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State-run insurance company continues to shrink policy count, CEO says


The state government’s role as a property insurer is only going to get smaller over the next four months.

Citizens Property Insurance has already passed off 1 million insurance policies to private carriers since 2012, and another surge is coming over the next four month, said Barry Gilway, CEO and president of Citizens.

Gilway told the Citizens board of governors on Wednesday that there will be enormous action in October and November and he foresees a very strong January coming for take-outs - policies offered up to private carriers.

By the end of the year, Gilway predicted tens of thousands of more policies will be in the hands of the private market.

“So we’re still thinking that we’re going to be – by the end of the year – we’ll be in the low 500,000 range,” Gilway said of total policies.

By the end of 2016, Citizens projects it will have 450,000 policies or less.

That’s a massive reduction compared to 2012, when the company had a record 1.5 million property insurance policies and not enough surplus to cover the state if a major hurricane had hit.

Currently the state is down to 586,000 policies, but Gilway said when September goes in the books, the state should have about 575,000, plus almost $7.5 billion in surplus.

“Takeout activity is just going on at an unprecedented pace,” he said.

Getting those numbers so low hasn’t come without controversy. Gilway has been under fire for the way Citizens has shifted many of the policies. Critics say letters from insurance companies announcing they were going to acquire a homeowner’s policy looked like junk mail and wound up in trash cans, preventing people from opting out to remain in Citizens. Others have complained that Citizens used “scare tactics” warning of 45 percent extra assessments for those who remained in Citizens, though whether that would ever happened was questioned because the company has $7 billion to cover potential losses.

But Citizens has changed its approach to be more consumer friendly, it says. Now Citizens sends a warning letter to residents so they know that a private insurer is going to get in touch with them to switch into the private market. And letters have been reworded. They still warn of potential assessments but have less of the doomsday feel that Florida Chief Financial Officer Jeff Atwater labeled a “scare tactic.”

State officials have been trying to shrink Florida’s role as an insurer as the state’s private market has slowly rebounded from the early 2000s – specifically 2004 when four hurricanes blasted Florida. The bigger Citizens is, the bigger the risk it is to all taxpayers, said Gary Aubuchon, a member of the board of governors. He said when Citizens has too much risk, everyone in Florida can be hit with surcharges to make sure there is enough money to cover Citizens.

Citizens was intended to be the insurer of last resort, taking only policies that the private market would not take. But when major carriers stopped writing policies in the early and mid-2000s, Citizens’ numbers swelled.

While the numbers are shrinking, Citizens still is having to raise premiums on many of its customers – particularly in southeast Florida. If not for a major increase in water loss claims and litigation coming from Miami-Dade, Citizens officials have said they could have cut rates. If water claims there mirrored trends in other parts of the state, more than nine out of 10 Miami-Dade policyholders would see rate reductions for 2016, Citizens spokesman Michael Peltier said. Instead, the Office of Insurance Regulation last month approved rates that call for an average 8.1 percent increase for Miami-Dade customers.