Citizens property insurance drops below 850,000 policies

TALLAHASSEE — The state's Citizens Property Insurance Corp. recently shed about 100,000 policies, with its number of customers dropping to the lowest total in nearly three years.

Citizens, which was created as an insurer of last resort but ballooned in recent years to become the state's largest insurer, had 844,688 policies as of mid-February, according to newly posted data on its website. That was down from 945,005 policies a week earlier and 942,810 policies two weeks earlier.

The drop coincided with eight private insurers last week being able to assume Citizens policies under what is known as a "depopulation" program. Under that program, private insurers seek approval to take certain numbers of Citizens policies.

A report scheduled to go before the Citizens Market Accountability Advisory Committee said regulators approved allowing insurers to assume a maximum of 342,918 Citizens policies last week — though the actual numbers of policies that leave Citizens are typically far below the maximums allowed.

The last time Citizens' policy count was below 850,000 was in spring 2022. It had 817,926 policies on March 31, 2022, before jumping to 851,006 on April 30, 2022.

Citizens reached as many as 1.4 million policies in 2023, as private carriers dropped customers and raised rates amid financial problems. The total has dropped because of numerous depopulation rounds and improved conditions in the private market, according to insurance officials.

Citizens President and CEO Tim Cerio told a House panel this month that Citizens expects to end 2025 with slightly fewer than 771,000 policies. Additional rounds of depopulation are scheduled in March and April.

State leaders have long sought to hold down the number of policies in Citizens, at least in part because of financial risks if the state gets hit by a major hurricane or multiple hurricanes. If Citizens didn't have enough money to pay claims, policyholders throughout the state — including possibly non-Citizens policyholders — could get hit with extra charges known as assessments.

But the depopulation program also can lead to higher costs for customers shifted to private insurers. That is because of a law requiring Citizens customers to accept offers of coverage from private insurers if the offers are within 20 percent of the cost of Citizens premiums. For example, if a homeowner received an offer of coverage from a private insurer that is 19 percent higher than the Citizens premium, the homeowner would have to accept it.

Citizens had as few as 419,475 policies in October 2019. Cerio told the House Insurance & Banking Subcommittee that such totals might have been artificially low.

"In hindsight, there's been some suggestion that maybe some companies did (policy) takeouts that didn't have the financial wherewithal that they should have," leading to policyholders later coming back to Citizens, he said.

Cerio said he hopes a target number for Citizens policies would be in the 500,000s or low 600,000s, though he said state Insurance Commissioner Michael Yaworsky thinks the "magic number" is about 700,000.

Cerio said private companies are not "taking the riskiest of the risky" policies as part of the depopulation process.

"The term 'cherry pick' is often used about the takeout process, and I would argue that is not a bad thing," Cerio told lawmakers. "These are private companies that are deploying capital, and each of them have different appetites for risk, they have different appetites in certain areas of the state, they all have different business models. And so the idea is, as a residual insurer, we (Citizens) should have those policies that no one else wants, and so when the market hardens, we grow and policies are coming into Citizens that normally the private market would want to be interested in. Maybe somebody's cutting the number of writings that they're doing or they even leave the state or they actually go insolvent. That's when we grow. As the market's recovering, we shrink." ¦