More Citizens insurance policies may move to private market

Seven private insurers have been approved to pick up what would amount to nearly half of the remaining policies held by the state-backed Citizens Property Insurance Corp.

Just don’t expect a mass exit from Citizens when the “takeout” period arrives in October.

The Office of Insurance Regulation announced Wednesday that up to 280,857 policies have been approved to move to the private insurance industry in late October.

“The number of policies that will ultimately leave Citizens will be substantially lower than the number of policies OIR has approved for takeout,” Citizens spokesman Michael Peltier noted in an email Wednesday. “That has always been the case but has become more noticeable over the past few takeouts.”

Citizens had 598,646 policies as of June 30.

The overall Citizens policy count is a considerable drop from a high of 1.5 million policies in 2012, when Gov. Rick Scott pushed to scale back the agency by putting more homeowners under private firms. The push was an attempt to reduce risk for policyholders across the state who could get hit with assessments to pay off Citizens claims after major hurricanes.

Citizens was created as the insurer of last resort, and president and chief executive officer Barry Gilway has projected that “depopulation” steps by Citizens, which includes the takeout process, should eventually lower the agency’s policy count to about 450,000 of the least-insurable policies.

Before this week’s announcement, the state had made 713,336 policies available through the takeout process in 2015. So far, 128,133 policies have been removed from Citizens through the process.

A reason for the low turnover is that private insurers typically select the least-risky policies. Also, policyholders are allowed to reject takeout offers.

In October, a total of 279,357 personal-residential policies and 1,500 commercial-residential policies will be offered to Anchor Property & Casualty, Cypress Property & Casualty, Heritage Property & Casualty, Homeowners Choice Property & Casualty, Olympus Insurance, Safepoint Insurance and United Property & Casualty Insurance.

Homeowners Choice Property & Casualty, a wholly owned insurance subsidiary of HCI Group Inc., was approved for up to 51,666 policies, but noted in a release Tuesday that it will target just about 17,500 wind-only policies.

“Based on the current opportunity within Citizens, we anticipate the focus of this takeout will be wind-only policies,” Paresh Patel, HCI Group’s chief executive officer, said in the release. “Selecting only those policies from Citizens that meet our strict underwriting criteria allows us to minimize our underwriting risk.”

Peltier also noted that the pace of the depopulation efforts may temporarily slow if Citizens rates proposed for 2016 are approved. That is because Citizens’ least-risky customers could see rate decreases, which might give them little incentive to move to the private market.

The Citizens Board of Governors has proposed a plan that would lead to an average 3.2 percent increase in rates next year for many homeowners. The rates would fluctuate depending on location, home and type of policy.

Under the plan, which will be heard by state regulators on Aug. 25, premiums would increase an average of 8.6 percent on coastal “multi-peril” policies, which provide full coverage to homeowners. Citizens’ customers who live in inland areas, however, would fare better under the rate plan. Homeowners in those areas would see average 1 percent rate decreases.