The state has been scrambling to unload some of the policies currently carried by Citizens.
In the middle of what many people have been calling a coverage crisis, Florida has now approved 6 new home insurance companies in a move to help the insurer of last resort, state-backed Citizens, unload some of its policies.
Citizens has been overloaded with policies, having reached record highs in recent months.
Insurance companies have been failing in the state and have been choosing to withdraw, have been going bankrupt, or have been deciding to stop selling policies to certain regions or throughout the entire state. Florida’s recent and worsening history with hurricanes has played a substantial role in this trend.
Climate change has increased both the frequency and severity of tropical storms and hurricanes that have been affecting the state. This is increasing the cost of doing business in the state for insurers. Moreover, while the number of claims has been increasing, so has their cost, as inflation has sent the price tag associated with repairs and replacements skyward.
As insurers leave, property owners have been turning to Citizens to the point that the insurer now covers 1.4 million policies, many of which it is now seeking to unload into the private market.
This combination of factors has made the state highly unappealing to many insurance companies.
That said, Florida Insurance Commissioner Michael Yaworsky has now signed six orders within the last few days to approve new insurers’ entry into the state. This has opened about 153,000 policies from Citizens for assumption offers.
This will be added to about 300,000 Citizens’ policyholders that have already received such letters intended to switch them away from the state-run insurer of last resort to a designated private insurer instead.
Policyholders are given the option not to accept the switch to the new insurer if the offer made means that they will pay over 20 percent more in premiums than they would have with Citizens.
The new insurance companies that will be selling property policies in Florida are Edison Insurance, TypTap Insurance, Florida Peninsula, Safepoint Insurance, Slide Insurance, and American Traditions. Each of those insurers will begin on December 15.
