The agents association says that its warning had nothing to do with commission reductions, saying it has to with coverage limits and costs.
The latest battle involving Citizens is an example of the growing rift between the private insurance industry and Florida's insurance system, including the state-run insurer of last resort and the state regulator.
Citizens may reduce agent commissions on personal residential policies from 8.2 percent, already less than private carriers pay, to 5 percent.
Sarasota agent Thomas Danson says the dispute is not about commissions. "No agent is going to avoid Citizens because of commissions," he said. The big issue, he says, is that Citizens could be on the hook for tens of billions of dollars in hurricane claims that it does not have the money to pay.
With nearly 1.4 million policies, Citizens has become Florida's largest -- and no longer its top-price -- property insurer. Its average premiums in Sarasota, Manatee and Charlotte are less than half the cost of State Farm, the most expensive company.
The FAIA says coverage from Citizens "may not always be the wisest choice for every homeowner."
Association president Jeff Grady admits that Citizens may be the only alternative for many Florida homeowners, especially those in coastal areas. Companies like Allstate, Nationwide and Auto-Owners have dropped hundreds of thousands of policyholders during the past two years. But Grady said consumers "clamoring" for Citizens might wind up with holes in coverage and future assessments to pay.
"The reality is that Citizens offers a one-size-fits-all policy that often leaves coverage gaps, and there is a higher probability that assessments could wipe out any perceived savings," he said.
Such coverage gaps could include personal property coverage, which Citizens restricts to 50 percent of a home's value, and additional living expense coverage, which Citizens caps at half that of private carriers.
Citizens policyholders will also pay more in assessments if the company's reserves are drained from paying hurricane claims, the FAIA said.
Citizens spokesman Rocky Scott declined to comment on the FAIA's motives. "We're not going to speculate on it," he said. "They did what they did, and it is what it is."
In a statement, Paul Palumbo, senior vice president of underwriting, said Citizens offered multi-peril homeowners coverage comparable to most private insurers, though it does not offer some optional additional coverages.