Homeowner policies continue to shift from Citizens to private insurers in Florida

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Property insurance. by designer481 via iStock for WMNF News.

By Jim Saunders ©2023 The News Service of Florida

TALLAHASSEE — For the second month in a row, private insurers have taken more than 90,000 policies from the state’s Citizens Property Insurance Corp.

Seven carriers last week assumed a total of 92,886 policies as part of an effort to reduce the number of homes insured by Citizens, which was created as an insurer of last resort but has seen its policy count explode during the past three years amid financial problems in the private market.

Citizens had 1,255,381 policies as of Friday, down from 1,344,353 a week earlier — and the lowest total since April. It reached as many as 1.412 million policies this fall.

The shift of customers is part of a strategy known as “depopulation,” which involves private insurers seeking approval from state regulators to take policies from Citizens. Five insurers assumed 99,773 Citizens policies in mid-October, while additional policy takeouts are planned in December and January.

“For the second straight month, Citizens is seeing heightened interest among private insurers to expand their business in Florida through Citizens’ depopulation program,” Citizens spokesman Michael Peltier said in an email Tuesday. “This is an encouraging sign that the market is improving.”

Regulators approve the maximum number of policies that each insurer can assume through the rounds of depopulation. As an example, regulators said the seven insurers could take as many as 202,000 policies last week, with the companies ending up with less than half of that amount.

By far, the company that assumed the most policies was Homeowners Choice Property & Casualty Insurance Co., which took 53,456 policies, according to information released Tuesday by Citizens. Parent company HCI Group, Inc., said in a news release that Homeowners Choice was approved to take as many as 75,000 policies and made 72,958 offers to property owners.

“Homeowners Choice has successfully completed the transition of a significant number of policies that were previously identified by our technology as attractive policies for assumption,” Paresh Patel, HCI’s chairman and chief executive officer, said in a prepared statement last week. “The strong acceptance rate was the result of Homeowners Choice offering policyholders a competitively priced renewal policy and expanded coverage compared with their existing Citizens policy.”

Florida Peninsula Insurance Co. took 11,862 policies, followed by Monarch National Insurance Co., which took 11,715. The others were SafePoint Insurance Co., which took 6,870 policies; Slide Insurance Co., which took 6,515; Loggerhead Reciprocal Interinsurance Exchange, which took 1,520; and Edison Insurance Co., which took 948.

Many state leaders have long sought to move customers out of Citizens into the private market, at least in part because of the risk that policyholders across the state — including people who do not have Citizens policies — could be forced to help pay claims after a major hurricane or multiple hurricanes.

But officials say Citizens often charges lower premiums than private insurers, reducing the incentive for customers to leave Citizens.

Trying to help spur depopulation, lawmakers last year approved a change that required Citizens customers to accept offers of coverage from private insurers if the offers are within 20 percent of the cost of Citizens premiums.

For example, if a homeowner received an offer of coverage from a private insurer that is 19 percent higher than the Citizens premium, the homeowner would have to accept it. If the offer was over 20 percent of the Citizens premium, the homeowner would not have to take it.

Last week’s depopulation round showed wide variations among the maximum number of policies that insurers could take and the numbers they actually assumed. For instance, Slide was approved to take as many as 50,000 but wound up taking 6,515. Meanwhile, Edison was approved to take as many as 5,000 and wound up with 948.

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