Newspaper article Sarasota Herald Tribune

Citizens Is Poised to Pare Policy Rolls

Newspaper article Sarasota Herald Tribune

Citizens Is Poised to Pare Policy Rolls

Article excerpt

TALLAHASSEE

SHIFT: Set to reduce state's risks by nudging thousands toward private insurers

Citizens Property Insurance is undergoing an unprecedented shift of policyholders from the state-run company to private insurers.

By the end of the year, state insurance regulators are expected to approve the removal of nearly 600,000 Citizens customers from the state's largest property insurer, which now covers some 1.2 million policyholders.

Not that many Citizens customers will leave the state-backed coverage; the numbers reflect removal requests that may be duplicated by private companies seeking the same policies, while roughly one-third of the Citizens policyholders will exercise their right to reject the move.

Nonetheless, Barry Gilway, Citizens' president and chief executive, told the Senate Banking and Insurance Committee on Tuesday that he expects Citizens will net a reduction in the range of 250,000 to 300,000 policies -- offset by new policies -- that will result in the insurer covering less than a million by early next year.

It would be the first time Citizens' coverage has dropped to that level since 2005, and would be well below the 1.5 million policy peak reached in 2012.

The reduction in Citizens policies will translate into lower exposure for the government-backed insurer in the event of a major hurricane strike.

Even at the 1.2-million-policy level, Gilway said Citizens has lowered its total exposure by $140 billion over the last two years, with a related drop in projected losses from a massive 1-in-100- year storm from $21.8 billion to $18.6 billion.

The reduced exposure also lowers the prospect of a so-called "hurricane tax" -- an assessment on most insurance policies in the state, including auto coverage, if Citizens cannot pay for its losses.

"I suggest to you that there has been huge progress," Gilway told the lawmakers.

Time to party?

Senators who have long criticized the growth of Citizens readily agreed.

"I think it's time to party," said Sen. Alan Hays, R-Umatilla, who called it the "best" insurance news he has heard in nearly a decade in the Legislature.

Others offered more cautious appraisals.

Sen. Jeff Clemens, D-Lake Worth, said one major tool the state has used in enticing private companies to enter the property insurance market is through higher premiums.

"We've raised rates on a lot of consumers and have made it very difficult for them to be able to afford homeowners insurance," Clemens said.

Sen. Tom Lee, R-Brandon, wrote Gilway earlier this month complaining that while he supports the "take-out" program, Citizens was giving policyholders inadequate information weighing the benefits and risks, while not addressing the critical issue of the cost of the new policies.

Gilway said Citizens immediately responded to Lee's critique and is now offering a "more balanced" information letter, while taking steps to give customers policy cost information even if the take- out companies will not provide it. …

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