In an effort to reduce its number of policyholders by over 675,000, Citizens Property Insurance is sending its rates skywards.
In an effort to take up to 678,000 policyholders out of its state-run coverage program and resume its position as a last resort carrier, Citizens Property Insurance has been rapidly raising its Florida homeowners insurance rates while decreasing the coverage it provides.
Citizens is justifying its dramatic “depopulation” strategy by saying it will prevent financial ruin in the state.
The insurer used its revised budget proposal to unveil both the plan and to explain that all it would take would be a major hurricane to cause the entire state to financially fall to its knees. Christine Ashburn, a spokesperson for the company, released an email that said that “Citizens has the ability to levy assessments (hurricane taxes) on almost all Florida policyholders in the event of a deficit after a storm.”
Ashburn went on to say that the goal over the long term will be to maintain the effort to bring the policies back into the private marketplace, which would be the way in which the assessment dependency can be reduced.
However, some residents of the state have already been affected by the first wave of increases to the Florida homeowners insurance premiums.
A widespread Citizens re-inspection program sent the company’s inspectors to approximately 158,000 different buildings throughout the last couple of years. The focus of these inspectors was primarily the condition of the windows and roofs. When something was found, the premiums would inevitably rise, at an average of $900.
In 2012, there are 209,000 more inspections scheduled to be performed.
Despite previous efforts to keep its number of policies down, it has swelled from 800,000 policies in 2007, to over 1.4 million in 2012. This most recent depopulation effort will soon hit harder than it ever has before, and will continue over the next 18 months with the goal of decreasing the numbers to 45 percent to 795,308 policies.
As private Florida homeowners insurance companies are still leery of the marketplace in that state, it is still unclear as to where the eliminated policyholders will turn for their coverage.