Citizens Property Insurance Corporation (Citizens) is a not-for-profit, tax-exempt, government entity created by Florida Legislature in August 2002. The mission of Citizens is to provide insurance protection to Florida policyholders who need but are unable to find property insurance in the private market.
After the hurricane seasons of 2004 and 2005 when 8 storms wreaked havoc on Florida, our property insurance market was in a state of turmoil. Many insurance companies were in financial chaos. A few carriers faced bankruptcy, and many of the larger names decided to exit the state or severely limit the amount of polices they wrote in the state.
As a result of the turmoil, many insureds were forced to find coverage with Citizens. Those that were still with private market carriers saw increasing rates. In an effort to reduce the financial burden on Floridians, Governor Charlie Christ passed House Bill 1A on January 25, 2007. The bill shifted the state’s focus away from a rebuilding a competitive private market and instead focused on keeping unsustainably low rates for insurance carriers.
By the end of 2007, Citizens had over 1.5 million policies in force. It soon became evident to Florida Legislature and Citizens that something had to be done to reduce the size of Citizens. The Legislature decided that depopulation was the answer. Depopulation would reduce the number of policies and exposure Citizens was responsible for, and it would encourage new and existing insurance companies to grow their book of business by taking over the risk that Citizens was trying to get off it’s books.
Since our state has not been threatened with a major hurricane since 2005, the depopulation program has hit a major stride. Citizens’ policyholders have been bombarded with multiple takeout letters requiring their signature and return to remain with Citizens. If the forms are not returned by the date listed on the form the policyholder is forced to go with the takeout carrier.
The takeouts have removed over 172 thousand policies from Citizens; however that is only a dent in the 1.3 million plus takeout letters that have been mailed to policyholders. Consumers are worried about the new carrier’s pricing and their financial stability. The takeout carriers’ renewal premium is not known at the time of takeout and in many cases is much more than that of Citizens when the policy renews. Also, there are newer carriers participating in the depopulation program, many of which have never been tested by a Florida hurricane.
And the depopulation is not over yet. Citizens announced the first set of 2016 takeouts on November 9th. Citizens is trying to shed 27,266 personal lines and 3,268 commercial lines policies in this segment of the ongoing depopulation.
We urge you to review all mail that comes in the from the depopulation carriers. If you have any questions about the process or the carriers involved, our agents will be there to help you make an informed decision.