Lawmakers have given the state backed insurer the ability to take action to reduce its policyholders.
The state backed homeowners insurance company, Citizens, in Florida, will now be reducing its number of policyholders following the approvals that it has recently received from lawmakers.
Hundreds of thousands of policies will no longer belong to Citizens but will be shifted to the private market.
Certain areas are being affected more heavily than others. Many lawmakers are using this as a kind of pilot program to be able to decide how reforms for the homeowners insurance company will proceed in the future, and how quickly. Moreover, it will help private insurers to be able to take on groups of new policies at a time, instead of an enormous influx all at once.
Some industry observers are concerned that this will make homeowners insurance startups more vulnerable.
Private insurers are starting to become competitive as Citizens changes the way that it operates and reduces the number of people that it will cover. These homeowners insurance companies do include some that were already functioning in Florida, but it is also going to include a growing number of new entrants who have never worked in this state. Some are concerned that a large storm could make those companies even more vulnerable than Citizens had been, which could be very risky for property owners.
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This month, the lawmakers in the state gave their approval for a bill that would give Citizens the opportunity to dump a large chunk of its 1.3 million homeowners insurance policies. This is being accomplished by forcing many of its policyholders to try to shop for cheaper policies that may be available in the state, before they will be allowed to purchase one with the state backed insurer. Governor Rick Scott has this bill on his desk, right now, but has yet to sign it.
The sponsor of the bill, David Simmons (R – Alamonte Springs) has been seeking stronger reforms that have the potential to increase rates for new Citizens policyholders, and decreasing the exposure of the insurer in the case of a catastrophic storm. At the moment, the annual rate increases for existing customers have a 10 percent cap.