Reducing the size of Citizens could lower the amount of potential assessments, or hurricane taxes, levied on consumers if Florida experienced a storm the size of Hurricane Andrew. Company leaders say Citizens needs to shrink from 1.4 million policies to about 750,000.
Preliminary results from a survey being conducted by Citizens show that less than 20 percent of homeowners realize that they could be hit for assessments after a major storm.
Fearing hurricane taxes, Scott told then-Citizens president Scott Wallace last year to shrink the size of the company drastically over the next few months.
I expect the solution you and the board bring to me will solve the problem by June of next year before the next hurricane season, Scott told Wallace in November.
Since then, company has launched on an aggressive campaign to get homeowners out of Citizens. It has scaled back what it covers, hiked premiums and deductibles, inspected thousands of homes and added more paperwork for potential new customers. It also has eliminated millions of dollars of fees for private companies taking policies out of Citizens this year.
But the impact on Citizens total size has been minimal. The company, which grew by more than 30 percent from 2008 to 2011, has only shrunk this year by 32,500 policies, or 2.2 percent. In part of South Florida and Tampa Bayregions where most of Citizens risk is locatedthere are few, if any, private companies offering affordable insurance, consumer advocates say.
Additionally, about a third of homeowners decide not to leave Citizens when presented with a takeout offer from a private company. Many fear their rates will increase faster once they leave Citizens, which by law must keep annual rate hikes below 10 percent. Others are worried about the financial strength of the takeout company.
In the past, some smaller companies have failed after taking policies out of Citizens.