By Giulia Carbonaro US News Reporter
Florida’s state-backed Citizens Property Insurance Corp. will be transferring about 76,000 policies to several private insurers this month, the company recently announced—offering a rare glimmer of hope for the crisis-stricken insurance sector in the Sunshine State.
The company’s Chief Executive Officer and President Tim Cerio told the House Insurance & Banking Subcommittee last week that Citizens will transfer 338,000 policies over the course of 2024, as fears over a possible insolvency of the state-backed insurer have grown as it picked up more customers in the past year.
Citizens, considered an insurer of last resort for Floridians who cannot convince a private company to cover their properties, has grown massively in recent years as home insurance premiums skyrocketed in the state.
Florida residents now pay the highest premiums in the entire country, due to a combination of increased risk caused by climate change and excessive litigation which have also led several major private insurers to leave the state. According to data from the Insurance Information Institute (Triple I), the average insurance premium for Florida homeowners in 2023 was $6,000 per year, a 42 percent increase compared to 2022.
The exodus of private insurers left many Floridians scrambling for options, with some being unable to afford higher premiums and deciding to “go bare,” without coverage, and many going to knock on Citizens’ doors.
In late January 2020, the state-backed insurer counted a total of 443,229 policies in force. By the same time in 2021 they had risen to 554,537, while in late January 2022, they were 776,790, and a year later, in 2023, they were a total of 1,167,579. By December 31, 2023, Citizens had 1,228,718 policies in force in Florida. Citizens currently holds around 18 percent of Florida’s insurance market.
The explosive growth of the not-for-profit insurer has raised concerns among observers. In November, the U.S. Senate Budget Committee announced the launch of an investigation into whether Citizens had enough funds to meet a potential increase in damage claims linked to future extreme weather events.
The concern was that an insolvent Citizens might cause millions of Florida policyholders to pay more, even if they’re covered by other private companies—something that is permitted under state law.
“We expect to see more Citizens’ policies transfer to private insurers in 2024 as the Florida property insurance market continues to improve, allowing Citizens to return to its role as the state’s insurer of last resort,” Michael Peltier, a spokesman for Citizens, told Newsweek.
“Reducing the size of Citizens lowers the risk of assessments on Florida insurance consumers—most of whom are not Citizens policyholders and already pay higher premiums,” he said.
In an attempt to depopulate Citizens, the state recently vetted and cleared six new private insurers whose agents will begin writing new home policies in the first quarter of the year, according to Triple I’s spokesperson Mark Friedlander.
“New insurers will provide more opportunities for consumers to shop their home insurance coverage, which should generate more competitive pricing and choice, something most Florida homeowners have not experienced in many years.”
He added that “combined with the successful depopulation of the state-backed Citizens Property Insurance Corp., new insurers wanting to write home policies in Florida is a positive sign that the market is heading in the right direction.”