FL approves 6-additional insurance companies to reduce number of policies carried by Citizens

The rollercoaster and challenge that is Florida's homeowners' insurance market received some potential good news this past week with six new companies receiving approval to make offers to homeowners presently insured by Citizens Insurance.

Florida's Insurance Commissioner Michael Yaworsky signed the orders opening the door for up to 153,000 Citizens' policies to be offers to switch to a private carrier.

The six new companies Yaworsky approved, and the respective number of Citizens' policies are:

- Edison Insurance approved to absorb 10,000 policies

- TypTap Insurance approved for 25,000 policies

- Florida Peninsula approved for 15,000 policies

- SafePoint Insurance approved for 16,000 policies

- Slide Insurance approved for 75,000 policies

- American Traditions Insurance Company approved or 12,000 policies

Originally set up as the state's insurer of last resort, Citizens is now carrying close to 1.4 million policies, raising concerns a major storm in Florida could significantly - and negatively - impact its ability to pay damage claims to policy holders.

Late last month, more than 300,000 Citizens customers received letters with offers to switch to a private insurance company. Police holders receiving the offer to switch have until Oct. 10 to respond to the "depopulation form." If the do not opt out, those policies will be automatically enrolled.

Policyholders only have the option to reject switching if the offers are more than 20% of the Citizens' premiums.

The website Insurance Journal reported that at a recent Citizens Board of Governors meeting, President Tim Cerio reiterated a concern, shared by many in the industry, that Citizens' rates are too low, which is hindering the growth of the primary market.

"As long as the rates remain artificially low, we will continue to distort competition and hamper the speed of market recovery," Cerio was quoted, adding that Citizen should never be competing with the private market.

In late September, the Citizens Board of Governors approved a historic double-digit rate hike, set to be in place by year's end, raising homeowner policy rates by an average of 11.5% and many commercial policies by an average of 10.2%.

The state-backed insurance company's earlier proposal of a 12.6% rate hike in June was denied by the state's Office of Insurance Regulation.