In a significant shift in Florida's insurance landscape, the state's insurer of last resort, Citizens Property Insurance Corporation, is slated to transfer hundreds of thousands of policies to private insurers later this month.
This move comes in response to a surge in demand and follows regulatory approval earlier this year.
According to Newsweek, the Florida Legislature established Citizens in 2002 to provide insurance coverage to eligible property owners who were unable to secure it in the private market. As the largest insurer in the state, Citizens has seen a dramatic increase in policies in recent years. This uptick is largely due to private insurers dropping customers and hiking rates in response to losses from payouts and litigation. As of August 2024, Citizens had 1,250,791 active policies, a significant leap from the 420,366 policies it held five years prior in August 2019.
In a move aimed at alleviating this burden, insurance commissioner Michael Yaworsky signed an order on August 2, permitting ten private insurance carriers to assume 413,808 policies from Citizens starting in late October. A report by Florida Politics indicates that an additional 235,035 policies were approved for transfer beginning in November.
"Citizens is committed to helping its policyholders find coverage in the private market," the corporation's website states. "As required by Florida law, Citizens' Depopulation Program matches Citizens policyholders with insurance companies interested in removing their policy from Citizens and providing private-market coverage for their policy."
This transition comes on the heels of Hurricane Helene, which wreaked havoc on Florida and other eastern states at the end of September. With a death toll exceeding 200 and hundreds more reported missing, the hurricane is shaping up to be one of the worst in U.S. history.
Data from the Florida Office of Insurance Regulation reveals that since Hurricane Helene's landfall, 84,400 claims have been filed by homeowners and businesses. Of these, 42,219 were for residential properties. To date, 1,340 claims have been settled with a payment, while 2,712 have been closed without a payment. Over 38,000 insurance claims remain open.
The insurance landscape in Florida is further complicated by some of the highest home insurance rates in the country. Bankrate reports that as of October 2024, the average insurance cost for a $300,000 home in Florida is $5,527 per year. This figure is significantly higher than the rates for homes of the same value in neighboring Georgia ($2,071) and Alabama ($2,745).
The average home insurance premium in Florida is $3,242 more expensive than the national average of $2,285. In some areas, costs can exceed $8,000. The state average is second only to Nebraska, where the average premium on a $300,000 home is $5,652. This shift in policy ownership from Citizens to private insurers is a significant development in Florida's ongoing struggle with high insurance costs and natural disaster recovery.
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