Florida’s Citizens Property Insurance Corporation says its policy count has dropped below 1 million for the first time since 2006, a development that industry representatives called a step in the right direction for the state’s property market.
Florida Citizens, intended to be the state’s insurer of last resort, grew to become its largest writer of property insurance.
In a statement, Florida Citizens says its policy count stood at 942,321 as of Monday, “a drop of 36% from a high of nearly 1.48 million policies in October 2012,” with its exposure falling to $302 billion from $515 billion in November 2011.
“Recent takeout efforts, legislative initiatives and an improving private market have combined to push Citizens’ exposure to the lowest level in more than seven years, reducing the risk on all Florida policyholders who would be on the hook if Citizens cannot pay claims following a major storm or series of events,” Florida Citizens says.
The statement adds that nearly 500,000 policies have been shifted to the private market over the past few years as a result of depopulation efforts.
“Following eight years with no major storms, Florida’s financially sound private insurance market has begun to rebound as new investors and companies look to expand and increase their footprint in the Florida marketplace,” Florida Citizens adds.
Samuel Miller, executive vice president of the Florida Insurance Council, says, “It is extremely encouraging and a most significant sign the private homeowners insurance market in Florida is stabilizing and growing.”
And there could be more good news to come, he notes. Florida Citizens recently launched a clearinghouse designed to lower its policy count. When homeowners seek coverage with Citizens, a Citizens-appointed agent will enter their information into the clearinghouse, which will seek offers of coverage from private-market companies.
Miller says the under-1-million milestone occurred almost entirely before the clearinghouse got underway late last month. ”We can expect a further decline in the size of Citizens,” he says. “As Citizens returns to its proper, smaller role, it will be stronger financially and the magnitude of statewide assessments after a major hurricane will be less.”
Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America, says in statement, “The sustained reduction of Citizens policies will continue to enhance the Florida insurance market for the benefit of the consumer. While we still have much work ahead of us to improve our market from the failed policies that ballooned Citizens, Florida’s residual market slipping below 1 million policies is proof we are moving in the right direction in protecting Floridians.”
Brown says that, barring a major catastrophe, PCI is “cautiously optimistic” that the clearinghouse as well as other takeout efforts, “will continue to drive down the size of Citizens and reduce the exposure of a potential hurricane tax on Florida’s consumers. We look forward to the day when Citizens is returned to its true purpose as Florida’s insurer of last resort.”