With private insurers retrenching, Citizens property-policy count swells by 50% in 2022
With private insurers dropping customers and raising rates, the statebacked Citizens Property Insurance Corp. saw its number of policies increase by about 50% in 2022.
Citizens had 1.14 million policies as of Dec. 30, up from 759,305 at the end of 2021, according to numbers posted Tuesday on the Citizens website. Citizens also added about 19,000 policies in December.
Citizens was created as an insurer of last resort and is something of a measuring stick for the health of the private insurance market. Citizens had 542,739 policies at the end of 2020 — meaning its policy count has more than doubled over the past two years.
During a special legislative session last month, lawmakers passed changes that included trying to reduce litigation and help steer policies out of Citizens into the private market. Citizens CEO Barry Gilway has long blamed heavy litigation for many of the industry’s problems.
“This is historic legislation,” Gilway said last week on The Florida Insurance Roundup podcast hosted by insurance lobbyist Lisa Miller. “It’s going to have a huge impact on this marketplace going forward.”
Gilway, who announced after the special session that he plans to retire, said he thinks the legislation will help draw new companies into the market because they will not be stuck with past losses and will be able to charge actuarially sound rates. He expressed confidence that companies will take policies out of Citizens — though that might not come until late 2023 after the threat of hurricane damage subsides.
A December report from leading rating agency A.M. Best underscored a key challenge in Florida. The nation’s largest property insurers long ago stopped writing new homeowner policies in most of the state, so Florida insurance officials need to lure them back. Right now, the state is relying on small- and medium-sized private
property insurers that have short track records and often are undercapitalized.
State leaders have long sought to keep policies out of Citizens, at least in part because of the risk that policyholders across the state could get hit with extra costs — known as assessments — if Citizens can’t pay all of its claims after a hurricane or multiple hurricanes.
Along with trying to reduce litigation and taking steps to help insurers
obtain critical reinsurance, lawmakers also made changes specifically geared toward Citizens.
As an example, they approved preventing Citizens policyholders from being able to renew coverage if they receive policy offers from private insurers that are within 20% of the cost of the Citizens premiums. Citizens often charges lower rates than private insurers, and the change is aimed at pushing more customers into the private market.