Alyssa Lane
Citizens Property Insurance Corporation, a non-profit insurer created by the state of Florida, is transferring hundreds of thousands of policies to private insurers. This move, known as depopulation, is an attempt to stabilize Florida's insurance market and reduce Citizens' risk exposure. Citizens is Florida's most used home insurance company, with 1.171 million policyholders, but it has faced financial concerns and criticism from Governor Ron DeSantis, who stated that the company is not solvent. While Citizens is expected to remain stable even after paying out billions of dollars in claims due to Hurricanes Milton and Helene, policyholders may face higher premiums as a result of the depopulation initiative.
| Characteristics | Values |
|---|---|
| Number of policies in Florida | 1.171 million |
| Number of policies at peak | 1.412 million |
| Number of policies shed since peak | 300,000 |
| Number of policies slated for transfer to private insurers | 648,000 |
| Number of policies requested for takeover by private insurers | 184,000 |
| Number of policies transferred to private insurers in 2022 | 300,000 |
| Average home insurance costs in Florida | $4,218 a year |
| Average annual premium for homeowners' insurance in Florida | $10,996 |
| Average national insurance cost | $2,777 |
| Number of policies in force as of last month | 1.3 million |
| Number of policies transferred to private insurers in December 2024 | 300,000 |
Explore related products
What You'll Learn
Citizens Insurance is a non-profit, state-backed insurer of last resort
Citizens Property Insurance Corporation is a non-profit, state-backed insurer of last resort. It was created by the state of Florida as a response to hurricanes and tropical storms, which have driven up the price of home insurance in the state. 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.
The insurer was designed to be 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 insurance is not available to everyone. Only those who are unable to purchase a policy from any other provider and those priced out of the private market are eligible for insurance.
Citizens is Florida's most used home insurance company, with 1.171 million policyholders, although this is partly because those property owners are unable to buy policies elsewhere. In 2022, Citizens held a record 1.412 million policies, but it has since shed nearly 300,000 policies. This is due to a depopulation program, which moves policyholders onto private insurers. Citizens is expected to shed many more policies by the end of the year, as more private companies assume Citizens' policies.
Despite the depopulation program, Citizens is still forecasting major growth in 2024. This is partly due to an exodus of national insurance companies from Florida, combined with local private insurers canceling plans, which has left many homeowners with Citizens as their only option. With Hurricanes Helene and Milton making landfall in Florida within days of each other, Citizens will have to pay out billions of dollars in claims. However, Citizens cannot go insolvent like a private insurer. In a worst-case scenario, Citizens is allowed by state regulations to implement a premium surcharge to ensure all claims are paid.
Insurance: Who Needs Fire Cover?
You may want to see also
Explore related products
Citizens is shedding policies to private insurers
Citizens Property Insurance Corporation, a nonprofit created by the state of Florida, is shedding thousands of policies to private insurers. Citizens is a last-resort insurer for those who cannot find coverage in the private market. However, the company has been actively working through its depopulation program to move policyholders to private insurers. At its peak, Citizens held 1.412 million policies in Florida, but it has since shed nearly 300,000 policies. The state of Florida has also sought to offload some of Citizens' policies to private insurers, with 300,000 policies transferred at the end of last year.
The depopulation of Citizens is occurring amidst Florida's property insurance crisis, which has seen rates soar. Citizens amassed a staggering 1.25 million active policies, but that number is now about to be halved as the state rolls out its depopulation initiative. More than 648,000 Citizens policies are slated for transfer to private insurers, a move authorized by Florida lawmakers in December 2022. The depopulation program aims to reduce the risks of Citizens as Florida's insurer of last resort.
As of July 2023, seven different private companies were approved to take over 91,000 Citizens policies, but that number is expected to climb higher as 184,000 Citizens policies have been requested for takeover. Citizens needs to depopulate by at least a million policies to reach a manageable level, according to Friedlander. The ongoing depopulation also shows that the private market now has more capacity to take on risk, indicating a healthier market.
The transition from Citizens to private insurers may result in higher premiums for homeowners. State law caps the increase at 20%, but this could still be challenging for homeowners in a climate where insurance costs are already high. Some homeowners may consider dropping insurance altogether, leaving them vulnerable to financial ruin in the event of a disaster.
While Citizens is shedding policies, it is important to note that the company cannot go insolvent like a private insurer. Mark Friedlander, a spokesperson for the Insurance Information Institute, stated that Citizens is allowed by state regulations to implement a premium surcharge to ensure all claims are paid. This structure may be reassuring to policyholders, even if it leads to higher premiums.
Social Insurance Programs: A Safety Net
You may want to see also
Explore related products
Citizens is not solvent, according to Gov. Ron DeSantis
Citizens Property Insurance Corporation is a nonprofit created by the state of Florida to provide insurance to eligible Florida property owners who are unable to find insurance coverage in the private market. It is currently the most used home insurance company in Florida, with 1.171 million policies across the state. However, Gov. Ron DeSantis has claimed that Citizens is "not solvent".
