Yet again, news outlets selectively present information favoring carriers, citing biased and interested parties. The portrayal of taking these policies as a favor to Floridians is misleading.
What is not disclosed is that Citizens (CPIC) is providing $18,400,000 (equivalent to $100 per policy) in payments as incentives to attract takeout companies. It is rather amusing how these insurance companies require incentives to accept new business. Any regular business owner would welcome new opportunities all of which come with an upfront payment and almost guaranteed income for 2 renewal periods afterwards.
Slide insurance alon is assuming 100,000 policies with a bonus of $100 per policy with an immediate profit of $10,000,000. Not to mention they keep the full unearned premium and have a 2 year renewal
The article says:
OIR is seeing greater participation and interest in the Citizens Depopulation program this year,” Bequer said, adding the number of policies requested by those eight companies in the first half of 2023 surpasses the total number requested last year.
After agreeing to take over 147,000 policies from failing St. Johns Insurance Co. last year and 72,000 policies of bankrupt United Property & Casualty in January, Slide was approved to take over up to 25,000 Citizens policies in May, effective on Aug. 22 or a later date to be approved by the Office and Citizens.
627.3511 Depopulation of Citizens Property Insurance Corporation.—
(2) TAKE-OUT BONUS.—The Citizens Property Insurance Corporation shall pay the sum of up to $100 to an insurer for each risk that the insurer removes from the corporation, either by issuance of a policy upon expiration or cancellation of the corporation policy or by assumption of the corporation’s obligations with respect to an in-force policy. Such payment is subject to approval of the corporation board. In order to qualify for the bonus under this subsection, the take-out plan must include a minimum of 25,000 policies. Within 30 days after approval by the board, the office may reject the insurer’s take-out plan and disqualify the insurer from the bonus, based on the following criteria:
(3)(a) (3) says:
If the removal of risks is accomplished through assumption of obligations with respect to in-force policies, the corporation shall pay to the assuming insurer all unearned premium with respect to such policies less any policy acquisition costs agreed to by the corporation and assuming insurer.
Takeout bonus offsets higher reinsurance costs associated with assuming Citizens policies. You might want to double check this chart. Slide was deep in the red despite the heavy take-up rate from defunct carriers & Citizens you’re pointing to.
Depopulating Citizens is a favor to the entire state of FL, actually. Citizens artificially low rates distort the market and expose FL citizens to higher risks of the “Hurricane Tax”.
(Correction: Slide was not deep in the red as depicted in this chart from S&P. I had mistaken Heritage’s NI for Slide’s as they are adjacent in this table. Regardless, Slide is still a poor example as they have assumed some of the riskiest market segments, struggling to revise their Legacy programs to de-fang this assumed biz, and are likely to fall into the same under-performing category as the other FL focused Insurtechs. It shouldn’t be lost on anyone these folks are hunting for VC Capital while also hiking rates – I wonder why?)
Well would ya look at that. Need this Ray to keep shining for quite a few more quarters before we can seriously start talking about Rate decreases..
Yet again, news outlets selectively present information favoring carriers, citing biased and interested parties. The portrayal of taking these policies as a favor to Floridians is misleading.
What is not disclosed is that Citizens (CPIC) is providing $18,400,000 (equivalent to $100 per policy) in payments as incentives to attract takeout companies. It is rather amusing how these insurance companies require incentives to accept new business. Any regular business owner would welcome new opportunities all of which come with an upfront payment and almost guaranteed income for 2 renewal periods afterwards.
Slide insurance alon is assuming 100,000 policies with a bonus of $100 per policy with an immediate profit of $10,000,000. Not to mention they keep the full unearned premium and have a 2 year renewal
The article says:
OIR is seeing greater participation and interest in the Citizens Depopulation program this year,” Bequer said, adding the number of policies requested by those eight companies in the first half of 2023 surpasses the total number requested last year.
After agreeing to take over 147,000 policies from failing St. Johns Insurance Co. last year and 72,000 policies of bankrupt United Property & Casualty in January, Slide was approved to take over up to 25,000 Citizens policies in May, effective on Aug. 22 or a later date to be approved by the Office and Citizens.
627.3511 Depopulation of Citizens Property Insurance Corporation.—
(2) TAKE-OUT BONUS.—The Citizens Property Insurance Corporation shall pay the sum of up to $100 to an insurer for each risk that the insurer removes from the corporation, either by issuance of a policy upon expiration or cancellation of the corporation policy or by assumption of the corporation’s obligations with respect to an in-force policy. Such payment is subject to approval of the corporation board. In order to qualify for the bonus under this subsection, the take-out plan must include a minimum of 25,000 policies. Within 30 days after approval by the board, the office may reject the insurer’s take-out plan and disqualify the insurer from the bonus, based on the following criteria:
(3)(a) (3) says:
If the removal of risks is accomplished through assumption of obligations with respect to in-force policies, the corporation shall pay to the assuming insurer all unearned premium with respect to such policies less any policy acquisition costs agreed to by the corporation and assuming insurer.
Takeout bonus offsets higher reinsurance costs associated with assuming Citizens policies. You might want to double check this chart. Slide was deep in the red despite the heavy take-up rate from defunct carriers & Citizens you’re pointing to.
Depopulating Citizens is a favor to the entire state of FL, actually. Citizens artificially low rates distort the market and expose FL citizens to higher risks of the “Hurricane Tax”.
(Correction: Slide was not deep in the red as depicted in this chart from S&P. I had mistaken Heritage’s NI for Slide’s as they are adjacent in this table. Regardless, Slide is still a poor example as they have assumed some of the riskiest market segments, struggling to revise their Legacy programs to de-fang this assumed biz, and are likely to fall into the same under-performing category as the other FL focused Insurtechs. It shouldn’t be lost on anyone these folks are hunting for VC Capital while also hiking rates – I wonder why?)