Florida Citizens shows signs of beginning to shrink, HCI takes out 53,750 policies

Homeowners Choice Property & Casualty Insurance Company, a subsidiary of HCI Group, has completed successful underwriting of approximately 53,750 policies with Citizens Property Insurance Corporation, Florida’s state-backed insurance company, insurer of last resort now showing signs that, thanks to depopulation, its exposure is beginning to reduce.

florida-citizens-mapThe move is the latest by Florida Citizens as the state’s property insurer of last resort seeks to reduce its exposure as primary insurers show a growing appetite to assume the risks it once insured .

Citizens had 1,344,353 insurance policies in force as of November 17, up from 1,334,620 at the end of October.

But there is now evidence that depopulation efforts are accelerating, and Florida citizens recently reported their first drop in policies in a long time, standing at 1,407,805 policies in force at the end of September.

These withdrawals have the effect of shifting risk from the state and, ultimately, taxpayer-supported citizens, to the private insurance market, which of course will increase demand for reinsurance from insurers as their exposure will increase.

HCI Group said the supported policies amount to approximately $196 million in in-force premiums and that the support will take effect on November 21, after being approved in September 2023 by the Florida Office of Insurance Regulatory .

Interestingly, although it is often assumed that Florida Citizens would be the cheapest insurer available, HCI claims that more than 70% of the policyholders whose risk it assumes will actually see savings compared to the offer of expected renewal that they would have received from Citizens.

Homeowners Choice was authorized to underwrite up to 75,000 policies from Florida citizens and made 72,958 offers, with 53,750 policies ultimately to be assumed, representing a 74% acceptance rate.

“Homeowners Choice has successfully completed the transition of a significant number of insurance policies that were previously identified by our technology as attractive insurance policies to take on. The strong acceptance rate is a result of Homeowners Choice offering policyholders a competitively priced renewal policy and expanded coverage compared to their existing Citizens policy,” commented Paresh Patel, President and CEO of HCI.

HCI Group’s other subsidiary, TypTap Insurance Company, is expected to take over Citizens Property Insurance Corporation’s policies. in December 2023 and January 2024.

As Citizens’ depopulation efforts accelerate and insurers’ appetite to assume Citizens’ policies increases, Florida’s market landscape will adjust, as risk returns to the private side.

This will impact the dynamics of reinsurance renewals next year, with a number of insurers participating in the withdrawal program likely to grow their portfolios and require more reinsurance as a result.

Find all our news and analyzes on the insurance and reinsurance market in Florida.

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