Jane Dotson
Citizens Insurance, also known as 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 is Florida's insurer of last resort, helping homeowners who cannot get insurance at an affordable price elsewhere. In recent years, Citizens Insurance has been actively working through its depopulation program, a way of moving policyholders onto private insurers. However, some sources caution against purchasing a policy from Citizens Insurance if it is not absolutely necessary, as premiums may be low initially but are likely to skyrocket after a hurricane.
| Characteristics | Values |
|---|---|
| Type of company | Non-profit, tax-exempt government entity |
| Year established | 2002 |
| Purpose | To provide home insurance to eligible Florida property owners who are unable to find insurance coverage in the private market |
| Number of policies | 1.4 million in 2023 |
| Recent changes | New laws that went into effect on July 1, 2024, will allow surplus line carriers to take out policies from Citizens for properties that are not primary residences |
| Premium rates | Expected to increase by 13.5%-14.2% |
| Depopulation efforts | Ongoing; Citizens executives indicate they expect to be under one million policies in 2024 |
| Financial health | Rated A1 by Moody's in July 2022 |
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What You'll Learn
- Citizens Insurance is a state-run, non-profit insurer of last resort
- It's designed for those unable to secure coverage with any other private home insurance provider
- Citizens Insurance premiums are increasing at an alarming rate
- Citizens has been actively working through its depopulation program, moving policyholders onto private insurers
- Citizens can assess its policyholders extra in the event of a hurricane
Citizens Insurance is a state-run, non-profit insurer of last resort
Citizens Insurance, also known as Citizens Property Insurance Corporation, is a state-run, non-profit insurer of last resort. It was established by the Florida Legislature in 2002 as a response to hurricanes and tropical storms, which were driving up the price of home insurance in the state. As Florida is vulnerable to hurricanes and flooding, Citizens Insurance has become the last resort for many residents seeking home insurance coverage.
Citizens Insurance is available to Florida residents who are unable to secure coverage with any other private home insurance provider. The company's insurance policies are often more affordable than those of private insurance companies. However, Citizens Insurance has been criticised for its high premiums, which are necessary to cover losses in the event of a hurricane or other natural disasters. If the assessment on Citizens policyholders is insufficient to cover losses, the company is legally allowed to issue assessments on private market policyholders.
In recent years, Citizens Insurance has actively worked to reduce the number of policies it holds through its "`depopulation` program", which aims to move policyholders onto private insurers. This is due to the financial risk posed by major hurricanes, as well as the company's undercapitalisation. Despite this, Citizens Insurance remains the most used home insurance company in Florida, with 1.171 million policies in 2024, although this number has decreased from 1.412 million in 2023.
The company is headquartered in Tallahassee, Florida, and is overseen by an oversight panel composed of the governor, chief financial officer, attorney general, and commissioner of agriculture. Citizens Insurance is funded by policyholder premiums and, in the event of a deficit caused by a catastrophic loss or storm, the state of Florida requires the company to levy surcharges on policyholders.
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It's designed for those unable to secure coverage with any other private home insurance provider
Citizens Insurance, or Citizens Property Insurance Corporation, is a state-run, non-profit insurance carrier for Florida residents. It was created in 2002 by the Florida Legislature as a response to hurricanes and tropical storms, which have driven up the price of home insurance in the state.
Citizens Insurance is designed for those unable to secure coverage with any other private home insurance provider. It is an insurer of last resort, and in recent years, it has outpaced every other provider in Florida, where customers have been dropped from their insurance companies or priced out.
The company 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. Citizens Insurance has an oversight panel made up of the governor, chief financial officer, attorney general, and commissioner of agriculture.
While Citizens Insurance can offer lower premiums initially, there is a risk that these costs will skyrocket after a hurricane or other natural disasters. This is because, as a government entity, Citizens does not have the same financial concerns as a private company. In the event of a deficit, Florida law requires Citizens to levy surcharges on policyholders.
In addition, Citizens Insurance does not cover carports, porches, screened enclosures, or pet liability. It is recommended that customers explore options with private homeowners insurance companies and compare quotes before choosing Citizens Insurance.
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Citizens Insurance premiums are increasing at an alarming rate
In recent years, insurance premiums in Florida have been rising rapidly, with the average homeowners' premiums in the state reaching five times the national average. This has pushed many households to their financial limits, leading them to seek alternative options, including Citizens Insurance. However, it is important to note that Citizens Insurance is intended to be an insurer of last resort, and policyholders may encounter challenges with coverage and premiums over time.
One of the critical factors contributing to the alarming rate increases in Citizens Insurance premiums is the state's vulnerability to natural disasters, such as hurricanes and tropical storms. In the event of widespread disasters, Citizens Insurance policyholders could face substantial financial burdens. The company's ability to cover losses has been questioned, and there is a risk of assessments being issued on both Citizens policyholders and private market policyholders to make up for any deficits.
