SEBRING - The number of multi-peril homeowners insurance policies with Citizens Property Insurance Corp. in Highlands County continues to drop as the state-run group launches efforts to shed policies in order to remain the insurer of last resort instead of the largest one.
A 30-day opt-out window ends Dec. 5 for 160,683 policy holders to decide if they want to remain with new private carriers who have opted to take over their policies or return to Citizens.
The number of Highlands County Citizens policy holders who could be potentially affected by this "depopulation" move was not available, but figures show a gradual drop in Citizens policies locally.
As of August, there were 1,235 Citizens policies in Highlands County with an exposure of $103 million.
In November 2011, Highlands County had 1,719 policies with a $171 million exposure; in November 2012 that dropped to 1,421 policies with a $136 million exposure. In November 2010, Citizens had 1,591 policies with a $141 million exposure.
Gov. Rick Scott and the Florida Legislature have been pushing to get Citizens to shed some of its state-subsidized policies, and the Florida Legislature enacted many changes in the 2013 legislative session to overhaul the insurance company.
Under current law, if Citizens falls short of the cash it needs to pay its claims after a massive storm, policyholders of other lines of insurance and state taxpayers will be assessed fees.
"We're moving in the right direction, heading back to that carrier of the last resort," Christine Ashburn, Citizens' director of legislative and external affairs, told members of the House Insurance and Banking Subcommittee last week. "We're really starting to head back to that pre '04, '05 Citizens....That would really put us back to older homes, lower value homes, the markets that are more the niche market, mobile homes in Florida," she said.
Citizens had 1.22 million policies as of Sept. 30. Ashburn said an ideal number of policies for Citizens is around 727,000.
The takeout measure is one of many efforts Citizens has launched, which its CEO Barry Gilway described as "bold yet responsible step to reduce the risk to Florida taxpayers while protecting Citizens policyholders in the event of a catastrophic storm."
Starting July 1, Citizens policyholders are not eligible to renew their policy with the company if they receive a comparable private-market offer with a premium that is equal to or less than their Citizens renewal premium.
The company also is launching an online clearinghouse in January, "to help match personal lines policyholders with private-market coverage when available."
"Prior to the launch of the clearinghouse in January 2014, current policyholders should work with their agents to identify potential private-market carriers and to request quotes for coverage," the company advises on its web site.
"The clearinghouse will indeed kick off January 1st for new business," said Citizens spokesman Michael Peltier in an email.
Renewal policyholders will begin seeing their policies shopped through the clearinghouse later in the year in 2014, probably beginning sometime in the second quarter, he added.
"We do not have a specific target for Highlands County per se. We expect that our multi-peril homeowners policies, like those in Highlands, may be among the most competitively priced with private carriers so may be more attractive," he added.
Among other changes, beginning Jan. 1, homeowners applying for Citizens policies for the first time will be required to go with a private carrier if it offers coverage that is within 15 percent of Citizens' rates.
Sen. Denise Grimsley, District 21, supports the changes to Citizens and said state government should not be the major player in Florida's home insurance market.
"Citizens is overextended, and can legally assess every Florida homeowner in the event of a catastrophic loss event in order to cover the policies it has written," she said in an email.
"We have to bring a healthy, private market back to Florida, and 'depopulating' Citizens is the primary way," she said. "Competition is going to be critical to not only getting policy premiums under control, but making sure all homeowners are not left on the hook to pay for a few."
Some critics argue homeowners are not getting enough information about the new companies, nor does the program boost their ability to pay claims in the event of any major storm losses. Others contend customers who opt for the takeout may face big premium hikes.
Local insurance agent Debi Anderson with Grand Prix Services Corp. in Sebring said she is not happy with the way Citizens is parceling off its policies to takeout companies, which she felt may not be doing their due diligence before offering to adopt certain insurance policies.
In one instance, a client of hers who is an elderly homeowner was supposed to be picked up by a private company, which didn't know she ran a small beauty shop in her home until Anderson informed them.
The reason why Anderson had got the homeowner into Citizens in the first place was because private carriers did not want to insure her because of business, she said.
When the company found out about the home business, she was told they would likely not renew her policy, possibly leaving her to start all over again with Citizens if she had gone with the private carrier, Anderson said.
"When people are falling through the cracks because you have not thought out your buyout, then that is not helping the consumer nor the agent," she said.
Citizens has tightened its eligibility criteria within the last year or so, Anderson said, and unlike some other insurance agents, she treats Citizens as the insurer of last resort and recommends it to customers who can't get a policy through a private carrier at a reasonable price they can afford.
"The main reason I choose (Citizens) is due to prior claims that makes them ineligible for any other company," she said.
Nearly 45,000 homeowners have opted out of the takeout in the past month. Ashburn said no analysis has been done why they chose to remain with Citizens.
"But she said a number of those homeowners who have already opted out expressed concern that private companies couldn't guarantee rates will be comparable to the Citizens' numbers when filed next year," a News Service of Florida report adds.
Homeowners covered by Citizens, however, will see an average rate increase of 6.3 percent in January 2014, down from a 7.9 percent hike requested on the combined personal-lines and coastal accounts.
Multi-peril policy holders will get a 4.4 percent increase in January, while homeowners with wind-only policies face an average 10.5 percent hike in February.
The agency expects another 70,000 policies to be shifted to private carriers in December. Also, the state Office of Insurance Regulation in January could approve about 100,000 more policies for further takeout, Ashburn said.
The companies picking up the most accounts are Heritage Property & Casualty and Homeowners Choice. Both had been approved for up to 50,000 policies. Heritage received 35,737 policies, while Homeowners Choice got 34,872.
Other insurance companies involved in the takeout include Florida Peninsula, Southern Fidelity, Southern Oak, Tower Hill Preferred, Town Hill Prime, Town Hill Signature, United Property & Casualty and Weston.
United Property&Casualty had been approved for up to 100,000 policies, but ended with 18,156.
The News Service of Florida contributed to this report