TALLAHASSEE (CBSMiami) – Citizens Property Insurance Corporation took a first step Monday to move thousands of coastal hurricane insurance policies to a private insurer.
The plan will eventually lead to Weston Insurance Company taking over wind-only policies from Citizens, including removal of policies for condominium buildings in coastal areas, according to the News Service of Florida.
Citizens currently has more than a million policies on the books and since Governor Rick Scott took over has been moving to depopulate, or get rid of, as many policies as possible to reduce the overall risk to the company.
The Citizens board Monday approved a key first step in the Weston plan. That step, which Citizens officials described as a “bridge,” involves Citizens paying premiums to Weston for reinsurance coverage through May 31. During that period, Weston will provide coverage for claims stemming from the wind-only policies that it is taking out of Citizens.
The arrangement will allow Weston to build up premiums in advance of hurricane season, while Citizens will reduce its exposure to wind damage through May 31 because Weston will provide reinsurance. After the transition period, Weston will provide coverage for the policies.
According to the NSF, Citizens expected Weston to assume 23,000 wind-only homeowners’ policies, 3,000 condo-complex policies, and 5,000 commercial non-residential policies, all of which are in coastal areas.
In exchange for receiving the policies, Weston would maintain the policies for at least three years and continue with current premium increase limits, which are set at a maximum of 10 percent a year. The NSF didn’t say what happens after the three year window expires when it comes to rate increases.
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