In a bid to reduce the number of policies held by the state-backed Citizens Property Insurance Corp., regulators have granted approval for private insurers to potentially take up to 184,000 policies away from Citizens, starting this October.
The orders, signed by Insurance Commissioner Michael Yaworsky on Monday, greenlit proposals from Slide Insurance Co., Safepoint Insurance Co., Southern Oak Insurance Co., Florida Peninsula Insurance Co., and Monarch National Insurance Co.
Among these insurers, Slide Insurance Co. received approval to assume the largest number of policies, with as many as 100,000 Citizen’s policies potentially moving over to them. Safepoint Insurance Co. could take up to 30,000 policies, Southern Oak up to 25,000 policies, Florida Peninsula up to 19,000 policies, and Monarch up to 10,000 policies. The process of transferring these policies could begin on October 17.
The move to shift policies from Citizens to private insurers is a longstanding goal of Florida’s leaders, motivated in part by concerns over the financial risks the state faces in the event of major hurricanes or multiple hurricane strikes.
Over the past three years, Citizens’ policy count has surged, mainly due to private insurers dropping customers and raising rates to cope with financial challenges. As of Friday, Citizens now holds a total of 1,345,403 policies, compared to 486,773 policies at the end of July 2020.
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Following a special session in December, Florida lawmakers implemented significant changes to strengthen the insurance market, prompting some insurance companies to express interest in taking policies from Citizens. In June, Monarch assumed 17,239 policies, and Slide Insurance, along with Loggerhead Reciprocal Interinsurance Exchange, received approval to potentially take up to 26,000 policies in August, as shared by Carl Rockman, a Vice President at Citizens, during a meeting last month.
Although the approved orders allow these five insurers to assume 184,000 policies, it is unlikely that the actual number of policies leaving Citizens will reach that high. The insurers will have the flexibility to selectively choose which policies they want to acquire, a process likened to “cherry-picking” by Citizens Board of Governors Chairman Carlos Beruff.
It is important to note that not all targeted policyholders will necessarily move out of Citizens to private carriers. However, changes approved by lawmakers in December have increased the likelihood of customers leaving Citizens, even if they might have to pay higher premiums for coverage.
In many instances, homeowners can find more affordable coverage from Citizens compared to private insurers. However, with the December-approved change, Citizens customers are now required to accept offers from private insurers if they are within 20 percent of the cost of Citizens’ premiums.
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Rockman highlighted that in June, Monarch requested 18,760 policies in their effort to take policies from Citizens, but they ultimately ended up with 17,239 policies. This illustrates the impact of the new law on policies shifting away from Citizens.
