Citizens Insurance expects to end the year ‘well under’ 1 million policies

Aggressive efforts to depopulate state-owned Citizens Property Insurance Corp. will leave the company with “well under” 1 million policies by the end of 2024 — the first time in years that the policy count has declined.

Fewer policies means less exposure and lower chances that nearly all of the state’s insurance customers will face assessments if a series of major hurricanes strike the state.

Jeremy Pope, the company’s chief administrative officer, shared the projection with members of the company’s Market Accountability Advisory Committee on Wednesday.

It would mark a steep reduction from the 1.24 million policies reported in September and the first time since 2021 that the company has finished a year with fewer than 1 million policies. The last time that Citizens ended the year with fewer policies than it started was 2018, when the count was reduced from 440,406 policies to 427,397.

The fourth quarter of 2024 “has proven to be a very strong and successful exchange of depopulation activity,” Pope said.

As of Nov. 15, Citizens’ policy count had fallen to 1.04 million, spokesman Michael Peltier said after the meeting. The company projects it will have 907,286 policies by Dec. 31.

Depopulation refers to Citizens’ effort to encourage the transfer of personal and commercial lines policies from the “insurer of last resort” to private market carriers.

Citizens officials and state legislators push depopulation when the company’s policy count swells because too much exposure leaves existing Citizens customers and the state’s overall population of insurance customers vulnerable to surcharges and assessments if a large storm or series of storms depletes the company’s claims-paying abilities.

Previous depopulation efforts were hampered because state law allowed policyholders to reject for any reason any proposed transfer from Citizens to a private carrier. A major reason was cost. Until 2021, Citizens was prohibited from raising its rates by more than 10% each year, making the company’s policies cheaper than private market insurers.

But last year, a new law took effect barring policyholders from remaining in Citizens if any takeout offer is estimated to cost up to 20% more than Citizens’ renewal offer.

With Citizens’ rates increasing each year by the maximum amount allowed and narrowing the difference, the new law has left policyholders with little choice but to accept one of the takeout offers.

In October, the Office of Insurance Regulation approved 410,008 takeout requests by eight private insurers. Of those, 237,323 policies were taken out, according to data presented during the meeting.

Among the takeouts, 97,792 were told their premiums would be less than what they were projected to pay Citizens upon renewal, and 136,079 are projected to exceed Citizens’ premiums by up to 20%.

The number of takeouts for November and December have not been finalized. For November, six insurers asked to remove 136,826 policies. For December, five insurers asked to remove 103,073 policies.

Citizens estimates that 119,218 policies will be removed in November and December. With the 371,295 policies removed through October, the company expects to finish the year with 490,513 takeouts and $225 billion in exposure removed.

In 2023, by comparison, 270,751 policies were taken out of Citizens and $111.3 billion in exposure was removed.

New business offsets many of those takeouts, challenging Citizens’ efforts to reduce its policy count. But the monthly average of new policies has dropped from 38,000 so far this year to 24,100 in October, said Jay Adams, the company’s chief insurance officer.

The decline, Adams said, indicates that “the (private) market is taking up more new business than it had in the first part of the year.”

Takeout requests for February look strong as well, Pope said, with 11 insurers approved to remove up to 342,918 policies. They include policies that have been requested for takeout by multiple insurers.

Of the 369,171 personal lines takeouts approved so far this year, 33.7% were located in South Florida’s tricounty region.

Last year, 44.7% of takeouts were in the region.

South Florida accounted for 54% of Citizens policies in 2020 but the percentage has fallen significantly — to 38% in September — as the number of Citizens policies from other parts of the state increased.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].

©2024 South Florida Sun-Sentinel. Visit sun-sentinel.com. Distributed by Tribune Content Agency, LLC.