Citizens Property Insurance looks to cut costs as market sags

Citizens Property Insurance Corporation will take steps to reduce administrative spending and review its vendors and contracts, despite rampant inflation, as a way to cut costs during a hectic time for the property insurance market in Florida, the company’s chairman said Wednesday.

During a board meeting, Chair Carlos Beruff said cost cutting action is needed because the state-run company continues to add policies and risk, increasing the possibility that all homeowners will be hit with assessments if a large hurricane hits Florida this year.

“We just want to be solvent so when a (catastrophic) event comes, we are not sticking Floridians with Citizens’ assessments across the state,” Beruff said. “That is my mission.”

Citizens was created in 2002 and intended to be Florida’s “insurer of last resort” for homeowners who couldn’t find affordable property coverage in the private market. Private insurers, however, often complain that its lower prices — Citizens’ rates can’t be increased more than 11% per year — funnel homeowners into the company.

If Citizens’ ability to pay claims is overwhelmed by a large hurricane, assessments can be placed on non-Citizens’ homeowners, automatically hiking insurance premiums for Florida homeowners. That means the more risk Citizens takes on, the greater the risk of assessments becomes.

Florida lawmakers have tried to reduce Citizens’ policy count, which ballooned to 1.5 million in the last decade, offering incentives to some companies that took over its policies.

But many private insurers have floundered in the last few years, with many requesting large rate increases, which have often been granted by state regulators. Others, such as the St. Johns Insurance Co., have gone belly up, as it was put into receivership in February.

Citizens has $6.5 billion in reserves and had a net income of $81.1 million in 2021, although that was largely due to investment income, which papered over $166.5 million in underwriting losses, a release from Citizens states.

Board members also expressed frustration at the Legislature’s inaction regarding property insurance during the Session that ended March 14. While the Senate passed a bill (SB 1728) aimed at reducing costs and boosting premiums for insurers, including through a new deductible for roof repairs, the measure was resisted by House leaders.

“Until we get some legislative relief … we are stuck chasing our tails,” said Citizens’ board member Scott Thomas.