Florida’s Citizens Property Insurance may be heading toward privatization. The state-run program is considered the last resort for affordable insurance coverage in the state, offering policies that other insurers shy away from at lower rates. Jim Malone, CEO of the state sponsored company, has been considering the idea for some time and has recently proposed the idea to legislators. If the program is to become privatized, the effort would take well over a year, during which time the company will no longer be able to take on additional clients.
Malone says that the move toward a privatized system would help save the state money. Despite the programs function as a safety net of sorts, there is no denying the allure of its lower-than-market rates. More home owners are being attracted to the program, thus increasing its exposure. With more policyholders being added, the state is now wracked with a significant financial commitment.
Florida is unique in the property insurance market as no other state as the same exposure to loss. This exposure has made many insurers uneasy about doing business in the area, particularly due to the high frequency in which hurricanes make landfall in the southern regions. Because of this, Citizens has seen tremendous growth, adding more than 5,000 new clients every week to the program. It is now the largest insurance program in the state.