Jane Dotson
Citizens Property Insurance Corporation, Florida's state-backed insurance company, is dropping more policyholders. Citizens is a not-for-profit, tax-exempt, government entity that provides property insurance to eligible Florida property owners who are unable to find insurance coverage in the private market. With recent changes in Florida's insurance laws, Citizens is looking to reduce its number of policies, which currently stands at over 1.2 million, to below 500,000. This move has caused concern among homeowners and insurance agents, as it will significantly impact Florida's insurance market.
| Characteristics | Values |
|---|---|
| Number of policies issued by Citizens Insurance | 1.171 million |
| Citizens Insurance's ranking among property insurers | Top 10 nationally |
| Yearly growth in policies | Over 65% |
| Average home insurance costs in Florida | $4,218 |
| Average national home insurance costs | $2,777 |
| Increase in property insurance costs in Florida due to natural disasters and inflation | 70% |
| Number of policies Citizens Insurance is looking to drop | 400,000 |
| Number of policies taken over by Slide Insurance Co. | 100,000 |
| Number of policies taken over by Florida Peninsula Insurance | N/A |
| Number of policies being transferred to private insurers | 300,000 |
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What You'll Learn
Citizens Property Insurance is Florida's insurer of last resort
Citizens Property Insurance Corporation, Florida's state-backed insurance company, is an insurer of last resort. It was created by the state of Florida in 2002 as a response to hurricanes and tropical storms, which were driving up the price of home insurance in the state. Citizens is a non-profit entity designed to provide property insurance to Floridians who have been priced out of the private market or are unable to purchase a policy from any other provider.
Citizens is run like a private corporation but has an oversight panel made up of the governor, chief financial officer, attorney general, and commissioner of agriculture. It is currently the state's largest insurer, with 1.171 million policies across the state as of March 2024, and over 1.2 million as of June 2024. However, it was not designed to be so big, and there are concerns about its financial stability. Citizens has grown over 65% in a single year, and with more policies comes more risk. If Citizens cannot cover claims from a major hurricane, taxpayers will have to foot the bill.
As a result, Citizens is looking to reduce its policies using a strategy called depopulation to move policies to private insurers. This has caused concern among homeowners and insurance agents, as it could be challenging to find alternative coverage. Private insurers may charge higher premiums, and some Florida homeowners may struggle to find coverage at all.
Citizens has also been criticised for incorrectly dropping some policyholders, including those who have not yet been able to make repairs to homes damaged by hurricanes. Citizens has said that it will make new renewal offers to those with outstanding FIGA claims that should not have been dropped.
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Citizens is dropping customers due to new legislation
Citizens Property Insurance Corporation is a non-profit, state-backed insurer of last resort created by the Florida Legislature in 2002. It was set up to provide property insurance to eligible Florida property owners who are unable to find insurance coverage in the private market. Citizens is utilized by more Floridians as a last resort than any other insurance provider, with 1.171 million policies across the state as of June 2024. However, Citizens is now dropping policyholders and moving them to private insurers. This is due to new legislation and a desire to reduce the risks associated with holding a large number of policies in the event of a major hurricane.
The more policies Citizens holds, the greater the risk of the company becoming insolvent if a large number of claims are made following a natural disaster. If Citizens cannot cover the cost of claims, then all Florida insurance customers will have to foot the bill. Citizens is using a strategy called "depopulation" to transfer policies to private insurers. This process has been approved by the state Office of Insurance Regulation, and several companies have already received the go-ahead to assume Citizens' policies.
The reduction in Citizens' policyholders is expected to have a significant impact on Florida's insurance market. Private insurers may charge higher premiums, and some customers may struggle to find coverage at all. This is a particular concern for homeowners who have not yet been able to repair damage caused by hurricanes, as their homes may be deemed uninsurable by private companies. Citizens has stated that it will make new renewal offers to any customers with outstanding FIGA claims that should not have been dropped.
The move by Citizens to reduce its number of policies is part of a broader trend in Florida's property insurance landscape. The company has grown rapidly in recent years as more Floridians have struggled to find affordable insurance elsewhere. Average home insurance costs in Florida are over $1,400 more than the national average, and natural disasters and inflation have driven property insurance costs up by as much as 70%. This has resulted in Citizens outpacing other providers and becoming one of the top 10 property insurers nationally.
The Florida government's decision to create Citizens as a state-backed insurer has been controversial. While it provides essential coverage for those who cannot obtain insurance elsewhere, it also competes with private insurance companies and offers lower rates. This has resulted in Florida taxpayers offsetting some people's insurance rates. There are concerns that this model is unsustainable and could lead to higher costs for all taxpayers if Citizens depletes its reserves.
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Citizens is not available to everyone
Citizens Property Insurance Corporation is a state-run, non-profit insurance carrier for Florida residents who are unable to find coverage from private insurance companies. It was created by the Florida legislature in 2002 as a "not-for-profit, tax-exempt, government entity to provide property insurance to eligible Florida property owners unable to find insurance coverage in the private market." Citizens is known as Florida's insurer of last resort.
