Citizens is expected to drop tens of thousands of policyholders into the state’s private market.
The largest insurance company in Florida is its state-run Citizens insurance, and that insurer has become massively bloated with policies over the last couple of years due to the ongoing crisis in the state.
The insurer is supposed to be the last resort for homeowners seeking coverage in Florida.
That said, after picking up over a million policies since the start of 2022, it is expected to take action to unload at least tens of thousands of those policies into the private market. The purpose of the insurer is to provide coverage for property owners who are unable to obtain their coverage elsewhere. However, that insurance company is now covering 1.3 million customers, which is far more than it was ever intended to serve.
It is now turning to the private market, where some insurers have already stepped forward to take on the coverage that Citizens is seeking to drop. Slide Insurance, for instance, has agreed to take on 25,000 of the policies the insurer of last resort is seeking to unload. Loggerhead will also be taking another 1,000 policies from Citizens.
Governor Ron DeSantis has stated that this is a necessary move for Citizens Insurance company.
According to DeSantis, even if policyholders will be forced to pay more for their coverage, it is a requirement. By last March, on his trip to Fort Myers, DeSantis was already warning that Citizens hadn’t been solvent.
“If you did have a major, major hurricane hit with a lot of Citizens property holders it would not have enough to pay out,” DeSantis explained.
A Slide consent order has shown that Citizens’ intentions are to cast off a total of about 26,000. This is not the first time the insurer has made a similar move, as their goal is typically to continue to carry as few policies as possible. Therefore, it wouldn’t be unheard of for this initial depopulation to be only the first of two or more waves of offloading into the private market.
DeSantis recently signed a new law allowing a private insurance company to charge as much as 20 percent more than Citizens for similar coverage.