Miami-Dade and Monroe exempted from $700,000 cap

When Citizens was first created in August 2002, there was no eligibility threshold. But critics soon discovered that the company insured more than 5,000 homes valued at over $1 million — most owned by wealthy people who could easily afford to buy private-market coverage. That put nearly all insurance consumers in Florida at risk of assessments to fund rebuilding of mansions if Citizens was unable to pay all claims after a catastrophe.

In 2013, lawmakers and Citizens leaders were looking for ways to reduce Citizens’ alarmingly high policy count, which peaked at nearly 1.5 million in 2012. Along with incentivizing private companies to take over Citizens’ most profitable accounts, reducing the eligibility cap was seen as a way to shed customers more appropriately served by the private market.

The legislature and governor enacted a law establishing a $1 million statewide eligibility cap along with a step-down provision requiring the cap to be reduced by

$100,000 each year until reaching

$700,000 in 2017. But the law gave the Office of Insurance Regulation the authority to keep the cap at $1 million in counties that it determined lack “a reasonable degree of competition.”

In 2014, the office conducted a study comparing the percentage of premium paid to Citizens in each county for homes with replacement values of $900,000 to $1 million. In Monroe, 96.8% went to Citizens. In Miami-Dade, it was 62.5%. No other county had a higher rate than 47.2%.

The office also used the Herfindahl-Hirschman Index, which it called a commonly accepted measure of market competitition. It, too, showed that Miami-Dade and Monroe were highly concentrated markets.

Alan Edwards, owner of Daviebased

Alan Edwards Insurance Agency, said one of his clients became ineligible for Citizens after the company increased the replacement value of his 3,800 squarefoot Broward County home from $621,000 in 2021 to $712,000 this year — a $91,000 increase. The client, who owns a small plumbing business, had to pay more money for lower levels of coverage from a surplus lines carrier, Edwards said.

“Is 3,800 square feet really, really rich people?” Edwards said. “You don’t want to subsidize really rich people [with state-backed insurance], but you don’t want to harm the upper middle class.”