Florida Approves More Policy Takeouts at Citizens; Also OKs Commercial Rate Hikes

Florida regulators announced that two property insurance companies have been approved to take out up to 100,000 policies from the state-backed insurer in December, adding to the 210,000 policies already slated for removal in November.

State regulators also approved the insurer’s rates for a variety of commercial policies.

American Integrity Insurance Co. of Florida has been approved to take out an additional 40,000 policies in December after previously being approved to remove 50,000 next month. Heritage Property & Casualty Insurance Co. has been given the green light to takeout 60,000. The St. Petersburg-based company is a new start-up, having been licensed last August.

They join five other takeout insurers, a list that includes First Community Insurance Co. (6,643 policies), Florida Peninsula Insurance Co. (45,000 policies), Homeowners Choice Property & Casualty Insurance Co. (75,000 policies), Southern Fidelity Property & Casualty Inc. (30,000 policies), and Southern Oak Insurance Co. (10,000).

In total, 84,339 policies have been removed from Citizens as of September 2012. An additional 6,643 policies have been approved for renewal as of this month, with another 210,000 slated for November and 100,000 for December. All together, they represent about 400,000 possible takeouts, though the actual number is expected to be less since policyholders and/or their agents have up to 30 days to decide whether to accept or reject the takeout.

The policyholder takeouts come as Citizens continues to work toward its plan to loan private insurers up to $350 million in surplus in exchange for removing large blocks of policies. The so-called surplus note plan that has been touted as a means to dramatically reduce the insurer’s policyholder rolls and, in so doing so, shrink the insurer’s overall exposure and the potential assessment load of policyholders, which some have estimated could be as high as $1.7 billion.

However, the loan plan came under scrutiny from the public and elected officials who questioned whether Citizens should be in effect investing in private insurers by using taxpayer monies.

As a result, Citizens put the brakes on the program. Citizens has contracted with the financial firm Goldman Sachs to provide an outside independent review of the program by January.

Also, the Office of Insurance Regulation announced its decision on Citizens’ commercial rates. The insurer’s commercial policy count of 118,598 represents just a fraction of the its 1.4 million policies currently in force and only accounts for $448 million in earned premiums.

Under the new rates, the coastal lines account that only provides wind coverage, residential condominium associations rates will increase by an average 10.6 percent, while all other residential policies will jump by an average of 10.8 percent. Nonresidential property owners will see their rates rise by an average 9.5 percent. All of those increases roughly match the ones sought by the insurer.

In the commercial lines account, residential condominium associations will see their rates increase by an average 9.9 percent. Other residential policies will increase by an average 3.1 percent and nonresidential policies by an average 10 percent.

Topics Carriers Florida Commercial Lines Business Insurance Pricing Trends Property Property Casualty