Citizens on rise among insurers

Claims abuses push some to former choice of last resort

State-owned Citizens Property Insurance Corp., the so-called “insurer of last resort,” is poised to again become the first choice for many homeowners in Broward and Miami-Dade counties.

But this isn’t like 2012, when the company was bursting at the seams with nearly 1.5 million policies that were unwanted or abandoned by hurricane-weary private-market insurers.

This time, private-market companies say escalating costs from claims abuses and excessive lawsuits in the region are causing them to sharply reduce the number of homes they are willing to insure in Broward and Miami-Dade.

At Keyes Insurance in Miami, company president Ryan Papy said 100 new policies have been written with Citizens so far in March — a sharp increase. “Last July, out of 284 policies we wrote, just six were with Citizens,” he said.

Papy said more Broward and Miami-Dade customers have no choice but to use Citizens because private-market options are dwindling rapidly compared with just a few months ago. Traditionally, when Keyes solicits competitive bids for new customers, it gets offers from six to seven insurers, he

said. “Now [price quotes from private insurers] are much higher, and there are only two to three insurers bidding,” he said.

Palm Beach County— though lumped by association into conversations by insurers about abuses in the “tricounty” area — was the source of just 5 percent of suits filed against Citizens over residential claims in the first seven months of 2017, the company reported in September. Sixty-four percent came from MiamiDade and 24 percent came from Broward. All counties outside the tricounty region accounted for the other 7 percent.

Private-market insurers aren’t afraid to insure homes in Palm Beach County, said Steve Schleifer, owner of Atlantic Insurance Agency in Delray Beach.

“In Palm Beach, I rarely have to place anyone with Citizens,” he said.

Citizens CEO Barry Gilway has been warning since early 2017 that South Florida homeowners would begin to “repopulate” the company if the state Legislature failed to pass reforms to quell excessive claims and litigation by water damage restoration contractors armed with “assignments of benefits.” But for five years, including the current one, bills have died amid stalemates between legislators representing insurers or trial attorneys.

Insurers still willing to cover older homes in Miami-Dade and Broward want so much money that clients have little choice but to go with Citizens, Papy said.

Papy produced examples of recent comparison quotes solicited by his company on behalf of clients. For all three, only two companies responded with price quotes for a year of coverage: Fort Lauderdalebased Universal Property & Casualty, which replaced Citizens in 2016 as the state’s largest insurer, and Citizens.

Responding to a March 20 solicitation to cover a $250,000 home in Pembroke Pines built in 1994, Universal asked for $4,003, while Citizens requested $3,073. For a $460,000 home in Plantation built in 1978, Universal wanted $7,710, while Citizens quoted $5,461. To insure a Pembroke Pines house built in 1982 and valued at $260,000, Universal sought $3,803, while Citizens proposed $2,059.

While Citizens’ prices might be lower than other insurers, its customers could get hit with a special assessment if the company’s surplus is depleted following a devastating hurricane or series of storms. And it doesn’t offer some coverage available from private-market insurers.

One reason Citizens can offer lower prices is the company is barred by state law from seeking rate increases of more than 10 percent a year. Private-market insurers, meanwhile, face no such restriction and several with large market share in South Florida — including Heritage Property & Casualty, People’s Trust, SafePoint and Universal — all raised rates 9.9 percent or more for most of their tricounty customers last year.

They have also taken steps to reduce their exposure in the region, by canceling or declining to renew existing policies and by choosing not to write new policies for homes in territories deemed at high risk for claims fraud.

Of the 10 companies that insured the largest numbers of personal residential home and condo-owner multi-peril policies in Broward and Miami-Dade counties at the end of 2016, seven had fewer policies in the two counties a year later, according to market share data maintained by the state Office of Insurance Regulation.

Those seven insurers were Heritage (9,683 fewer policies), People’s Trust (12,551 fewer), Federated National (891 fewer), Homeowners Choice (3,440 fewer), Florida Peninsula (4,208 fewer), United Property & Casualty (4,761 fewer), and Florida Family (2,143 fewer).

Picking up the slack were Universal, with 24,521 more policies, and Citizens, with 5,295 more.

Citizens spokesman Michael Peltier said the company does not yet have a county-level breakdown of new policies added through mid-March.

But South Florida agents are telling the company that they are writing more policies with Citizens, Peltier said, and those will be evident in market-share reports over the next few months.

Dulce Suarez-Resnick, vice president of sales and marketing for NCF Insurance Associates in Miami, said homeowners with the fewest insurance options in Miami-Dade and Broward are those with older homes, and homes without updated roofs, impact windows or hurricane shutters.

In addition, homeowners with a claims history not resulting from hurricane damage will face challenges finding insurance outside of Citizens, Suarez-Resnick said.

Heritage recently told state insurance regulators that it has flagged 1,369 former Citizens home- and condo-owner policies with two or more claims to “review and potentially nonrenew” over the next year.

As for homeowners looking for new policies, “if they have any claims, they go to Citizens,” Suarez-Resnick said.