Florida property insurance market is
‘unhealthy,’ Citizens chief warns
Article Courtesy of News Service of Florida
By Jim Turner
September 27, 2020
TALLAHASSEE — Homeowners are again starting to flock
to the state-backed property insurer of last resort as the private
market becomes economically stressed, the president of Citizens Property
Insurance Corp. warned Wednesday.
Citizens President and CEO Barry Gilway
pointed to an “unhealthy” private market that is leading to
increased policies at Citizens, with the problems due
primarily to litigation and rises in costs of reinsurance,
which insurance companies buy to help cover losses.
“The growth is becoming extraordinary,” Gilway said during
an online meeting of the Citizens Board of Governors. “And
you can gloss over these numbers, but the impact they have
on the overall operations is significant.”
After peaking near 1.5 million policies in 2012, Citizens
has spent years trying to shed policies and move them into
the private market. A healthy number for Citizens is
considered around 420,000 policies, or roughly the amount it
had in 2019.
But Gilway said Citizens likely will be
above 540,000 policies by the end of this year, moving from
4% of the market to 5%. In South Florida, Citizens will
account for about 17% of the market.
Barry Gilway, CEO of Citizens Insurance.
With a number of major companies scaling back coverage in South Florida
or deciding they won’t cover homes older than 10 years, the forecast has
Citizens growing to 625,000 policies next year, or 6% of the market,
Citizens is back above 500,000 policies for the first time since 2015.
Citizens stood at 499,056 policies as of Aug. 31, and Gilway said the
company has been netting 2,500 to 3,000 new policies a week.
“This is exacerbated because nobody’s leaving (Citizens), because
there’s no capacity in the overall marketplace,” Gilway said.
Citizens' rate proposals for 2021 are expected to be released before a
December Board of Governors meeting.
Citizens is also expected by the December meeting to receive a study
from Florida State University’s Florida Catastrophic Storm Risk
Management Center that is looking at steps to further reduce exposure
and actions the Legislature can take to slow the movement of policies
from private insurers to Citizens.
While Citizens has a 10% cap on annual rate increases, excluding
coverage changes and surcharges, private companies have been seeking
rate increases of 12% to 30%.
The Florida Office of Insurance Regulation held a public hearing Tuesday
on a proposal by First Community Insurance Co. to raise rates by an
average of 24.5%.
Last year, the Citizens board approved a statewide average increase of
8.2% for homeowners, condominium owners and renters.