The Florida Office of Insurance Regulation has announced that Citizens Property Insurance, Florida’s public non-profit insurance company, will be removing a maximum of 91,499 policies from its books, centered around multiple-peril personal residential policies, as well as another 5,732 commercial line policies that the company has, until now, been holding. These policies will be distributed to four of Florida’s private insurers: Heritage Property & Casualty, SafePoint, Tower Hill Preferred, and Weston.
This announcement brings the yearly total of policies being removed to over 466,000, assuming that all policies are removed as intended. However, as noted by the Office of Insurance Regulation, policy holders will not be forced to obtain private coverage if their policy has been approved from removal. However, those who do not change their policies may find themselves subjected to increased assessments that help support the company. Approximately 119,000 policies, or a quarter of those slated for removal, have actually been removed so far this year.
This announcement is part of the state legislature’s ongoing attempt to remove homeowners from public insurance and support them in their efforts to obtain private insurance. Having some policy holders on public insurance would not normally be a problem, but the events of the 2004 and 2005 storm seasons, where record-setting damages forced numerous companies to close their doors, forced numerous insurance companies to either leave the state or shut down entirely because they could not afford to pay the coverage for so many damaged homes.
The solution of Florida’s state legislature was Citizens Property Insurance, which began in 2002 but grew quickly after those storm seasons until it achieved an annual revenue of over $2.75 billion by providing coverage to what was, in effect, the entire customer base of several different insurance companies. Various techniques were used to try and push customers away from CPI once the market settled down, including charging high rates and refusing to offer coverage if private insurers would do so, but the lack of private coverage in many areas meant that Citizens Property Insurance became the only insurer homeowners could access.
The Office of Insurance Regulation is expected to add more policies to the current list of those slated for removal, with the end goal of getting as many policy holders back into the private market as possible.
If you have received a notification, please call your agent at The Marcus Group. We can discuss your options with you.