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TALLAHASSEE (CBSMiami/NSF) – As regulators approved another round of policy “takeouts” from Citizens Property Insurance Corp. on Friday, the state-backed insurer says it can get smaller than previously thought.
The Florida Office of Insurance Regulation announced it approved up to 93,500 policies that can be acquired, or taken out, by four private-insurers in March.
The announcement came two days after Citizens President and CEO Barry Gilway told lawmakers he has revised a prior projection about how many policies will remain with Citizens in the future because they are uninsurable in the private market. The earlier projection put the number at 650,000 polices, but he said it is now down to 525,000 to 550,000.
“The appetite for Florida domestic (insurance) companies has increased dramatically,” Gilway told the House Insurance & Banking Subcommittee. “I would have told you a year ago that nobody was going to write a mobile home in Florida that was produced in 1994 and prior. Yet we now have a company in Florida, Mount Beacon, that’s basically focused on mobile homes in Florida that were built in 1994 and prior.”
Citizens currently handles about 661,000 policies, down from 1.47 million two years ago, Gilway said.
More important, Gilway said, the potential financial exposure for Citizens from a disaster has gone down from more than $510 billion to nearly $200 billion. State leaders have pushed for years to reduce the size of Citizens because of worries about the financial risks.
The appetite of private companies to insure Florida properties has grown as the state has gone through its ninth consecutive year without a hurricane making landfall. Gilway hedged his projection on the number of Citizens policies because of uncertainty about whether the trend will continue of hurricanes missing Florida.
Mount Beacon Insurance was among the four companies approved for the March takeout, with the potential to acquire up to 35,000 single-family home policies.
Anchor Property & Casualty can grab up to 28,000 single-family home policies in March, and Heritage Property & Casualty can acquire up to 20,000 single-family home policies and 500 commercial-residential policies. Southern Oak Insurance was approved for up to 10,000 single-family home policies.
The overall number of policies eventually shifted through the “takeout” process is not expected to reach the approved maximum, as private companies cherry-pick the least-risky policies and often go after many of the same customers. Citizens customers can also opt to remain with the state-backed insurer.
For 2014, regulators approved 1.1 million policies for private “takeout,” yet as of Dec. 19, the number moved out of Citizens stood at 416,623.
A big part of Citizens’ policy decrease has been the introduction last year of a legislatively approved electronic clearinghouse, which compares new and returning residential policies. When coverage by a private firm is found within 15 percent of Citizens’ premium for a new single-family policy, the policy goes to the private carrier.
This report is by Jim Turner with The News Service of Florida.
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