In late 2022, Melissa Marro got a notice from her private home insurance company that her rates would soon go up to a degree she found shockingly high. The only option, her insurance agent told her, was to see if she qualified for Citizens Property Insurance, the state created and taxpayer-owned property insurance company.
Marro hired a licensed inspector to come to her Palm Harbor home in the Tampa Bay region in order to do a four-point inspection and a wind mitigation inspection. After she sent in the resulting reports, Citizens accepted her home, and she breathed a sigh of relief.
It was much cheaper than the private cost of insurance she had just been quoted.
“Then shortly after the policy started with Citizens, I received an email saying: ‘You have to have another home inspection.’ And I didn't understand why, since I had just had two inspections,” said Marro.
What happened next to Marro in Palm Harbor is a byproduct of a major but little-known push by Citizens to inspect a startlingly large number of homes per year, and the methods it is using to go about it.
Marro's insurance agent said there was no choice but to allow the inspection to move forward. The insurance company, he assured her, would pay for it. She would not have to spend anything out of pocket.
“They had us by the neck. Let's say that,” said Marro. “I had absolutely no choice.”
In her case, a staffer from the company Sutton Inspection Bureau — a company contracted by Citizens — came to Marro’s home to take photos.
Marro was unable to be there for the inspection, and her mother was present. But when she later saw the final report, Marro said she was shocked by factual errors that were listed.
Three black cats’ worth of accumulated hair on her crown molding was listed as “weird looking mold, fuzzy stuff growing on the walls.” A wooden fence on her side yard was listed as “rotted” even though most of the fence had just been repaired.
“The thing that really got me was the completely deceptive picture she took from an angle in front of my neighbor's house so that their tree — which is nowhere near my house — it looks like the branches are overhanging my roof,” said Marro. “I mean, it was clearly on purpose.”
Sutton Inspection Bureau did not respond to requests for comment about errors on its reports, or how much training it gives employees.
The photo in Marro's inspection report was captioned “large tree hanging over roof/branches.”
Within three weeks of receiving the report, Marro was issued a cancellation by Citizens. If she was thrown back on the private market at the rates she was being quoted, the ramifications would have been life changing. Marro works at a nonprofit that runs a driving while intoxicated program in Pinellas County, and she does not make a lot of money.
“I would have lost my house if I lost this coverage,” said Marro, matter-of-factly.
As policies skyrocket, a new practice
The inspection ordered by Citizens appears to be a new practice by the insurance giant.
In 2019, Citizens Insurance, the state-created and taxpayer-backed insurance company of last resort, ordered 2,200 home inspections. By the end of 2023, the company estimates that it will have ordered about 300,000 home inspections.
That’s more than a 100 fold increase in inspections, compared to a few short years ago. The number of properties the state company insures has roughly doubled over that time frame.
The public company was created in 2002 to be an insurance company of last resort, for properties that could find no other reasonably affordable insurance coverage. But over the last few years, the number of policies it holds has skyrocketed, and it has reluctantly become the largest insurance company in the state.
The goal of these inspections, according to the company, is simply to get more accurate information about the homes it insures.
Property owners like Marro have told WLRN they are concerned about the contractors being used to perform the inspections. Reports have been filled with factual errors, they say, threatening their coverage or raising their insurance premiums based on falsehoods.
“I would have lost my house if I lost this coverage ... It's really, really scary."Homeowner Melissa Marro
The people hired by Citizens to do the new home inspections are not licensed by the state of Florida, they point out. The company then relies upon reports made by those unlicensed inspectors to make decisions that can upend the lives of Florida residents.
Marro nearly lost her house because of errors on an unlicensed inspection.
“It's really, really scary,” said Marro. “You would think they would be required by law to only hire licensed contractors or licensed inspectors.”
After getting the policy cancellation letter, Marro started calling her insurance agent and calling Citizens to fight the report and the outcome it led to. She scrubbed the black cat hair off the crown molding, climbed onto her roof to prove the suspicious tree was nowhere near the roof, and scrubbed the fence to prove it was simply dirty, not rotten. She sent photos to everybody and spent hours on the phone.
