"What is important to realize is that it's not just Citizens' policyholders who benefit from depopulation," said Louisiana insurance Commissioner James Donelon in a statement. "All Louisiana property owners benefit from this reduction of Citizens policies as it reduces the need for future assessments charged to property insurance consumers in the event of another Katrina-level event."

Citizens' policy count ballooned following the historic hurricane season in 2005, reaching an all-time high of about 10% of insurance market share in 2008, when it was the third-largest homeowners group in Louisiana following State Farm and Allstate.

The insurer has been aggressive with its depopulating program since 2008 by asking private companies to review Citizens' policies at the year's end and offer to take on a portion of hand-picked voluntary customers.

Generally, fewer than 2% of customers choose to remain with Citizens, which must legally keep its premiums above that of private insurers.

Jeff Albright, CEO of the Independent Insurance and Brokers (IIAB) of Louisiana, attributes the "healthy" market rebound to an influx of new, non-traditional players in the marketplace, who sought to grow their business while State Farm and Allstate "took significant losses as a result of Katrina and Rita and had their own depopulation strategies to shrink their market share."

Louisiana has added 18 new carrier groups since 2005, 12 of which have been utilized by Citizens' depopulation program.

The three companies being utilized in next year's transfer are Access Home Insurance Co, Maison Insurance Co., and Lighthouse Property Insurance Corp. Customers have 60 days to decide whether they prefer to remain with Citizens upon receiving a letter of request in early December 2013.

"Younger companies are equipped to handle risks along the state coast because they are heavily reinsured," says Albright. "If a major natural catastrophe causes the reinsurance market to contract, then small homeowners' carriers will have a hard time managing their business, and will have significant price increases or capacity reduction. But they're in great shape now with a healthy reinsurance market."