Florida property insurance experts say the approval of four insurance companies to take over up to 125,000 policies from Citizens Property Insurance is another sign that the state is moving in the right direction.
During a special legislative session earlier this year, state leaders said one of their top priorities was to transfer policies from state-backed insurer Citizens, citing the financial risks of a major hurricane.
Fast forward to today – with the 2023 hurricane season almost upon us – and property insurance experts say Florida appears to be on the road to recovery.
“The good news is that private companies are looking to take on more policyholders, something we haven’t seen here in Florida for several years,” said Insurance Information Institute spokesman Mark Friedlander.
Friedlander is talking about 125,000 policies that will be removed from Citizens Property Insurance in January 2024.
According to Citizens’ website, they currently have about 1.33 million policies, a number that’s down from 1.412 million policies in early October.
Insurance experts say that the more policies that are offloaded from Citizens, the less financial risk there is for the rest of the state. So far, there have been four significant periods of depopulation.
“Right, both the November and December programmes will potentially move several 100,000 policyholders back to the private market. But if we look back at the October data, there were about 300,000 policyholders available in October, and about a third of them are moving back to the private market. So about one in three,” Friedlander said.
Insurance agents said the key factor in whether a policyholder moves to the private market or not is the takeout offer from the private company and how much it costs. If the private company’s offer is within 20% of what you are currently paying Citizens, you have to take it or find another policy.
But if it’s more than 20%, you can turn it down and stay with Citizens.
Friedlander said the current rate of defections from Citizens is a hopeful sign that Florida is on the road to stability.
“It’s getting better and it’s getting better every day. And the good news is that this hurricane season has been mild compared to last year in terms of significant losses for insurers. We had Hurricane Ian, one of the worst on record in the US in terms of insured losses, much smaller claims here from Idalia because [it] hit a sparse area of Florida, not a big impact compared to Ian in southwest Florida,” Friedlander said.
Friedlander said Citizens’ current rate of depopulation also makes it less likely that Floridians will have to pay what’s known as a hurricane tax, where every Florida consumer would be on the hook to pay Citizens’ insurance claims after a major hurricane or storm.
