CEO: Florida homeowners insurer Citizens seeing price pressure ease
State’s insurer of last resort, Citizens, successful in reducing its exposure, CEO Tim Cerio says
- Citizens Property Insurance Corp. saw a record-breaking decrease in policies, indicating a potential recovery in Florida’s private insurance market.
- Some lawmakers argue that shrinking Citizens might not be the best measure of a healthy insurance market.
Last year was a record-breaking year for shrinking the size of Florida’s insurer of last resort, according to a report that Citizens Property Insurance Corp. committee heard Wednesday, Feb. 26. And that’s great news, they were told.
Created in 2002, Citizens is not a business the state hopes to grow. In fact, decreasing the number of policies the state-backed insurer carries has long been a goal in order to reduce the state’s exposure to losses in a disaster. That’s because too many claims could cost every kind of insurance policyholder.
Citizens can levy a surcharge on every insurance policy in the state if the catastrophic claims of Citizens’ policyholders deplete the nonprofit’s reserves too far, as happened after the 2004-2005 hurricane season when a series of the storms hit the state. Wednesday, though, the Market Accountability Advisory Committee heard that the possibility of that reoccurring is dwindling: 2024 was a banner year for moving Citizens’ policyholders to the private market so they can be insured by private companies.
“Historically, we have never depopulated so many policies in such a short amount of time, which is further validating the many positive developments we are seeing take place in the Florida property insurance market,” said Jeremy Pope, chief administrative officer for Citizens.
Citizens insures the most property of any insurance company in the state and was started as part of reforms instituted as the state’s insurance market absorbed the devastation of Hurricane Andrew in 1992.
An ailing market, getting healthier?
The number of Citizens policyholders is closely watched because demand for its policies also indicates how much liability the state’s private insurers are willing to take on, given the state’s vulnerability to devastating storms. The number of policies on Citizens’ books hit an 11-year high in September 2023 when several insurance companies stopped insuring properties in Florida or became insolvent.
The state Legislature passed new laws from 2019 to 2023 to shore up the wobbly insurance market. And private insurers are responding, Citizens’ executives told the committee.
After that high of 1.4 million policies in force in 2023, last year ended with slightly more than 936,000 policies underwritten by Citizens. That’s about 24% fewer policies than Citizens had at the end of 2023.
“We had 16 carriers that participated in our depop (depopulation) program last year, and that includes five new entrants to the Florida market, which is great news,” Pope said.
Not everyone agrees, however, that less Citizens’ business is better overall.
State Rep. Hillary Cassel, R-Hollywood, has proposed expanding Citizens to every homeowner who wants it, not just those who can’t get property insurance anywhere else. It would make it so the liability is more evenly spread throughout the state. The bill has been assigned to committees but has yet to get a hearing.
State Rep. Kelly Skidmore, D-Boca Raton, who represents Palm Beach County, said fewer Citizens’ policies might be an outdated metric for assessing the insurance industry’s health in Florida. She pointed to a recent report in the Tampa Bay Times that showed private insurance companies have been siphoning profits to subsidiary companies as they’ve claimed losses due to catastrophic storms, hurricanes Irma and Michael.
“It may have been a laudable goal at one time to keep Citizens low in policyholders, but I don’t think that that is what the goal should be anymore,” Skidmore said. “I really think the goal should be that there is transparency and accountability on the part of everyone that is in this process.”
The number of Citizens’ policies ticked up slightly in January as the market continued to digest the results of last year’s active hurricane season, which saw hurricanes Debby, Helene and Milton hit the state, Citizens’ numbers show.
Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com.Help support our journalism. Subscribe today.