A.G. Gancarski
Florida House Insurance and Banking Subcommittee (IBS) members heard good news about the state insurer of last resort on Tuesday, and recent legislative reforms have shored it up.
Citizens CEO Tim Cerio said that depopulation of the insurer may be down to desired levels by 2027, saying Florida Office of Insurance Regulation Commissioner Michael Yaworsky thinks 700,000 may be the correct number, while he hopes “it’s in the fives or maybe low sixes.”
“I think we will see whatever that number is in the next two years. Knock on wood,” Cerio said, unwittingly using an infamous Gov. Ron DeSantis phrase of hope that no storms would hit while he ran for President.
Citizens closed 2024 with slightly more than 936,000 policies in force, down from more than 1.4 million policies at the peak in 2023.
Gov. Ron DeSantis has warned about Citizens’ bloat in the past. He previously noted that Citizens was “unfortunately undercapitalized” and that the company could go “belly up” if it had to weather a significant storm. But Cerio’s comments suggest that the company only has so far to shrink.
Cerio noted that in 2018, Citizens had just 427,000 policies, but that was “artificially low” given the shakiness of some private companies.
He also noted Citizens has to shoulder more dangerous properties than a private insurer might and charges “actuarially unsound” rates in much of the state (with Miami-Dade an exception), given its role in the marketplace, as private companies are not “coming in to take the riskiest of the risky.” That said, actuarial soundness gets closer all the time.
Mangrove Property Insurance Co. is the latest company to enter the market, approved by OIR last week. In recent months, ASI Select Insurance Corp., Trident Reciprocal Exchange, Ovation Home Insurance Exchange, Manatee Insurance Exchange, Condo Owners Reciprocal Exchange, Orange Insurance Exchange, Orion180 Select Insurance Company, Orion180 Insurance Company, Mainsail Insurance Company, and Tailrow Insurance Exchange have also entered the market.
Despite the realities of the marketplace, prudent policy has also had benefits for those in the private market.
“We would have had an assessment this year but for the reforms,” Cerio said, referring to laws (HB 1A and SB 2A) passed in 2022 that bolstered the reinsurance market and decreased the window of time for homeowners to file claims against policies. Citizens customers must also move to a private carrier if they receive an offer within 20% above the Citizens rate.
Cerio noted that the reforms have also cut legal costs, saving Florida from an “insurance spiral.”