Citizens insurance is not available to everyone. Only those who are unable to purchase a policy from any other provider and those who have been priced out of the private market are eligible for insurance. In other words, it is designed for those who have "nowhere else to turn." This is reflected in the fact that the company's total policies issued fluctuate based on eligibility.
Citizens has been criticised for its high costs in the event of insolvency. In the case of hurricanes or other widespread disasters, Citizens policyholders may be the worst off. This is because Citizens has the right to assess its policyholders up to 45% of their existing premium in the event of insolvency. In contrast, private market policyholders can be assessed only up to 2%.
In recent years, Citizens has grown rapidly as more and more Florida homeowners have found themselves unable to buy policies elsewhere. This growth has led to concerns about Citizens' solvency, with Florida Governor Ron DeSantis questioning whether the insurer would be able to fulfil its role in the event of a major storm. As a result, Citizens has been actively working to reduce its number of policies through a process known as depopulation, transitioning policyholders to private insurers.
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Citizens is exceeding expectations in dropping customers
Citizens Property Insurance, the insurer of last resort in Florida, is exceeding its expectations in dropping customers. The company has been dropping policyholders and transferring them to private insurers through a process called "depopulation." Citizens initially aimed to drop 360,000 policies by the end of 2024, but it has now upped its target to over 400,000, with a long-term goal of getting below 500,000 policies. This move has caused concern among homeowners and insurance agents as it will significantly impact Florida's insurance market.
Citizens was created by the Florida Legislature in 2002 as a not-for-profit, tax-exempt entity to provide property insurance to eligible Florida property owners who cannot find coverage in the private market. It is backed by the state and has lower rates than private companies, making it a popular choice for Floridians. However, Citizens' large number of policies increases the risk of exposure if a major hurricane or natural disaster strikes. To mitigate this risk, Citizens is transferring policies to private insurers, reducing its policy count, and shrinking its footprint in the state.
The process of depopulation has raised concerns among customers who worry about finding affordable alternative coverage. Private insurers may charge higher premiums, and some customers may struggle to obtain insurance at all. Additionally, there are concerns about the timing of the depopulation, as it coincides with hurricane season, adding to the worries of homeowners with damaged properties.
Citizens has defended its actions, stating that the market is getting healthier and that private companies are showing increased interest in the Florida insurance market. The company has also assured customers that they are not obligated to accept offers from private insurers if the premium is 20% or more than Citizens' rate. However, if the offer is 19% or less, customers will be ineligible to remain with Citizens, as per the depopulation program's rules.
While Citizens' decision to drop customers may be strategic, it has left many Floridians scrambling to find alternative insurance options. The company's progress in exceeding its initial expectations highlights the challenges faced by homeowners in Florida's evolving insurance landscape.
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Citizens customers are moving to private insurers
Citizens Property Insurance Corporation, a non-profit entity created by the state of Florida, is dropping more policyholders. This is causing a stir among homeowners as it will have a significant impact on the insurance market in the state. Citizens was established as an insurer of last resort for eligible Florida property owners who were unable to find insurance coverage in the private market.
With recent changes in Florida's insurance laws, Citizens aims to reduce its number of policies to below 500,000, a significant decrease from the over 1.2 million policies it held as of June 2024. This move, known as "depopulation," involves transferring policies to private insurers. While this strategy is intended to reduce risk and strengthen the market, it has raised concerns among Citizens customers who may face challenges finding alternative coverage or face higher premiums with private insurers.
Several private insurance companies, such as Florida Peninsula Insurance, Slide Insurance, Edison Insurance, and Southern Oak Insurance, have been approved to assume Citizens policies. This transition has sparked a mix of reactions, with some homeowners expressing fear of increased insurance costs and uncertainty about their coverage. On the other hand, insurance agents like Robert Norberg view the reduction of Citizens policyholders as beneficial for the overall health of the insurance system, despite the immediate cost increase for homeowners.
The shift from Citizens to private insurers is a complex issue in Florida's insurance landscape. While Citizens was created to provide a safety net for property owners, the increasing number of policies held by the company has raised concerns about its solvency and the potential financial burden on all Florida insurance customers in the event of a major hurricane. This situation highlights the challenges faced by Florida homeowners in balancing the need for affordable insurance with the risks associated with living in high-risk areas prone to hurricanes and tropical storms.
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Frequently asked questions
Yes, Citizens Property Insurance, Florida's insurer of last resort, is dropping policyholders. Citizens is using a strategy called "depopulation" to move policies to private insurers.
Citizens is dropping customers because it is not solvent. Gov. Ron DeSantis said that Citizens would not be able to do its job in the event of a major storm. Citizens grew over 65% in a single year as more and more Florida homeowners found themselves unable to buy policies elsewhere.
If you believe your insurance policy was incorrectly canceled or non-renewed by Citizens, you can contact your local representative, who will forward your information to Citizens. You should provide information such as the name on the policy, the property address, the policy number, your phone number, and your FIGA claim number.
