Hundreds of thousands of policyholders with Florida's last-resort insurer have a chance to return to the private market after an approval from regulators for 10 private carriers to assume policies.
Citizens Property Insurance Corp. says nearly 400,000 of its policyholders will receive letters from private companies, telling these homeowners they have been selected. Each homeowner has the option to remain with Citizens but the state-run insurer is hoping the policies find a home in the private market.
Citizens, which is meant to be the state's last resort insurer, has grown to become its largest writer of property insurance. Mandated rate freezes made Citizens a cheap option for homeowners and the insurer competed with the private market. But that has been slowly been changing since laws to allow Citizens to increase rates to better match the risk have been passed.
CEO Barry Gilways says, “Citizens policies are becoming more attractive to private carriers. We have had success but still have a ways to go.”
Citizens has been attempting to educate the public on assessments and other risks of remaining with Citizens. Homeowners returning to the private market would no longer be subject to Citizens' assessment of as much as 45 percent if money is needed to pay claims after a major catastrophe. Instead, they would be in line to be assessed 2 percent if Citizens finds itself with a deficit after a storm.
The Citizens depopulation program has been in place in Florida for years but just now is price becoming less of an obstacle. Citizens is not the glaring cheapest option, especially when considering the coverage available in the private market, Citizens has said.
A law passed during the last Legislative Session also established a consumer clearinghouse to depopulate the insurer and reduce its exposure.
“The clearinghouse will provide policyholders with more private market options so they do not need to enter Citizens in the first place,” Gilway says.
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