Citizens Property Insurance Under Investigation Executives at Florida's second biggest insurance company, Citizens Property Insurance Corporation, are facing accusations of bribes, kickbacks and insider dealing. Hundreds of disgruntled customers have sued the company for claims from last year's hurricanes.
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Citizens Property Insurance Under Investigation

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Citizens Property Insurance Under Investigation

Citizens Property Insurance Under Investigation

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RENEE MONTAGNE, host:

This is MORNING EDITION from NPR News. I'm Renee Montagne.

STEVE INSKEEP, host:

And I'm Steve Inskeep.

As Hurricane Wilma threatens Florida, a scandal is shaking the state's second-biggest insurance company. Executives of Citizens Property Insurance are under investigation for bribes, kickbacks and insider dealing. And the company is being sued by hundreds of residents who still have not gotten claims paid from last year's hurricanes. NPR's Phillip Davis reports.

PHILLIP DAVIS reporting:

When Hurricane Jeanne ripped most of the roof off of Carl Fleming's(ph) beachfront house in Stuart, Florida, last year, he was saddened but not worried. After all, he had flood insurance and had bought windstorm insurance from Citizens Property Insurance, the state-created insurer that must insure houses in even the riskiest areas. But despite paying more than $10,000 in premiums last year, Fleming is still living in a leaky house.

Mr. CARL FLEMING (Florida Resident): We have at least five rooms in the home that have varying degrees of the ceiling falling down. As of this very moment, the dining room ceiling is being held up by 2X4s, or the entire ceiling would be on the floor.

DAVIS: Thousands of Floridians like Fleming have, over the past year, complained about Citizens' foot-dragging on claims. Fleming is now part of a class-action suit against the firm.

Mr. FLEMING: Citizens very clearly is in the business of collecting premiums and denying claims. Unfortunately, we came to the realization that until a court and a judge forces this insurance company to do the right thing, they're not going to do the right thing.

DAVIS: Those complaints could be just the tip of the iceberg. The man Citizens hired to improve customer service, former chief operating officer R. Paul Huslebusch, may have taken kickbacks, including a $28,000 motorcycle, from companies wanting to do business with Citizens. That's according to a suit filed by Texas-based Universal Risk Insurance Company. Huslebusch has since resigned and is the target of a criminal investigation.

Earlier this month, two other executives were forced to resign over conflict of interest allegations when it was revealed that they were planning to create their own insurance company which would make money by taking on thousands of Citizens' policies.

The tide of allegations has angered many in the state legislature. State Senator Mike FASANO this week introduced a bill to rein in the conflicts of interest.

State Senator MIKE FASANO (Florida): When you're dealing with taxpayers and taxpayers' money, somebody better be accountable when questions are asked.

DAVIS: Under the bill, executives will now have to wait at least two years before they can do business with the company.

Yesterday, State Senate Insurance Committee Chairman Rudy Garcia hauled Citizens executives before his committee, where they faced two hours of sharp questioning. Afterwards, Garcia said...

State Senator RUDY GARCIA (Florida): The Citizens needs to be redone. We need to look at its mission, its goal, its costs and its impact on Floridians.

DAVIS: At the hearing yesterday, Citizens Chairman Bruce Douglas defended his company. But even he admitted that it had had difficulty in processing claims last hurricane season.

(Soundbite of hearing)

Mr. BRUCE DOUGLAS (Chairman, Citizens Property Insurance): It was chaotic. It caused great pain to homeowners who couldn't get through to us, couldn't get service. It's been resolved now.

DAVIS: Clients involved in the lawsuits might disagree. But Citizens executives say that they have paid out thousands of claims, more than $2 billion in all. In fact, now the company says it will have to raise rates up to 135 percent to pay for a projected $500 million-dollar deficit. And that, Douglas said, is before Hurricanes Dennis and Katrina have been tallied.

(Soundbite of hearing)

Mr. DOUGLAS: Twenty thousand claims on Katrina, 5,000 on Dennis, and Wilma--if I wasn't here, I'd be home lighting candles.

DAVIS: And praying that his company will survive both the political and tropical storms. Phillip Davis, NPR News.

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