With more than 1 million policies, ‘going above and beyond’ continues at Citizens Insurance

Barry Gilway, president and CEO of Citizens Property Insurance Corp., said Wednesday that state-sponsored insurance has been at a “high level” for the past two decades.

Right now, it continues to rise rapidly.

Citizens last week reached 1.055 million points – more than double the previous two years – as private insurers downgrade customers to try to prevent financial losses. Meanwhile, the industry continues to struggle with major challenges, including high insurance costs and high claims-related litigation.

Gilway told the Citizens Board of Governors at a meeting Wednesday and said private property insurers are expected to have $1 billion in losses this year. Five insurers have been declared insolvent and placed into receivership since February, with thousands of customers of these companies turning to Citizens for help.

“If the numbers (financials) are still in the red, and the companies are not put in a position where they’re getting enough returns, you’re not going to have a stable market,” Gilway said.

The most important issue in the market is reinsurance, which provides insurance coverage. It’s especially important in Florida, which relies heavily on Florida-based insurers rather than large national insurance companies.

Gilway said 40 percent to 50 percent of premiums go toward recycling rates, and Florida carriers are expected to continue to face a tough market.

A review released last week by AM Best ratings said that recyclers are seeing losses in Florida, “despite the hurricane season, it also shows that the current prices are not enough to cover the inflation and fraud in the market. Therefore, recyclers have been leaving the market for Florida goods or raising prices significantly.”

“Prices will continue to affect business plans and the ability of companies to use their capital assets to protect against headwinds,” the investment watchdog said. “AM Best expects insurers to be cautious about the risks they’ve reestablished, putting pressure on the Florida homeowners market, which has seen four insurers, along with a Louisiana insurer that wrote policies in Florida, declare bankruptcy since the end of February.”

Florida lawmakers in a special session in May agreed to use $2 billion in tax dollars to provide an additional “portion” of insurance to insurers who may not be able to purchase it on the regular market. But this was a stoppage to help insurers, many of whom were due to have insurance contracts in June.

Lawmakers have also taken steps to reduce prosecution costs, but Gilway and many other retail executives say there is more to be done to reduce prosecutions and fines. This issue, however, is always controversial, as groups such as plaintiffs’ representatives argue that lawsuits help to hold insurers accountable.

“For the third year in a row, private companies will report losses of $1 billion, with no hurricane to report,” Gilway said. “This is case-driven.”

Citizens was created as a last-ditch insurance policy and has been changing its plans over the past two decades.

After Florida was hit by hurricanes in 2004 and 2005, the number of Citizens’ policies exceeded 1 million and remained above that mark until the beginning of 2014, according to information on the insurance website. But this number dropped below 500,000 in 2016 and remained below this level for more than four years.

In September 2020, Citizens hit 511,055 points and increased to 1,055,366 points as of Friday, with thousands of customers a week logging in. a year.

In other parts of the state, however, they are the biggest players. For example, it has 39 percent of the residential market in Miami-Dade County and 30 percent in Broward County, Gilway said.

Government leaders have been trying to reduce the number of policies in Citizens, because legislators across the country can face additional costs – known as “tests” – if Citizens run shortfalls after a hurricane or several hurricanes. Those with civil liability policies may have the most trouble with the assessment, but other insureds may also face additional costs if the deficits are large enough.

“The whole state is at risk,” citizen board member M. Scott Thomas said at Wednesday’s meeting.

News Service Assignment Manager Tom Urban contributed to this report.