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Takeouts Continue To Shift Citizens Insurance Policies

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Citizens Property Insurance

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TALLAHASSEE (CBSMiam/NSF) –As Citizen’s Property Insurance Corp customers continue to be shifted into the private insurance market, the company is slowly reaching their 1 million policy mark.

The Florida Office of Insurance Regulation has approved up to 151,249 more homeowner policies to be taken out of Citizens in February in a process known as “depopulation.” Meanwhile, officials at Citizens wait to find out how many of the 160,683 policyholders who were shifted to private carriers last month remain with their new coverage providers.

“The ultimate goal of depop is to return Citizens to a residual carrier, meaning that policies that can be taken over by private carriers are transferred to the private market,” Citizens spokesman Michael Peltier said in an email.

Citizens hasn’t been under 1 million policies since mid-2006.

The target for Citizens is to be around 800,000 policies, which would again make it the insurer of last resort for Florida’s most difficult-to-insure properties —- older properties, mobile homes and properties in coastal regions.

“Following the recent rate approval, we are recalculating that figure and it could drop further,” Peltier added.

Sam Miller, executive vice president of the Florida Insurance Council, put the desired number of Citizens’ policies between 500,000 and 600,000, but added that while Citizens remains “too large” . . . “at least we have stopped the bleeding.”

Miller, in an email, said for now the continued decline for Citizens is an indication the private market is growing. Critics of Citizens have long pointed to the potential of requiring property owners throughout the state to pick up part of the tab if Citizens cannot cover all of the costs after a devastating hurricane.

“It means the extent of statewide assessments from Citizens following a major hurricane is being reduced, which is a positive for everyone with a property and casualty insurance policy,” Miller said.

Preliminary figures as of Nov. 29 show Citizens total policy count at 1,062,817. As of Oct. 31, there were 1,223,009 policies, according to Citizens’ website.

The number of policies that actually move to private hands in the February takeout won’t reach the approved numbers by OIR. Past takeout efforts have shown that private companies cherry-pick the least risky policies and that companies often go after many of the same policies.

The number of policies that were moved into the private market last month had initially been projected to be as high as 390,897. After private companies made their requests for individual policies, a pre-set computer algorithm divided up the overlapping policies, which lowered the number of policies that faced a shift to 205,736.

From there, individual policyholders were given their first option to go to the private carriers or to return to Citizens.

The private companies were required to provide numbers Thursday on how many policyholders wanted to remain in private hands or return to Citizens. However, a final tally isn’t expected to be known for several days, Peltier said.

For the February takeout, 51,249 personal line accounts were approved for First Community Insurance Co., and 40,000 personal line accounts for SafePoint Insurance Company.

Elements Property Insurance Co. and Heritage Property Casualty Insurance Co. have each been approved for up to 20,000 accounts, both personal lines and coastal accounts.

Separately, an additional 53,092 policies are in line to be shifted out of Citizens in January.

None of the recent takeout efforts has required the “unique” package offered earlier in the year in which Heritage Property was offered up to $52 million to take out as many as 60,000 policies.

The Heritage deal came under fire after media reports pointed out that the company contributed $100,000 on March 5 and $10,000 on March 18 to “Let’s Get to Work,” a Tallahassee-based political committee backing Gov. Rick Scott’s 2014 re-election effort.

Citizens officials have defended the deal, noting that usually takeouts occur in November and December. But because the Heritage deal came closer to the June 1 start of hurricane season, the financial package was included and Citizens board approval was required.

The money was intended to provide coverage for the private company as it had not been able to build reserves through months of premiums collected on the policies.

In the end, Heritage ultimately assumed 39,656 policies, for which Citizens paid $33.1 million.

Claims from those policies have required $2.4 million in payments from Heritage to policy holders.

The need for private firms to engage in such mass depopulation efforts is expected to wane next year as a legislatively approved clearinghouse for policies begins.

Through the clearinghouse, all new applicants will be shopped to private firms. If coverage is found within 15 percent of Citizens’ premium, the policy would go to the private carrier. For Citizens customers, renewals will have to go the private market if comparable coverage is found at or below the state-backed insurer’s rates.

“I think it’s safe to assume that once the clearinghouse is in full swing, traditional depopulation efforts will diminish,” Peltier said.

“The News Service of Florida’s Jim Turner contributed to this report.”

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