Citizens Property Insurance causes shift in homeowners insurance market
Florida’s Citizens Property Insurance has been facing serious financial problems that have also attracted a great deal of criticism to the state-run organization. Florida lawmakers have been pressuring the insurer to resolve many of its own issues, which has lead to a shift in the state’s homeowners insurance market as the insurer sheds policies and these policies are taken up by private homeowners insurance companies. Now, Citizens making a move to increase its hurricane coverage this year in the hopes of protecting itself from future catastrophes and generating more revenue.
Citizens offering new catastrophe bond
Citizens Property Insurance has announced that it will be selling $250 million in catastrophe bonds this year, which will raise its hurricane protection coverage to $1.75 billion for 2013. In 2012, the state-run insurer sold a $750 catastrophe bond, saying that this move was significantly more financially viable than purchasing traditional reinsurance to cover the state’s hurricane risk. The catastrophe bond will help the insurer offset some of the risks it sees to the capital market, which will help free up some funds that can be used to address some of the insurers other issues.
Florida market seeing major changes
Florida’s homeowners insurance market continues to go through a state of evolution as Citizens works to address its monumental financial issues. The insurer accounts for the majority of homeowners insurance policies in the state and offers coverage at rates lower than those coming from private companies. Due to the severe natural disasters that have struck the state in recent years, the insurer has been struggling to overcome the financial damage that these disasters have caused. The company’s financial problems often threaten to put a halt on claims payments in the wake of powerful hurricanes and other such events.
Investors show strong interest in catastrophe bond
Investors have been eagerly awaiting for Citizens Property Insurance to return to the catastrophe bond market. Though the state-run company’s new bond offering is significantly lower that what it had offered last year, investors are still expected to show a great deal of interest in the bond. Increasing its hurricane protection is another step in the company’s plans to solve many of the problems that it has been suffering from for several years.