been testing the system and is hoping for a smooth launch.
"We don't want egg on our face," Citizens executive Steve Bitar told the Tampa Bay Times.
The goal is to stimulate competition, reinvigorate the private insurance market and shrink Citizens.
But the end result could be ever-higher premiums and less choice for homeowners, who might be forced to go with unproven companies they don't want.
At least with the ongoing "takeout" system that's been shifting policies from Citizens to private insurers, consumers could say no to an offer and stick with Citizens. But with the new clearinghouse system, homeowners will be forced to go with a private company if it offers "comparable coverage" at the same rate as Citizens (for renewing policies) or up to 15 percent higher than Citizens (for new policies).
Talk about an offer you can't refuse.
For this, we have our legislators to thank. The law establishing the clearinghouse – which should have been named the Don Corleone Act – was approved last year.
At first, only homeowners trying to get new Citizens policies will be subject to the clearinghouse system. Peltier said that's roughly 4,000 a week. Only four private companies will take part at the start. That number will grow to 11 by March, and 20 by July (pending approval by regulators).
Renewals and existing Citizens customers won't have to go through the clearinghouse process until later this year – perhaps June or July, Peltier said – depending on how the launch goes.
There are now just over 1 million Citizens policyholders statewide, roughly 256,000 in Broward and Palm Beach Counties. That's a drop of nearly a third from Citizens' peak two years ago, when there were 1.47 million policies statewide.
Come Jan. 27, here's how the system is supposed to work: An agent will get a new policy quote from Citizens, then go through the clearinghouse. If any company offers coverage within 15 percent of Citizens' rates, the homeowner must go with the private insurer.
The scenarios are better for existing Citizens customers once the process expands to renewals: Only offers at or below Citizens' rates will be forced upon homeowners. And if the private insurer raises rates by more than 10 percent in the first three years, the homeowner can return to Citizens and be considered a renewal.
Peltier said there is a bright spot for those shifted to the private market: They won't be subject to special Citizens surcharges (up to 45 percent of annual premiums) in case of a devastating storm year.
But for all the scare talk coming from Citizens and state leaders who've been eager to shrink it, the company is actually in better financial shape than many of the new private insurers that have recently come on the scene. Citizens has built up reserves of nearly $7 billion over the last eight storm-free years.
The real test of how this works won't really come until a hurricane hits. Then we'll see how the private insurers service and pay claims.
"You don't know until something happens," said Ralph McLean of Miramar, who recently switched from Citizens to People's Trust, an emerging Boca Raton-based company that will take part in the clearinghouse.
Keep your fingers crossed.