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Letter to the editor

Citizens grows, but not as fast as expected

Some private insurers are writing policies, stemming the growth.

By TOM ZUCCO, Times Staff Writer
Published October 26, 2007

Florida's largest property insurer keeps growing, but it isn't expanding nearly as fast as expected, a signal that at least some private companies are still willing to write new business in the state.

Citizens Property Insurance board chairman Bruce Douglas said Thursday that private companies will take about 90,000 policies out of state-backed Citizens in the final two months of this year, bringing the total number of policies sent into the private market to a near record of about 222,000.

However, Citizens is still gaining more policies than it is losing, which Douglas said should push the company over the 1.4-million mark this week. That represents about a third of Florida's property insurance market.

The four companies that will assume the policies are Florida Peninsula Insurance, Homeowners Choice, Southern Oak and Tampa-based HomeWise Preferred.

Perhaps not household names, said deputy insurance commissioner Belinda Miller. "But they all must meet Florida's capitalization requirements, and they typically have $40- to $50-million in surplus," Miller said. "We do monitor them closely."

Miller said regulators also keep track of the letters these and other insurers send to Citizens policyholders informing them they are about to switch companies. If a letter is not answered, the policyholder is usually sent to the private carrier automatically, sometimes against the policyholder's wishes.

If that happens, Miller said, a policyholder can return to Citizens. Under current law, a Citizens policyholder can refuse to switch to any private company.

After eight hurricanes struck Florida in 2004-05, most property insurers restricted their business, either by dropping policies or not writing new ones. As a result, in the past three years, Citizens has out-grown State Farm, Allstate, Nationwide and every other insurer in the state.

In the meantime, replacements have been hard to find. Of approximately 200 insurance companies that are currently writing policies in Florida, only about 30 will write a new policy.

Companies that do write new business are very selective, and to a certain extent, the state protects them. Although companies that take policies out of Citizens no longer get a cash bonus, they also are no longer required to keep the policy for a given period of time. Most homeowner policies run year to year.

Citizens says none of the policies going back into the private market are coming from its coastal, or high-risk, account. That means the policies with the most risk will remain in Citizens.

What Florida insurance commissioner Kevin McCarty said the state is trying to do is steadily chip away at Citizens while encouraging private companies to fill the void.

"When House Bill 1A passed, making Citizens competitive, people thought there would be a rush to Citizens, and that didn't happen," McCarty said Thursday, noting that private insurers are starting to take back some of Citizens' policies.

"It's a work in progress. But so far, it's been successful."

Tom Zucco can be reached at zucco@sptimes.com or (727) 893-8247.

[Last modified October 25, 2007, 22:44:29]