TALLAHASSEE — With private insurers dropping customers and raising rates, the state-backed Citizens Property Insurance Corp. saw its number of policies increase about 50 percent in 2022.
Citizens had 1,145,178 policies as of Dec. 30, up from 759,305 at the end of 2021, according to numbers posted Tuesday on the Citizens website. Citizens also added about 19,000 policies in December.
Citizens was created as an insurer of last resort and is something of a measuring stick for the health of the private insurance market. Citizens had 542,739 policies at the end of 2020 — meaning its policy count has more than doubled over the past two years.
During a special legislative session last month, lawmakers passed wide-ranging insurance changes that included trying to reduce litigation and help steer policies out of Citizens into the private market. Citizens President and CEO Barry Gilway has long blamed heavy litigation for many of the industry’s problems.
“This is historic legislation,” Gilway said last week on The Florida Insurance Roundup podcast hosted by insurance lobbyist Lisa Miller. “It’s going to have a huge impact on this marketplace going forward.”
Gilway, who announced after the special session that he plans to retire, said he thinks the legislation will help draw new companies into the market, as they will not be stuck with past losses and will be able to charge actuarially sound rates.
Citizens depopulation possible
He expressed confidence that companies will take policies out of Citizens — though that might not come until late 2023 after the threat of hurricane damage subsides.
“We’re getting calls from investors saying, ‘Hey, is now the time to come in and provide capacity in this overall marketplace?” Gilway said on the podcast.
“And, of course, our attitude is yes. I would expect a significant … attempted depopulation (of Citizens) in the November-December ‘23 time frame. I think that’s probably when we’re going to see the biggest impact of more capacity entering the market. But it’s unlikely they would do it before that simply because they’re not going to come in before the storm season.”
State leaders have long sought to keep policies out of Citizens, at least in part because of the risk that policyholders across the state could get hit with extra costs — known as assessments — if Citizens can’t pay all of its claims after a hurricane or multiple hurricanes.
Along with trying to reduce litigation and taking steps to help insurers obtain critical reinsurance, lawmakers also made changes specifically geared toward Citizens.
As an example, they approved preventing Citizens policyholders from being able to renew coverage if they receive policy offers from private insurers that are within 20 percent of the cost of the Citizens premiums. Citizens often charges lower rates than private insurers, and the change is aimed at pushing more customers into the private market.
But for residents in some areas of the state, Citizens has been virtually the only option for coverage. With those residents paying thousands of dollars a year for policies, the Legislature in the past has constrained the ability of Citizens to raise rates.
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