“I was able to keep my policy,” Marro said with relief. “But had I not had the fortitude to fight it, I would have been at the mercy of this woman who seemingly purposely wanted to get me canceled so that Citizens didn't have another policy.”
Citizens acknowledged to WLRN that field inspectors hired by its contractors are not licensed by the state of Florida.
“Field inspectors are not licensed but all decisions are made by licensed inspectors and then reviewed by Citizens’ underwriters,” Michael Peltier, a spokesman for Citizens, wrote WLRN in an email. “The inspectors are required to photograph their findings, enabling Citizens to confirm the risk meets our underwriting guidelines and validate certain building characteristics.”
Internal data shared with WLRN showed that out of more than 200,000 inspections conducted through the program between January and September of 2023, only 62 resulted in a vendor error complaint.
“While one error is too many — especially if it affects your policy, it appears that, overall, the program is pretty accurate,” wrote Peltier.
Mark Friedlander, the director of communications at the Insurance Information Institute, an insurance industry-funded trade organization, told WLRN the admission that Citizens is using unlicensed inspectors for the program is alarming.
“From an industry wide perspective, property insurers typically use licensed inspectors that are well-trained and provide very objective analysis of conditions of homes. If companies are not following that standard, that is very troubling to us, and I could understand why some homeowners are reporting that there's major errors taking place,” said Friedlander.
"If companies are taking shortcuts, that's extremely concerning and the insurance companies should be accountable for that."Mark Friedlander, the director of communications at the Insurance Information Institute.
Mark Friedlander, the director of communications at the Insurance Information Institute.
“If companies are taking shortcuts, that's extremely concerning and the insurance companies should be accountable for that,” he said.
Friedlander stressed that insurance companies across the board have ramped up inspections in the current property insurance market, but the standard is to use licensed inspectors.
Citizens does not appear to be breaking any regulations or laws, he said, but it is not following industry best practices.
'Getting a handle on the book of business'
As companies have fled the state of Florida in recent years after successive hurricanes and being hammered by lawsuits, the number of Citizens policies has exploded.
State lawmakers are uneasy about the rapid growth of Citizens, arguing that Florida taxpayers could be left on the hook for billions of dollars in damages if a major disaster strikes. The state has passed laws and nudged Citizens to shed its risk by shifting policies to the private market.
The initial decision that Citizens would sharply increase the number of inspections it orders for properties was made in July of 2021. Board members argued that ordering more inspections would potentially play a major role in slowing the rapid growth of the state’s largest insurance company.
“They're just trying to get a handle on the book of business. They have the properties that they are insuring, just to make sure that everything is on the up and up,” said Mel Montagne, an insurance agent based out of the Florida Keys.
Citizens Insurance is the only option for home insurance for many residents of the Keys. Montagne also serves as the president of the grassroots group Fair Insurance Rates in Monroe.
Even though he feels like he understands why Citizens is ordering so many more inspections, Montagne has concerns about Citizens hiring people who are not licensed by the state of Florida to do field inspections.
“It's better to hire a person that is licensed and has had some experience rather than just, you know, anybody that you're picking up off the street,” he said.
A typical wind mitigation inspection could cost around $150 per property from a licensed inspector, he estimated. The inspections ordered by Citizens, which it calls “General Condition” inspections, go for as low as $32 per property, according to publicly available contracts.
Montagne said the motivation for using unlicensed inspectors is likely to save money as it ramps up inspections.
“At the end of the day, they are owned by the folks in the state of Florida, the folks are paying the premiums. And they want to be good stewards of those funds and not triple the cost of an inspection,” he said.
Asked if Citizens uses unlicensed inspectors because it is cheaper, the company simply noted in a statement to WLRN that "the cost for inspections varies depending upon the inspection type and inspection vendor."
“They are owned by the folks in the state of Florida, the folks are paying the premiums. And they want to be good stewards of those funds and not triple the cost of an inspection."Mel Montagne, insurance agent and president of Fair Insurance Rates in Monroe.
