Citizens To Cut 7,500 Coastal Property Policies Next Year
TALLAHASSEE (CBSMiami/AP) - In an effort to shrink their risk during and after the annual hurricane season, Citizens Property Insurance Corp. plans to quit providing coverage to coastal homeowners whose properties are valued at $2 million or more.
The change will affect approximately 7,500 current policy holders.
The underwriting committee, comprised of a voting majority of the Citizens' Board of Governors, said Wednesday it could reduce the company's exposure by insuring coastal homes with a value of up to $1 million instead of the current $2 million cap. The panel also recommended the company reduce its maximum homeowner liability coverage from $300,000 to $100,000 and eliminate its optional buyback.
Those changes would take effect next year and not require legislative approval, Citizens' spokeswoman Christine Ashburn said.
A series of changes that would reduce risk on condominiums and some businesses was also discussed and could be approved at the board's December meeting.
The Citizens' board approved an average hike of 32.8 percent on sinkhole policies for homeowners and 6 percent for standard coverage at its October meeting. The board initially sought higher rates, voting in September to cap rate hikes for sinkhole coverage at 50 percent in 2012. But state regulators cut that to a statewide average of 6.2 percent for standard coverage and a cap of 32.9 percent for sinkhole policies.
The panel's recommendations will be presented to Gov. Rick Scott and the Florida Cabinet at its next meeting on Tuesday.
Scott wanted the Citizens board to come up with recommendations that would not require legislative approval. The governor and other top Republican lawmakers want Citizens shrunk because of fears the insurer would suffer massive losses if a big hurricane hits. Unlike private companies, Citizens has the power to place a surcharge on nearly every insurance bill in the state if it can't cover such losses.
Citizens' has roughly 1.5 million policyholders making it easily the largest property insurer for home and business owners in Florida.
The company was created by the Legislature in 2002 to provide insurance to homeowners in high-risk areas and those who cannot find coverage in the private market. It was largely an offshoot of an underwriting association formed by the state in the aftermath of Hurricane Andrew in August 1992.
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