In an attempt to address concerns about Florida's Citizens Property Corp. growing too large, up to 110,000 homeowners policies will be removed from the state's insurer of last resort and placed with six private carriers, it was announced.
As of last week, Citizens had written 1.14 million policies, according to Ed Domansky, spokesman for Florida's Office of Insurance Regulation, who was citing the Citizens Web site.
Asked what the current dollar exposure is, he referred questions to Citizens, which did not immediately respond. According to some reports that figure exceeds $430 billion, well above the company's reserves.
As of June 30, he added, Citizens' market share based on homeowners policies in force was 19.1 percent. Minus the 110,000 policies, the number would drop to 17.2 percent. State Farm, as of June 30, is the next largest carrier in the state at 16.1 percent with respect to market share, Mr. Domansky said, and from there the percentages drop to single digits.
Mr. Domansky noted there has been debate in Florida regarding how much risk Citizens can take on.
In a statement, Insurance Commissioner Kevin McCarty said, "We have heard a lot of concerns about Citizens growing too large. To address that issue, the office is working with [certain approved insurance companies] to help facilitate the reduction of policies in Citizens. I am pleased to see so many Citizens policies being moved into the private market."
The latest removals scheduled to begin today could increase the total number of policies moved out of Citizens to over 400,000 this year, the office said.
The office said it approves insurance companies to take on Citizens polices after "demonstrating that they have the financial capacity to absorb the number of policies requested."
The companies include American Integrity Insurance Co. of Florida, approved to remove up to 75,000 policies total; Florida Peninsula Insurance Co., approved to remove up to 80,000 policies total; HomeWise Preferred Insurance Co., approved to remove up to 95,000 policies total; Southern Oak Insurance Co., approved to remove up to 75,000 policies total; Northern Capital Insurance Co., approved to remove up to 20,000 policies total; and Magnolia Insurance Co., approved to remove up to 120,000 policies total.
Citizens' policyholders have the right to refuse a take-out offer, the office noted, adding that many of the last 300,000 policyholders this year have agreed to be removed to the private sector.
Mr. Domansky said there is no specific target set by the office or the Legislature regarding how many policies should be moved from Citizens to ease concerns about it growing too large.
"It's required by statute that depopulation occur, that policies be removed [from Citizens]," Mr. Domansky said. "So the idea behind seeing new companies come in is to hopefully give consumers in Florida more options, more choices for their property insurance and to give them a chance to shop around and find insurance with a carrier other than Citizens."
A benefit of going with a carrier other than Citizens, Mr. Domansky noted, is the homeowner is not subject to the first 15 percent of any assessment that could be levied if there is a storm that would require an assessment.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.