Citizens Insurance clients may face decision soon

The following editorial was published in The Daily Sun on Oct 17, 2023.

OUR POSITION: Trying to cull customers from Citizens Insurance is needed, but not at the expense of homeowners still struggling to recover from hurricanes.

It’s well documented and certainly no secret that Citizens Property Insurance Corp., Florida’s state-backed insurer of last resort, has too many clients.

Hurricanes the past two to three years, frivolous lawsuits and the high cost of re-insurance chased several insurance companies out of Florida. That sent homeowners scurrying to Citizens, whose rates are lower than almost any other insurer that covers property in Florida.

According to the News Service of Florida, Citizens is forecasting it will have about 1.3 million policies within the next couple of months. The growth has been astounding. Citizens’ website says it had 511,055 policies on Sept. 30, 2020; 708,919 policies on Sept. 30, 2021; and 1,071,850 policies on Sept. 30, 2022.

The flood of new policies is not healthy for the state or Citizens.

That’s why Florida Insurance Commissioner Michael Yaworski is working with the state and other insurance companies to “depopulate” Citizens. He wants Citizens to shed between 150,000 and 386,000 policies.

Recent good news in the state’s insurance industry may allow that to happen — if customers find their rates will not exceed 20% or so of their current Citizens premium.

There are some new insurance companies that have set up shop in Florida, even after Hurricanes Ian and Idalia.

The state has approved at least six new and already-established companies to take over as many at 153,000 policies from Citizens, according to the News Service of Florida. That number could rise, depending on the market and how aggressive the state will be to move policies from Citizens.

The process involves the new companies being given policies that they in turn will make offers on to the homeowners. Considering Citizens has been given a green light to raise its fees 11.5% or a little higher depending on the policy, the offers should be close enough to encourage movement from Citizens.

But that may not always be the case.

In an effort to restructure the state’s struggling insurance market — where customers were finding it difficult to find coverage and when they did they complained of excessively high rates — the Legislature passed laws the past two sessions they believe will alleviate the problems.

And, while consumers are saying the laws are not helping, lawmakers are saying they have no plans for the 2024 legislative session, which begins in January, to make further changes to laws that impact insurance rates.

One of the laws passed, requires Citizens’ customers to accept offers from private insurance companies if the cost is within 20% of what Citizens is charging. If the offer is more than 20% over the current premium the insured has an option to accept it or not.

Those offers should be coming soon.

What you need to know is that if that offer exceeds the 20% over current cost, you have to let Citizens know you want to keep their policy.

There is concern, according to the News Service of Florida story, that customers will not realize they have an option. Or that some customers will not for some reason see the offer.

Another possible negative outcome the NSF says is that companies making offers to large numbers of customers will lead to premium increases higher than 20%.

“It feels to me like they (the new carriers) are banking on people not reading their mail,” Charlie Lydecker, a member of the Citizens Board of Governors, told the News Service of Florida.

Don’t let that happen to you.