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Letter to the editor

Citizens' policy load posts rare decline

The insurer's exposure falls $68.2-billion.

By TOM ZUCCO, Times Staff Writer
Published January 25, 2008

For the past several years, Bruce Douglas rarely used the words "Citizens Property Insurance" and "shrinking" in the same sentence.

That changed Thursday.

The chairman of Citizens' board of governors, Douglas told company officials meeting in Jacksonville that Florida's largest property insurer got smaller in the past few months despite so-called "dire predictions" that Citizens would grow to more than 2-million policies this year.

The count is now around 1.274-million policies, down 30,000 from the week before and nearly 127,000 fewer than the November high of 1.4-million.

The last time state-backed Citizens had as many policies as it does now was in August 2006.

The decline, Douglas said, is primarily due to one factor: Last year, seven Florida-based insurers removed about 248,000 policies from Citizens. By contrast, four companies removed just 67,853 policies in all of 2006.

And no company has been better at removing Citizens policies than American Integrity, a Tampa-based insurer run by Robert C. Ritchie, which was licensed in September 2006. Most of the company's policies are in South Florida, Duval, Orange and Polk counties.

State law requires that private companies must hold former Citizens policies at least three years. But the more Citizens policies a company takes on, the smaller the percentage of commission it has to return to Citizens. Thatranges from 6 to 16 percent.

While none of the seven companies has concentrated in one area, a deeper look into where and what those policies are reveals most are newer homes away from the coast. Citizens' records show that no policies have been removed from the company's high-risk account - properties near Florida's coastline - since March 2006.

And while the policies removed last year dropped Citizens' exposure to risk by $68.2-billion, the company's total exposure for all the property it insures stands at more than $485-billion.

Because Citizens is controlled by the state, losses that can't be covered by the company must be picked up by policyholders of all other companies. That happened in 2004-05, when all Florida policyholders were twice assessed up to 2 percent of their premium to make up the shortfall.

So any time Citizens gets smaller, the company thinks it can breathe a little easier.

Douglas also noted Citizens now has $2.4-billion in surplus, twice what it had a year ago.

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

[Last modified January 24, 2008, 23:13:06]