Additionally, Citizens Insurance has been actively working on its depopulation program, aiming to transfer policyholders to private insurers. This effort has resulted in a decrease in the number of policies held by Citizens, with the company shedding nearly 300,000 policies since last September. However, the depopulation process also contributes to the rising premiums as Citizens works to align its rates with the private market to facilitate the transition.
The increasing premiums at Citizens Insurance have sparked debates and concerns among customers and industry experts. While some insurance agents recommend steering clear of Citizens due to potential challenges with coverage and financial stability, others defend the company's financial health and highlight its role as a last resort for homeowners struggling to find affordable coverage. As Citizens Insurance navigates the complex landscape of Florida's insurance market, it remains crucial for policyholders and prospective customers to carefully consider their options, compare quotes from multiple insurers, and make informed decisions based on their specific needs and circumstances.
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Citizens has been actively working through its depopulation program, moving policyholders onto private insurers
Citizens Property Insurance Corporation, also known as Florida's insurer of last resort, has been actively working to reduce its number of policies through its depopulation program. This initiative aims to transition policyholders from Citizens to private insurers in the state. The depopulation program is driven by Florida law, which requires Citizens to match its policyholders with insurance companies interested in assuming their policies and providing private-market coverage.
The depopulation efforts are essential to the stability of Florida's insurance market. In recent years, Citizens has seen a significant increase in the number of policies, with over 1.25 million active policies at its peak. This surge in policies poses a substantial financial risk to the state, especially in the event of a major hurricane or widespread disaster. By transferring policies to private insurers, the state aims to reduce this risk and strengthen the insurance market.
The depopulation program offers several advantages to Citizens policyholders. Firstly, private insurers often provide more comprehensive coverage options, including additional protections not typically offered by Citizens, such as coverage for carports, porches, and pet liability. Secondly, private insurers are less likely to impose costly assessments on policyholders in the event of significant losses. While Citizens policyholders may be subject to substantial assessments after a major hurricane or series of storms, private-market policyholders generally face lower assessment amounts.
However, one of the challenges associated with the depopulation program is the potential increase in premiums for homeowners. As policies are transferred from Citizens to private insurers, policyholders may experience a hike in their insurance costs. To mitigate this impact, the state has implemented a 20% cap on premium increases for transitioning policyholders. Nonetheless, with Florida's average annual premium for homeowners' insurance already four to five times the national average, managing these additional costs can be challenging for many residents.
The depopulation program has been authorized by Florida lawmakers, and it is expected to result in the transfer of more than 648,000 Citizens policies to private insurers. As the program progresses, homeowners will receive notifications indicating which private carrier will be assuming their policy. Policyholders are advised to carefully review the new terms and conditions of their coverage to make informed decisions about their insurance choices.
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Citizens can assess its policyholders extra in the event of a hurricane
Citizens Property Insurance Corporation, also known as Florida's insurer of last resort, is a state-run, non-profit insurance carrier for Florida residents who are unable to find coverage from private insurance companies. Citizens Insurance premiums have been increasing at an alarming rate, with the average homeowner's premiums in Florida being five times the national average. As a result, Citizens Insurance may be the cheapest option for some Floridians.
However, Citizens Insurance has been criticised for its high assessments in the event of a hurricane or other widespread disasters. Citizens is required by law to levy assessments on its customers if funds to pay claims have been exhausted after a major storm. These assessments can be substantial for Citizens policyholders and can even be levied on private insurance holders in the state. This is often referred to as Florida's "hurricane tax". While Citizens remains in a strong financial position, policyholders should understand the assessment process and how it might impact them.
In the event of a deficit, Citizens must levy an emergency assessment of up to 10% per year on assessable statewide premiums, including Citizens and private-market policyholders, until the deficit is eliminated. Citizens' customers can reduce their assessment risk by finding coverage with another company. This has led to ongoing depopulation efforts to reduce the number of policies, which ballooned to more than 1.4 million in 2023.
Despite these concerns, Citizens receives a strong A1 rating from credit rating agency Moody's as of July 2022.
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Frequently asked questions
Citizens Insurance is Florida’s home insurance company of last resort, helping homeowners who can’t get insurance at an affordable price elsewhere. It is a state-run, non-profit insurance carrier for Florida residents who are unable to find coverage from private insurance companies.
Natural disasters like tropical storms and hurricanes along with inflation have combined to drive property insurance costs up as high as 70% in Florida. Citizens Insurance was created in 2002 in response to hurricanes and tropical storms, which drove up the price of home insurance in the state.
Citizens Insurance premiums have been increasing at an alarming rate and are likely to skyrocket after a hurricane. It also does not cover car ports, porches, screened enclosures, or pet liability.
Citizens executives indicate they expect to be under one million policies in 2024. The Florida government is working to reduce the number of policies through a "`depopulation program",' which moves policyholders onto private insurers.