One of the companies Citizens contracted to do the increased inspections is Mueller Reports, a Bradenton company.
In 2012 a woman in Palm Beach County sued Mueller Reports alleging it colluded with Citizens to issue faulty reports in order to revoke insurance mitigation discounts and raise premiums. Citizens was not a party in the case.
The court case was settled out of court, with Mueller Reports making no admission of wrongdoing. Citizens entered into a new contract with the company in September of 2021, records show.
“No private market is going to hire a company already alleged to be acting in a bad way. No private company is going to do that,” said Sean Shaw, a former Democratic state representative who served as the Florida insurance consumer advocate between 2008 and 2010. “That's what lawsuits are made of.”
As a public company, Citizens is immune to many of the same kinds of lawsuits that private companies face. In Shaw’s view, that makes it more likely that Citizens does things that deviate from industry standards.
“The private market is scared not only of litigation, but of the public ridicule that would come from them trying to do this with unlicensed people,” said Shaw. “But Citizens seemed to think they were immune from all that. And so they act in this way.”
Mueller Reports did not respond to requests for comment.
The companies contracted by Citizens to carry out the inspection program include Mueller Reports, Sutton Inspection Bureau, Inspection Depot, Insurance Risk Services and C&E Information Services.
A three-to-one payoff ratio
The cost of ramping up inspections 100 fold over the course of a few years is not cheap. A four-year program approved in 2021 received a budget of $43,618,492. Citizens board members argued it would be worth the cost in the long-term by reducing the company’s market share.
“I'd rather spend more money in this particular arena if indeed it gives us the results that we might get, which is: reduce the amount of policies,” Carlos Beruff, the current chairman of Citizens, said in the July 2021 meeting, where the inspection program was approved.
Beruff is a real estate developer and has long standing ties to the Republican Party in Florida. In 2017, former Gov. Rick Scott chose Beruff to chair the 2018 Florida Constitution Revision Commission, the group that suggested changes to the state constitution. Gov. DeSantis appointed Beruff to the Citizens board in 2020, and just appointed him again in 2023. Beruff and his wife each recently gave $6,600 to DeSantis’ presidential campaign.
“The more we inspect, the more likely it is we might not take ‘em,” said attorney Marc Dunbar, who was a member of the Citizens’ board in 2021, referring to home insurance policies.
At that initial meeting, the Citizens board estimated that only 1% of policies were being inspected per year, and it set the goal of having 6% of policies inspected per year. In 2022, it increased that goal to inspecting 13% of policies annually.
By the end of 2023, Citizens expects to have inspected about 300,000 properties through the program, according to a July 2023 presentation and report. As of early November, the publicly owned company insured about 1.3 million properties. The number of insured properties has slightly been coming down as Citizens moves to offload policies to the private market, in part through the inspection program.
The July report showed that an estimated 5.38% of policies were canceled or not renewed after being inspected through the program.
“This is the kind of math I can do, fifth grade math. It is just a pretty natural winner for me.”Citizens Chairman Carlos Beruff, on the three-to-one inspection payoff ratio.
The report shows that for each dollar spent on the ramped-up inspections program, it had a payoff of three dollars in terms of reduced estimated payouts, premiums being increased, or policies being canceled. The three-to-one ratio made board members happy.
“This is the kind of math I can do, fifth grade math,” chairman Beruff said in the July meeting. “It is just a pretty natural winner for me.”
Beruff did not respond to requests for comment.
The overall purpose of the increased inspection program is not to raise premiums or kick people off Citizens, said Peltier, the Citizens spokesman. Rather, it is “to get a more accurate picture of the policies we are insuring,” he said in an email.
In January of this year, Citizens launched a “predictive inspection model” that uses an algorithm to identify “the highest risk policies to order inspections on to meet the desired volume by inspection type and vendor.”
The new inspections are meant to lower losses by identifying properties that do not meet minimum guidelines or that have an inappropriate policy, wrote Peltier. Secondly, the company says ramping up inspections is an overall effort to emulate what private insurance companies do.
And lastly, the inspections are meant to help private companies who might want to take policies being pushed out by Citizens.
