A top debt-rating firm gave high marks Tuesday to the move to jettison policy holders from the state-run Citizens insurance program.
Moody’s issued a report saying the plan by approved by the Legislature and Gov. Rick Scott will reduce the risk for a hurricane fund that had gotten too large. By reducing the risk of a flood of post-storm claims Citizens couldn’t afford, the “depopulation” plan will also make it easier for private insurers to compete in Florida and will decrease the possibility of an assessment on all Florida insurance policies to subsidize a major loss by Citizens.
Citizens this summer approved a plan that would remove hundreds of thousands of policies from its portfolio and increase rates by an average of about 7 percent. Along with praising the push to lower Citizen’s policy count, Moody’s also endorsed the rate increases — hikes under fire by consumer advocates as too costly. Moody’s judges all moves by an entity’s ability to pay back debt on Wall Street’s bond market.
In its report, Moody’s analysts said Citizen’s current count of 1.2 million policies is large enough to keep out private-sector competitors. Citizens insures one out of every five homes in Florida, according to the Moody’s report, and Citizens’ “size has also kept the private insurance market in Florida from growing.”
A number of private insurance companies have chosen to leave Florida or to stop writing new policies in the state” because they found it too hard to beat Citizen’s premiums, the report stated.