Florida’s Citizens sheds another 45,000 Florida citizens
Another 45,000 homeowners policies could be leaving Citizens Property Insurance Corp. in March. Florida’s insurer of last resort has been trying to shed policyholders and their risk for the past couple of years, and the Office of Insurance Regulation recently approved another “takeout.” We discussed the overall effort and the company’s goal of moving 400,000 policies to private insurers in our Sept. 27, 2013 post.
Apparently, the insurer’s reach exceeded its grasp last year. The expected number of policyholders did not take up the offer to move their coverage to one of the selected private insurers. According to Citizens, just 60-65 percent accepted coverage elsewhere.
The numbers are low, a Citizens representative said, because the private insurers are also looking for low-risk homeowners. Citizens would rather keep those and hand off higher-risk policies.
In the March round, polices will be divided between three companies. One will get 10,000 policies, another will get 15,000, and the third will get 20,000 policies.
Even if 35 percent of those homeowners stay with Citizens, the insurer’s enrollment should dip below 1 million for the first time since mid-2006. At its peak, the insurer had 1.5 million policies. By the end of 2013, the number was down to 1.02 million. If 2014 plans are successful, Citizens will have just 925,000 homeowners policies by the time hurricane season rolls around this year. By the end of 2015, it should shed another 200,000 policies.
Enrollment may not decline, but the rate of growth should slow considerably when the clearinghouse comes on line later this month. The clearinghouse was part of the insurance reform bill enacted in 2013. When a homeowner applies to Citizens, the application will go to private firms; if one of them quotes a premium at 15 percent above or below Citizens’ premium, the applicant will not be eligible for Citizens.
Even more policyholders will shift to the private market this summer, when renewals go through the clearinghouse. The same process — comparing private insurers’ premiums with Citizens’ renewal rate — will shed homeowners for whom Citizens is not the insurer of last resort.
Source: Sun-Sentinel, “Another 45,000 policies leaving Citizens,” Jan. 11, 2014Share