William Stander, the executive director of the Florida Property and Casualty Association, said the last point is accurate, and that private insurance companies appreciate the reports when considering new business.
“To the extent that they can get better data on these properties, it helps make sure those policies meet the standards of private business,” said Stander.
Friedlander, of the Insurance Information Institute, said the use of the unlicensed inspections in depopulation efforts raises questions about how Citizens is shifting homeowner policies to the private market.
“Their depopulation program is supposed to be a random program,” said Friedlander. “They're not supposed to cherry pick policies where there might be an issue. I mean, that's at least the way we've been told how it’s supposed to work.”
Citizens is 'kind of pulling a con,' says homeowner
During his last year as a homeowner in Fort Lauderdale, Robert Mitchell paid Citizens $4,353 for his home insurance policy. With rates skyrocketing around the state, Mitchell did his research and expected about a 20% increase in his premium.
“I was expecting to pay about $5,400 this year,” he said.
In August, Citizens contacted Mitchell and told him he would need to allow inspectors of Sutton Inspection Bureau to conduct an inspection of his home.
The company’s first report was riddled with mistakes.
Mitchell called and wrote emails to Citizens and Sutton pointing out the mistakes. He contacted his insurance agent. Citizens dispatched a second inspector from the same company.
The second report had even more mistakes than the first.
“After the second report, I was told that I should be expecting between $8,000-$9,000 premium, closer to $9000, about a 100% increase,” said Mitchell. “That's when I started to fight back.”
Some of the listed mistakes are hard to explain. An inspector wrote that he was not connected to a municipal water and sewer system, when the City of Fort Lauderdale manhole is right in front of his house.
They said there was no fire hydrant within 1,000 feet of his property, when a bright red hydrant is plainly visible, two doors down.
They wrote that he had no required second electrical panel and that his water heater had no temperature and pressure release valve, when both in fact exist. Even his fully gated house was listed without a gate.
All of that worked against him.
And strangely, his home was listed as being eight miles from the Atlantic Ocean, when it is in fact about 4.3 miles away.
“It actually worked to my benefit, but I still reported it because it's wrong,” he said about the mistake of his home’s distance from the water. “It was just a myriad of things.”
Mitchell kept a folder of notes, emails, inspection reports, permits from the city and other materials he used in pushing back against Citizens to correct the errors. He estimated that he made “over 100” emails and phone calls and spent hours upon hours of his time sorting it out.
Finally, a third inspector from the company came and virtually all of the issues were cleared up with Citizens.
When he got back his renewal with the accurate information, his annual premium came out to $4,361 — merely an $8 increase year-over-year.
The updated quote gave him relief that he could actually afford his insurance.
When Mitchell realized that the inspectors who came to his house were unlicensed, he was infuriated at Citizens. In his mind, it explained everything.
“They're kind of pulling a con. They're making you think — if you didn't know better — you would think this was going to be a licensed person coming out. But it's not. And they don't tell you that. They tell you everything but that,” he said.
Mitchell said he wants people to be empowered with the fact that they can push back against faulty reports issued by unlicensed inspectors, and that they can actually win.
Montagne, the insurance agent who works in the Florida Keys, said this point is extremely important. Consumers and insurance agents need to closely review inspections to make sure all the information is accurate.
“It is imperative that the homeowner, when they get that report, or the insurance agent himself, when he gets that report, should be reviewing that report with his client,” said Montagne.
Mitchell said he understands on some level that Citizens needs to reduce the amount of properties it insures in Florida. But he said the end does not justify the means when it comes to how the inspection program is rolling out by hiring unlicensed inspectors.
“They really were never meant to be what they become. They were not supposed to have this many policies. They were not supposed to be the primary insurer,” he said. "I think they have to find a way to get fewer policyholders with them and to get more money out of the policyholders they have. But I think they're doing it in an at best shady way, and possibly a very underhanded way.”
Our investigative team is interested in hearing about your experience with inspections by Citizens Property Insurance. Please contact Danny Rivero via email: drivero@wlrnnews.org
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