Citizens Property Insurance approves 31,000 more policies for take out
Feb 11, 2013
The following article was published in The Florida Current on February 11, 2013:
By Gray Rohrer
Citizens Property Insurance Corp. board members approved the removal of up to 31,000 wind-only policies in South Florida on Monday, removing about $30 billion in risk and $840 million in annual probable maximum loss from its books.
The policies will be taken over by Weston Insurance Co., but homeowners will have the option to decline the new company’s overtures.
Under the agreement, Weston will provide reinsurance on the policies it will assume through May 31. Part of that reinsurance, however, is backdated to Dec. 21, allowing Weston to earn premiums from that time until the end of the “quota share” agreement — for the five months before hurricane season. Weston won’t have access to premium payments until the depopulation progam is complete. Takeouts will begin in March and homeowners who do not opt out will be covered entirely by Weston as of June 1, the start of hurricane season.
Weston also agreed to keep the policies for at least three years and maintain the annual rate increase cap of 10 percent for Citizens on the new policies. That cap, however, could rise if the Legislature increases it this year, as proposed in a Senate draft bill. Then the new Weston policies would be subject to the increased rate increase cap.
“I would expect Weston would want to have their rates sound as quickly as possible,” said Citizens chief financial officer Sharon Binnun.
Citizens officials, prodded by Gov. Rick Scott and GOP lawmakers to reduce the size of the state-run insurer, which has 1.3 million policies and 23 percent of the property insurance market in Florida, were ecstatic about removing coastal wind-only policies. About 23,000 policies cover homes, 3,000 cover condominiums and 5,000 cover commercial properties. Binnun said Citizens has never had a company take over wind-only policies for condos before.
“(The takeout) is unique because these condo policies — commercial residential wind-only policies — are such a large percent of the risk being removed and that’s something that’s not occurred,” Binnun said.
View the original article here: http://www.thefloridacurrent.com/article.cfm?id=31499716