If there were only one numerical trend needed to understand how dire the property insurance market in Florida has been, it would be the steady growth of policies taken on by the state’s insurer of last resort, Citizens Property Insurance Corp.
It may be time to reassess assumptions about the market, some say.
Citizens officials have adjusted their policy count forecast downward for the rest of 2023 and expect to end the year with around 1.3 million policies, fewer than the 1.4 million it has now, said Tim Cerio, Citizens’ chief executive officer, president and executive director. Earlier forecasts were for Citizens to finish 2023 with 1.5 million to 1.7 million policies, he said.
Speaking to the Florida Senate Banking and Insurance Committee, Cerio and Florida Insurance Commissioner Michael Yaworsky painted a picture of a still-struggling market, but with signs pointing in the right direction.
Yaworsky, whose nomination to be commissioner was approved in March, said from the outset he thought it would be a victory for Florida if Citizens ended 2023 with 2 million policies.
Cerio pointed to private carriers’ positive response to its program to take out Citizens policies, with assumption rates of around 42%, up from about 18% a year ago.
The total exposure removed so far from Citizens this year through the takeout program is around $14 billion, or double the 2022 figure, he said — and that’s not counting depopulations for this month, November and December.
Still, the risk remains high, as Citizens has half of all of the exposure of the top seven residual carriers across the United States, he said.
Citizens is working on a state-approved plan to pool its reserves among its three main accounts so reserves from one may be used to fill another depleted account, without having to assess property policies across Florida, Cerio said.
The fact Florida has five new companies writing policies and taking out Citizens policies is evidence of a market turning around, Yaworsky said.
“A lot of companies are acting on optimism,” Yaworsky said. “Obviously to form these companies, capital had to be raised, business plans had to be developed, people had to be convinced that this was a viable market to enter and that the future was relatively bright.”
Several more companies are in the process of formation and may further bolster the market, he said.
Yaworsky added Florida is not taking just any operators that apply to take on Florida property risk.
“This is not a Wild West scenario where we’ll take anybody with the dollars to come into our market,” he said. “You have to have an organic growth plan that goes beyond just taking out policies.”
Yaworsky also said he’s been seeking to meet with top executives of the nation’s largest property/casualty firms to promote the Florida market and to ensure they are aware of legislative reforms taken in 2022 and 2023 to reduce litigation and strengthen insurer accountability. That’s vital for the state because the majority of its property insurers lack the diffusion of risk large carriers have, he said.
Those regional carriers also are dependent on reinsurance, and while the most recent renewals were up an average of 27.03%, that was better than the 50% to 60% increases they faced Jan. 1, he added.
Without naming the company, Yaworsky also mentioned State Farm earlier this year said it would remain committed to Florida and had plans to grow “responsibly” there.
The top five writers of homeowners multiperil insurance in Florida in 2022, based on direct premiums written, were: Citizens Property Insurance Corp, with a 15.62% market share; Universal Insurance Holdings Group, 10%; State Farm Group, 6.68%; Florida Peninsula Group, 4.53%; and Tower Hill Group, 4.44%, according to BestLink.