Nearly 400,000 policyholders will be given the option to return to the private market in November, following last week’s approval by the Office of Insurance Regulation (OIR) for 10 private insurers to take out policies from the state-owned insurance firm.
Homeowners with policies that Citizens wants to transfer will receive a notice at least 30 days in advance. It will announce the name of the private insurer that’s slated to take their policy, and it will give them instructions on how they can elect to remain with Citizens if they wish. Homeowners who move their coverage to a private company also have 30 days to decide whether to return to Citizens.
“Citizens policies are becoming more attractive to private carriers,” says Citizens Property Insurance Corporation CEO Barry Gilway. “We have had success but still have a ways to go.
A key advantage for homeowners who choose to make the switch from Citizens to a private company involves the cost after a hurricane strikes: Switched policyholders would no longer be subject to Citizens’ assessments, which could reach 45 percent of the premium. Instead, they would be subject to the 2 percent assessment that could be levied on all Florida policyholders. Even then, however, the 2 percent kicks in only if event Citizens policyholder assessments are insufficient.
“These takeout efforts not only improve the coverage for many individuals but also reduce the risk of a hurricane tax on all Florida policyholders,” Gilway says.
In January 2014, Citizens will launch another tactic to cut back on the number of homeowners covered: A consumer clearinghouse, which will help match Citizens policyholders and applicants with private carriers willing to write coverage at comparable rates.
“The clearinghouse will provide policyholders with more private market options so they do not need to enter Citizens in the first place,” Gilway said.