New Florida Domestic Property Insurer, EPIC, Enters the Market

It’s likely the goal of all property insurers in Florida, but the newest to enter the market hopes to be truly “epic.”

The Florida Office of Insurance Regulation has licensed Elements Property Insurance Co. (EPIC) to write homeowners insurance in Florida—a state always in need of addition capital due to its high risk of hurricanes, alleged fraud, and other perils such as sinkholes.

“I think it’s a good time to start,” says Robert L. Ricker, president of the new insurer. “On a macro level, the real-estate market is rebounding. And rates are going up in the market in rational way. The state has done some good legislative things recently regarding sinkholes and curbing fraud.”

Ricker is no stranger to the Sunshine State. He was president of Florida Citizens Property Insurance Corp., the last-resort insurer, from 2003-2006, which means he lived through the infamous 2004-2005 hurricane seasons—seasons that some would argue led to a predicament in Florida from which it is now recovering.

Private insurers fled or drew back from the coast of Florida due to hurricane risk and a reluctance by legislators and regulators to allow them to charge rates to match that risk. Shortly after Ricker left Citizens, its rates were frozen for several years and the state-backed insurer ballooned to become the largest property insurer in the state—a title Citizens still holds, but one that it is working hard to shed with, among other strategies, a renewed commitment to a depopulation program.

Tallahassee-based EPIC will grow its book of business in this manner. State regulators have approved EPIC to attempt to take out 45,000 policies from Citizens, starting in December, says Ricker.

“I think there are policies to be had; we’ll be careful and selective in the policies we assume,” Ricker says. “But I think there are good risks in there. Our main focus with any risk to insure it for the long term.”

Therein lies the challenge. EPIC won’t be inserting 45,000 policies onto its paper immediately. Citizens policyholders earmarked for removal by EPIC have an option to opt out and remain with Citizens. And even if they chose EPIC they can always wind up back with Citizens—still oftentimes the cheapest option—at renewal.

Ricker says it’s “too early to estimate” how many policies will wind up with his company, but he has the confidence of some major market players—allowing him to raise $26 million in capital and a financial strength rating on A from insurance rating agency Demotech Inc. Ricker says Axis Re and Dowling Capital Partners are investors. For Dowling, it’s the first investment the private equity firm has made in Florida, according to Ricker. Ricker says the level of his investors gave him a “great vote of confidence.”

Ricker says EPIC will roll of a voluntary market program in February, using independent agents he is currently schooling on the new insurer—a process he says is positive.

“You need to get the right business at the right price and we think that’s possible,” Ricker says. “With that you must focus on managing day-to-day claims, and keep reinsurance costs in line.”

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