Florida’s insurer of last resort has surpassed 1 million policies for the first time since 2013. And, while the private insurance market is still in turmoil, there is no sign of this growth trend. is slowing down.
Citizens Property Insurance Corp. reached the milestone earlier this month, and as of August 12, it stands at 1,005,000 policies. The state-supported government organization was established by Florida two decades ago Legislature to provide coverage to property owners who cannot obtain insurance in the private market.
“When the market is healthy, Citizens gets smaller while private companies take advantage of good market conditions,” Citizens spokesman Michael Peltier said. “When the market is in challenging times, we grow.”
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In Palm Beach County, the state’s third most populous county, there are more than 105,000 noncommercial civil policies. That is until August Thursday. 18, a nearly 60% increase over July 31 last year, according to a civic spokesperson.
Industry experts continue to blame litigation and fraudulent ceiling claims for the crisis. Five insurance companies have gone bankrupt so far this year, pushing customers into a vulnerable market Sending them to the citizens.
In good weather, with no imminent natural disaster, civilian customers and the market as a whole “shouldn’t really notice” the number of its policies, Peltier said.
“Whether we have 500,000 policies or a million and a half policies, the policies are designed to be able to handle them,” he said.
But when the storm comes, that scene changes. If a hurricane or two hits Florida and causes property damage to the majority of civilian policyholders, it could leave insurance providers unable to pay claims, and leave the rest of Florida residents to pay the bills, even if they don’t have to. Policy with citizens.
With that many policyholders, Citizens has a risk of $346 billion, but the ability to pay $13.4 billion in claims, said Mark Friedlander, a spokesman for the industry-backed Insurance Information Institute. If there are backstops to help pay property owners’ claims, citizens can impose assessments on their customers, or extend them to Floridians’ home, auto and renters insurance policies.
That happened after the state was hit by eight hurricanes during the 2004 and 2005 seasons.
A 1% assessment was levied against policyholders of homeowners and auto insurance in 2007 to fill the coffers of the Florida Hurricane Disaster Fund. That rating was raised to 1.3% four years later. The assessment ended in 2014, a year ahead of schedule, raising between $350 million and $500 million each year.
“It’s a situation we want to avoid,” Peltier said.
That time period, between 2007 and 2013, was the last time Citizens maintained more than 1 million policies, reaching a peak of 1.5 million in 2012.
But this time nature has not caused problems in the market.
“What we’re facing right now is a man-made crisis,” Friedlander said. “That makes the Florida crisis unique.”
Peltier noted that the measures passed during this summer’s special legislative session It will take some time to bear fruit.
At the rate Citizens is growing, however, the insurance provider could hit 1.2 million policies by the end of the year and reach a record number of policies this time next year, Friedlander added.
Citizen rates are also increasing from October 1
Insurance regulators approved rate hikes for civilian policies earlier this summer. Citizens had requested an increase closer to the maximum allowed at 11%, but the most common type of insurance, called homeowner multi-peril, would increase by 6.4%.
Rates for residential insurance will increase after October 1, and commercial policies will increase on November 1. The increase will be applied after renewal.
For any homeowner concerned that their insurance company may be next on the chopping block, fear not, Friedlander said. Instead, he notes, make sure to keep your coverage and make sure you’re fully covered.
It’s probably not the best time to shop for a new insurance provider if you don’t need it, Friedlander said.
“It’s very difficult to move your coverage now. It’s possible, but it’s very challenging,” he said. At the very least, communicate with your agent, he added.
In doing so, make sure your coverage is adequate to pay the increased costs due to inflation, he said.
“Florida remains the most volatile home insurance market in the country,” he said. “Until the market stabilizes and until private insurers say it’s the market they want to write risk, we’re going to continue to see the majority of new policies written by citizens.”
Hannah Morse covers consumer issues for the Palm Beach Post. Drop a line at [email protected], call 561-820-4833 or follow him on Twitter @mannahhorse.