The market share for Florida domestic homeowners insurers could reach 50 percent in the state by year's end, according to the Florida Insurance Council, citing Office of Insurance Regulation (OIR) statistics.
A number of factors, including new startup companies in the state, and an effort by the state to depopulate Citizens, the state-sponsored insurer of last resort, has helped lead to an increase in the homeowners market share for these domestic companies, according to Ed Domansky, OIR spokesman.
Since 2006, Mr. Domansky said, the OIR has licensed 24 domestics to write personal residential property insurance. Of those companies, he said eight are, or have been, approved as "take-out companies," making them eligible to write business that is depopulated from Citizens.
The Florida Insurance Council said the domestic market share nearly doubled to 44 percent between the year 2005 and the end of 2007. The council added that many of the start-ups have also taken advantage of a Capital Build-Up Incentive Program established by the 2006 Florida Legislature, while others have brought in millions of dollars of new investment from areas outside of the state.
Gary Landry, spokesman for the Florida Insurance Council, spoke to the increasing market share among domestics amid concerns that 2007 legislation would make Citizens too competitive.
He said despite the changes that made the insurer of last resort more competitive, the high number of new domestic insurers, combined with the capital incentive program, has allowed these companies to each take small slices of business from Citizens.
The new domestics have also written business because "big name" insurers have "dramatically downsized their exposure in Florida over recent years," Mr. Domansky said.
Mr. Landry, when asked if the higher market share among domestics might spur some big companies to return to the market, said those companies are challenged in the state because the OIR has not allowed a rate increase in a few years.
Until that rate situation changes, he said, the larger insurers cannot take on new business. Mr. Landry said companies should be allowed to buy reinsurance they feel is adequate, and factor that into the premiums they charge. If that happens, Mr. Landry said bigger companies may be inclined to compete more in the state.
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