DeSantis has stated that Citizens is "not solvent, and we can't have millions of people on that because if a storm hits, it's going to cause problems for the state". This statement has prompted scrutiny from Washington, with the U.S. Senate Budget Committee investigating Citizens' finances and expressing concern about the potential of a federal bailout. DeSantis' comments come amid a federal investigation into whether Citizens has enough funds to withstand a future natural disaster.
Financial experts have disputed DeSantis' claim, citing Citizens' financial data, which shows a $5 billion surplus at the end of 2023 and an expected surplus of $6.3 billion by the end of 2024. With additional state funding and the ability to draw funds from Floridians with insurance policies, Citizens' total reserves are estimated at $17.8 billion. Jeremy Redfern, the governor's press secretary, acknowledged that Citizens was never intended to accommodate as many policies as it currently does and that at its current growth rate, DeSantis' concerns about solvency may be valid.
While Citizens faces significant financial challenges, particularly with the recent surge in popularity, it is structured differently from private insurers and cannot go insolvent. In the worst-case scenario, Citizens is allowed by state regulations to implement a premium surcharge to ensure all claims are paid. Despite this, DeSantis maintains that Citizens is not solvent, and the company has been working on a depopulation program to transition policyholders to private insurers.
Choking Fatality: Insurance's Take on Accidents
You may want to see also
Explore related products
Citizens' policyholders may face higher premiums
Citizens Property Insurance Corporation is a non-profit, state-backed insurer created by the state of Florida as a response to hurricanes and tropical storms, which drive up the price of home insurance in the state. Citizens is a last resort for those who can't find coverage in the private market. However, Citizens has been actively working through its depopulation program, which involves transferring policies to private insurers. This is an attempt to reduce the number of policies it holds to a more manageable level.
As of March 2024, Citizens held 1.171 million policies in Florida, with some sources stating this number was as high as 1.412 million in 2023. The company has since shed nearly 300,000 policies, with more than 648,000 slated for transfer to private insurers. This is a cause for concern for many policyholders, who may be forced to pay higher premiums with private insurance companies.
In 2023, the average annual premium for homeowners' insurance in Florida was $10,996, four times the national average. State law caps premium hikes at 20%, but this is still a significant increase for many homeowners. Some have considered "going bare", or dropping insurance altogether, a risky maneuver that leaves them exposed to financial ruin should a disaster strike.
The depopulation of Citizens Insurance is part of an effort to stabilize Florida's insurance market. According to Mark Friedlander, a spokesperson for the Insurance Information Institute, Citizens cannot go insolvent like a private insurer. In a worst-case scenario, Citizens is allowed by state regulations to implement a premium surcharge to ensure all claims are paid. However, this could lead to higher premiums for policyholders.
Understanding Insurance Coverage for New York State Civil Servants
You may want to see also
Explore related products
Citizens' policyholders may be forced to switch to pricier premiums
Citizens Property Insurance Corporation, a non-profit created by the state of Florida, is facing an unprecedented surge in popularity amidst the state's property insurance crisis. Citizens is run like a private corporation but is overseen by an oversight panel comprising the governor, chief financial officer, attorney general, and commissioner of agriculture.
As of last month, Citizens held 1.3 million policies in force, three times as many compared to five years ago, making it the largest provider in the state. However, the company has been actively working through its depopulation program to transition policyholders to private insurers. This move is authorized by Florida lawmakers, who passed legislation in December 2022 to reduce Citizens' policies.
The depopulation program aims to stabilize Florida's insurance market by reducing the risks borne by Citizens as the insurer of last resort. As of March 2024, Citizens had shed nearly 300,000 policies, with more than 648,000 slated for transfer to private insurers. The Florida Office of Insurance Regulation has approved several private companies to take over Citizens' policies, but this is just a fraction of the total number of policies that need to be offloaded.
For homeowners transitioning from Citizens, an increase in premiums is likely. While state law caps this hike at 20%, the average annual premium for homeowners' insurance in Florida has skyrocketed to $10,996, four times the national average. This situation has left many Citizens policyholders facing the difficult choice between accepting pricier premiums with a private insurance company or dropping insurance altogether.
While Citizens has stated that it has the financial resources to handle claims from recent hurricanes without imposing surcharges, the company's spokesperson, Michael Peltier, has acknowledged that policyholders will receive notices indicating which private carrier is taking over their policy. This transition to private insurers may lead to higher costs for Floridians, especially in a climate of increasing insurance premiums.
Understanding the Insured's Road to Restoration: A Guide to Insurance Restoration
You may want to see also
Frequently asked questions
No, Citizens Insurance is not leaving Florida. However, it is actively working through its “depopulation program", which involves transferring policies to private insurers. Citizens Insurance is a state-backed nonprofit home insurance company.
Citizens Insurance is transferring policies to private insurers to reduce its risk and improve the stability of Florida's insurance market. Citizens Insurance has grown to more than a million policyholders, and it needs to reduce its policies by at least a million to get to a manageable number.
For homeowners transitioning from Citizens Insurance to a private insurer, an increase in premiums is likely. State law caps this hike at 20%. However, some homeowners may consider “going bare” or dropping insurance altogether, leaving them exposed to financial ruin should a disaster strike.
