Citizens Property Insurance expects to drop below one million policies

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The state-backed Citizens Property Insurance may drop below 1 million policies for the first time since 2005, while its employees could start to occupy fewer buildings in the coming year, reports Jim Turner of the News Service of Florida.

Citizens, which stood at a bloated 1.5 million policies a little more than a year ago, could be around 600,000 policies before the next storm season approaches.

However, Citizens President and CEO Barry Gilway said Friday a more reasonable number would be just over 900,000.

Gilway credited the pending reduction to recent takeout efforts by private companies and to the anticipation of using a new clearinghouse to help direct what are expected to be many of the least-risky policies into the private market.

“The difference in the entire makeup of Citizens in the last 14 months is staggering,” Gilway said during a board meeting that mostly focused on informational updates. 

Gilway was brought onto Citizens from Seattle-based Mattei Insurance Services in June 2012 as Citizens was under fire for its role as the state’s largest property insurer.

As of Aug. 31, Citizens had nearly 1.23 million policies, according to the most recent number posted on the company’s website. Gilway said Friday the number was now closer to 1.2 million.

Nearly 400,000 Citizens policyholders will be told during the next month that they will have to decide whether they want to remain with the state-backed insurer or be shifted to one of 10 private carriers that were approved in August for a massive takeout program.

Gilway said he expects seven or eight companies to request taking out an additional 200,000 policies in December.

In each case, the private carriers must agree not to change the terms of policies until it is time for policies to be renewed.

Citizens estimates that 30 percent to 35 percent of those offered the move to the private market will remain with the state-backed insurer when the initial offers are made. 

Lisa Miller, a former deputy insurance commissioner who now lobbies for insurers, said the reduction should be good for all Floridians.

“This means more options for consumers because companies will compete — compete on price, service and coverage,” Miller said.

Sam Miller, executive vice president of the Florida Insurance Council, said the reduction of Citizens will make the rest of the insurance market in Florida stronger. But, he added that Citizens, which was under 300,000 policies a decade ago, still has a ways to go.

“We believe Citizens should not compete with private insurers who are writing at rates approved by the Office of Insurance Regulation and that coverage should be written on the private market whenever it is available, again at rates regulated by the state,” Sam Miller said in an email.

He added that while statewide assessments may still be necessary following a major hurricane, the totals will be less. 

With the trimming of policies, and as Florida is in the midst of an eighth consecutive season of having no major hurricane make direct landfall, Citizens’ unfunded liability risk from the impact of a one-in-100-year-storm has dropped from $10 billion to $4 billion, Gilway said. 

“And that does not contemplate the 600,000 requests for depopulation,” Gilway said.

With the leaner number of policies, and as the company internally undergoes a massive reorganization, the state-backed insurer is also looking to scale back on its facilities used to house approximately 1,120 employees. 

Collectively, the nine properties cost $525,894 a month in leases. The total does not include operational costs.

Gilway said the agency is undertaking a review of four offices in Jacksonville, four in Tallahassee and one in Tampa for the potential of consolidation and to reduce lease costs.

“We probably do need one location in each,” Gilway said. “Looking at the lease rates, we’re designing strategies to consolidate locations.”

Citizens spends $270,818 a month to rent space in the Corporate Center, Cypress Plaza, The Point and on Nations Way in Jacksonville.

Citizens already plans to move out of Monroe Park Tower in Tallahassee, which costs $11,218 a month, by the end of the year. The remaining locations in Tallahassee, at Citizens Centre I, Citizens Centre II and the Killearn Center, collectively cost $129,146.

Meanwhile, Yong Gilroy, Citizens chief insurance officer, told the board the clearinghouse, which lawmakers approved this year, remains on pace to begin Jan. 1.

Last month, the Citizens board approved a contract that could be worth up to $44.9 million over a decade with Bolt Solutions, Inc., to provide a software platform for the clearinghouse.

The clearinghouse is designed to match up homeowners with private insurance companies willing to provide coverage. 

Consumers, working with their agents, will submit information, and insurance companies then will be able to make coverage offers. 

Sen. Tom Lee, R-Brandon, has requested that additional warnings be clearly placed on the takeout offers.