Florida’s latest insurer has surpassed 1 million policies for the first time since 2013. And, with the state of the private insurance market still in turmoil, there’s no sign of that upward trend it’s slowing down.
Citizens Property Insurance Corp. reached the milestone earlier this month, and as of August 12, it stands at 1,005,000 policies. The state-supported governmental entity was created two decades ago by Florida Legislature to provide coverage for property owners who cannot find insurance in the private market.
“When the market is healthy, Citizens becomes smaller as private companies take advantage of good market conditions,” said Citizens spokesman Michael Peltier. “When the market is in challenging times, we grow.”
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In Palm Beach County, the state’s third most populous county, there are more than 105,000 non-commercial citizen policies. Since Thursday August. 18, a nearly 60% increase from July 31 last year, according to a Citizens spokesman.
Industry experts continue to blame litigation and fraudulent roofing claims for the said crisis. Five insurers have gone bankrupt so far this year, pushing customers into a depleted market or sending them to Citizens.
In good weather, with no impending natural disaster, Citizens customers and the market as a whole “shouldn’t really notice” how many policies there are, Peltier said.
“We’re built to be able to handle policies, whether we have 500,000 policies or a million and a half,” he said.
But that picture changes when a storm hits. If a hurricane or two hits Florida and causes property damage to the vast majority of citizens’ policies, it could leave the insurance provider unable to pay the claims and leave the rest of Floridians footing the bill, even if they don’t have a policy with citizens.
With so many policyholders, Citizens has a risk exposure of $346 billion but the ability to pay $13.4 billion in claims, said Mark Friedlander, spokesman for the industry-backed Insurance Information Institute. While there are support tools available to help pay property owner claims, Citizens can place assessments on its customers, or even extend them to other Floridian home, auto and renters insurance policies in its portfolio. its general.
This happened after the state was hit by eight hurricanes during the 2004 and 2005 seasons.
Referred to as the “hurricane tax,” a 1% assessment was levied against homeowner’s and auto insurance policies in 2007 to replenish Florida’s Hurricane Catastrophe Fund coffers. This estimate then increased to 1.3% four years later. The assessment was completed in 2014, more than a year ahead of schedule, raising between $350 million and $500 million annually.
“This is a situation we would like to avoid,” Peltier said.
That time period, between 2007 and 2013, was the last time Citizens supported more than 1 million policies, with the peak reaching 1.5 million in 2012.
But this time, it’s not nature causing trouble in the market.
“What we’re facing right now is a man-made crisis,” Friedlander said. “That’s what makes Florida’s crisis so unique.”
Peltier noted that the measures passed during a special legislative session this summer it will “take some time to bear fruit.”
At the rate Citizens is growing, however, the insurance provider could reach 1.2 million policies by the end of the year and could reach a record number of policies this time next year, Friedlander added.
Citizens’ fees are also increasing starting from October 1
Insurance regulators approved rate hikes for citizens’ policies earlier this summer. Citizens required by all increases near the maximum allowed at 11%, but the most common type of insurance, known as high-risk homeowners, will increase by 6.4%.
Rates for home insurance will increase after October 1 and commercial policies will increase on November 1. The increases will take effect upon renewal.
For any homeowner worried that their insurance company could be next on the chopping block, don’t panic, Friedlander said. Instead, he noted, make sure you keep your coverage and make sure you’re fully covered.
This is probably not the best time to shop for a new insurance provider if you don’t need to, Friedlander said.
“It’s very difficult to move your coverage now. It’s possible, but it’s very challenging,” he said. At the very least, have a chat with your agent, he added.
As you do so, make sure your coverage is adequate to pay for the increased costs due to inflation, he said.
“Florida remains the most volatile home insurance market in the country,” he said. Until the market stabilizes and until private insurers say that this is a market where they want to write risk, we will continue to see the majority of new policies written by citizens.
Hannah Morse covers consumer affairs for The Palm Beach Post. Drop a line at [email protected], call 561-820-4833 or follow him on Twitter @mannahhorse.