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'Takeout' Drops Citizens Property to About 1 Million Policies

November 9, 2013 - 6:00pm

The 30-day clock has begun for 160,683 property insurance policyholders to decide if they want to remain with new private carriers or return to the state-backed Citizens Property Insurance Corp.

The number of policies that has been shifted out of Citizens is far fewer than initially anticipated when what is known as a "depopulation" effort began this summer. Still, the depopulation effort is moving Citizens closer to dropping below the 1 million customer mark for the first time since mid-2006.

"We're moving in the right direction, heading back to that carrier of the last resort," Christine Ashburn, Citizens' director of legislative and external affairs, told members of the House Insurance and Banking Subcommittee last Tuesday. "Were really starting to head back to that pre-04,-05 Citizens."

Citizens had 1.22 million policies as of Sept. 30.

The agency expects another 70,000 policies to be shifted to private carriers in December. Also, the state Office of Insurance Regulation in January could approve about 100,000 more policies for further takeout, Ashburn said.

The goal of the depopulation effort, as well as a legislatively approved insurance clearinghouse, is to direct what are expected to be many of the least-risky policies into the private market and to restore for Citizens the status of insurer of last resort. Ashburn said an ideal number of policies for Citizens is around 727,000.

"That would really put us back to older homes, lower value homes, the markets that are more the niche market, mobile homes in Florida," she said.

Still, the effort is going a little slower than anticipated.

The November takeout total of 160,683 policies is far below the 390,897 that had been approved by the Office of Insurance Regulation in August.

The private companies collectively made 328,343 requests for policies, but many of the requests were for the same policies. A pre-set computer algorithm divided up the overlapping policies among the companies, which lowered the number of policies that faced a shift to 205,736.

The companies picking up the most accounts are Heritage Property & Casualty and Homeowners Choice. Both had been approved for up to 50,000 policies. Heritage received 35,737 policies, while Homeowners Choice got 34,872.

"This assumption increases our annualized gross premiums to approximately $400 million," Scott Wallace, president of Homeowners Choice, said in a release. "These policies meet our strict underwriting guidelines and should further strengthen our long-term growth prospects."

Other insurance companies involved in the takeout include Florida Peninsula, Southern Fidelity, Southern Oak, Tower Hill Preferred, Town Hill Prime, Town Hill Signature, United Property & Casualty and Weston.

United Property& Casualty had been approved for up to 100,000 policies, but ended with 18,156.

Not every policyholder who was moved last week or faces the prospect of being shifted as the new year begins is expected to remain with the private carrier.

For those impacted in the current round, customers have 30 days following their policies being acquired to decide if they want to stay with the private carrier or return to Citizens.

Citizens had sent out "encouragement" letters prior to the shift informing them of the move.

Those shifted wont see a change in rates through the term of the current policy, Ashburn said.

Ashburn said no analysis has been done on why nearly 45,000 homeowners have opted out of the takeout in the past month. But she said a number of those homeowners who have already opted out expressed concern that private companies couldn't guarantee rates will be comparable to the Citizens numbers when filed next year.

Homeowners covered by Citizens will see an average rate increase of 6.3 percent in January 2014, down from a 7.9 percent hike requested on the combined personal-lines and coastal accounts.

Multiperil policyholders will get a 4.4 percent increase in January, while homeowners with wind-only policies face an average 10.5 percent hike in February.

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