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As property insurance rates skyrocket, Florida’s ‘insurer of last resort’ seeks to become less attractive

By on September 28, 2021 0

With hurricanes, rising sea levels and litigation driving property insurance rates in Florida soaring, state taxpayers are increasingly at risk as more homeowners sign on. to the state subsidized “insurer of last resort”.

When the Legislature convenes its 60-day session in 2022 on Jan. 11, state officials said one of the priorities – in addition to tackling the struggling property insurance market of the Florida – will be making Citizens Property Insurance Corp. less attractive while keeping it strong enough to support those who can’t find home insurance.

Florida has reluctantly engaged in the property insurance industry since the legislature created Citizens in 2002 after corporate insurers such as State Farm, Allstate and Liberty Mutual abandoned the state in due to losses caused by hurricanes, leaving a growing number of the state’s 6.5 million homeowners, including 6.2 million homeowners, unable to find home insurance.

In 2012, the number of citizens’ policies increased to 1.5 million, with the state supporting $ 10 billion in property insurance policies. A “depopulation” initiative to shift policies – and liability – to private insurers reduced the number to 419,475 in October 2019.

But since then, citizen enrollment has increased as the roughly 60 low-funding independent insurers that dominate the state’s market have called for double-digit rate hikes, some as high as 45%, citing reinsurance costs. on the rise, the “creeping loss” from 2017 -18 hurricanes, coastal flooding and excessive litigation.

Citizens predicted earlier this year that there would be 650,000 registered homeowners by December 2021. He increased that number to 765,000 and now predicts that more than one million will be registered in 2022, with the state responsible for $ 6.4 billion in potential damage claims.

Last week, the Citizen Governing Council’s Exposure Reduction Committee unveiled three draft proposals that it will ask lawmakers to carry on their behalf in the 2022 session, designed to reduce the number of its police forces by increasing costs for policyholders.

“We want to get these people out of our insurance company. We want them to be on the open market, ”said Nelson Telemaco, chairman of the exposure reduction committee.

Under state law, residents can purchase a citizens ‘insurance policy if they cannot find private insurance or if a policy is 15% higher than citizens’ rates.

Under a 2007 law, registrants can reject for any reason a request from citizens to transfer their policies to a private market insurer.

According to the still preliminary proposals, the 2007 law would be repealed and citizens ‘insureds would only be allowed to stay if the premiums charged by a private insurer exceed citizens’ rates by more than 20%.

Another draft proposal calls for allowing citizens to reject potential clients who had previously refused a private insurer’s offer to sell them a new policy at the time of renewal, unless that offer exceeds citizens’ rates. more than 20%.

The third bill citizens envisioned would simply eliminate the ability of policyholders to completely reject “take-out offers” from private insurers.

In essence, Citizens is proposing to transfer people enrolled under its program to private insurers if their rates do not exceed its rates by more than 20%.

Citizens chairman / CEO Barry Gilway said that under these laws about 80% of Citizens policyholders selected for “take-out offers” under the depopulation program have rejected the offer of the private insurer, not necessarily because of the new tariffs, but because many have said they do not trust the financial viability of independent insurers in the state property insurance market.

In the second quarter of 2021, Gilway said, only 330 Citizens customers received offers below the price they were getting from the state-subsidized insurer, while 1,208 received offers above their Citizens premium. which makes them eligible to stay with Citizens under the 15% provision. .

Original story at The central square.