TALLAHASSEE – As efforts continued to assess damage from Hurricane Idalia, regulators on Friday approved proposals by seven private insurers to withdraw as many as 202,000 policies from the state’s Citizens Property Insurance Corp.
Insurance Commissioner Michael Yaworksy signed orders approving the proposals by Homeowners Choice Property & Casualty Insurance Co., Slide Insurance Co., Florida Peninsula Insurance Co., Monarch National Insurance Co., Safepoint Insurance Co., Loggerhead Reciprocal Interinsurance Exchange and Edison Insurance Co.
The applications were filed in late July, and the companies will be able to begin accepting policies from Citizens around 21 November.
The approvals came as state leaders have long sought to move policies out of Citizens and into the private market, at least in part because of the financial risks if Florida is hit by a major hurricane or multiple hurricanes.
Policies have poured into Citizens over the past three years as private insurers have dropped customers and raised rates because of financial problems. As of Friday, Citizens had nearly 1.38 million policies, making it Florida’s largest property insurer. Citizens was created as an insurer of last resort, but has become the insurer of choice for many homeowners.
Friday’s orders do not mean that the seven insurers will assume the full number of approved policies from Citizens. Homeowners Choice was approved to take up to 75,000 policies; Slide was approved to take up to 50,000; Florida Peninsula was approved to take up to 30,000; Monarch National was approved to take up to 20,399; Safepoint was approved to take up to 16,000; Loggerhead was approved to take up to 6,000; and Edison was approved to take up to 5,000.
Insurers will effectively be able to pick and choose which policies they want, a process that Citizens Board of Governors Chairman Carlos Beruff recently likened to “cherry picking”.
In addition, homeowners targeted for “takeout” could be forced to pay more for coverage.
In many cases, homeowners can buy less expensive coverage from Citizens than from private insurers. But a change approved by lawmakers and Governor Ron DeSantis in December requires Citizens customers to accept offers of coverage from private insurers if the offers are within 20% of the cost of Citizens’ premiums.
The change was part of a wide-ranging package aimed at strengthening the insurance market. The willingness of insurers to accept Citizens policies may be a sign that the package, which also included attempts to limit lawsuits against carriers, has helped make the market more attractive to the industry.
In late July, Yaworsky approved proposals that could result in private insurers pulling up to 184,000 policies from Citizens starting in October. These insurers were Slide, Safepoint, Southern Oak Insurance Co., Florida Peninsula and Monarch.
Monarch also assumed 17,239 policies in June, while Slide and Loggerhead received approval to assume up to 26,000 policies in August.
While last year’s Hurricane Ian caused tens of billions of dollars of damage, Hurricane Idalia is expected to have a much smaller impact on the insurance industry. Idalia made landfall in Taylor County on Wednesday and continued its path through other rural areas.
“The Big Bend area where it made landfall is more sparsely populated and has some of the lowest insured values in the state, so losses are unlikely to match those of Hurricane Ian last year,” financial rating agency AM Best said in a commentary Friday. “Idalia’s fierce winds, torrential rains and resulting storm surge battered Florida’s Gulf Coast before moving on to Georgia and South Carolina, causing significant property damage that will result in substantial losses for the insurance industry.”
Reinsurance firm BMS estimated last week that Idalia caused insured losses of $3 billion to $5 billion.
“In reality, the insurance industry dodged a bullet as Idalia tracked over relatively rural areas with low population density,” said an analysis posted on the BMS website.
The analysis did not break down potential insured losses in Florida and other states.
As of Sunday, insurers had reported $85 million in estimated insured losses, according to data posted on the Office of Insurance Regulation’s website. That total included data from 10,561 claims, including 7,515 residential property claims. Other types of claims included things like auto damage.
