Citizens Property set to hand off more policies

Jun 2, 2008

Orlando Sentinel--June 2, 2008

Anika Myers Palm
Sentinel staff writer

Six more insurance companies will be taking policies from Citizens Property Insurance.

Florida Insurance Commissioner Kevin McCarty has signed off on plans for the insurers to take 100,000 policies from the state-backed insurance company in June.

McCarty said the majority of the newer companies had been licensed with double or triple the $5 million startup capital required by state regulations.

The six companies are American Integrity, Argus Fire & Casualty, Avatar Property and Casualty, Homeowners Choice Property & Casualty, Magnolia, and Southern Oak.

American Integrity has removed 42,000 policies from Citizens so far this year, and has received approval to take 75,000; Argus has taken 12,360 and can take up to 18,000; Avatar is expected to take up to 10,000 policies in June; Homeowners Choice has taken 20,000 to date and can remove up to 30,000; Magnolia Insurance will take out up to 60,000 policies in June; and Southern Oak has taken 6,678 and can remove up to 75,000 policies.

Insurance regulators have approved plans to remove up to 500,000 policies from Citizens this year.

Rapid growth

State-run property insurers such as Citizens have grown by leaps and bounds, according to research by the Insurance Information Institute.

The plans had $656.7 billion in exposure to loss in 2006, the last year for which data were available, compared with just $54.7 billion in 1990.

With 1.5 million policies — 60 percent of all policies issued under state-run Fair Access to Insurance Requirements programs — Citizens is the largest state-backed insurance plan in the U.S.

Second to Florida?

Massachusetts, with 217,056 policies issued through its state-backed plan.

Credit scores and insurance

What should your credit score have to do with your insurance premium?

Not much, say state insurance regulators, including McCarty.

He explained some of the steps state regulators have taken to limit the relationship between credit scores and premiums in May 21 testimony before the U.S. House Financial Services Committee’s Subcommittee on Oversight and Investigations.

McCarty, who is chairman of the National Association of Insurance Commissioners Property and Casualty Insurance Committee, said using credit scores could result in discriminatory pricing for consumers of certain ages or ethnicities.

Celebrating 60 years

Hugh Cotton Insurance, one of the oldest Orlando-based insurance companies, will be celebrating its 60th anniversary this year — as well as the 50th anniversary for Vice President Irma Platt.

The firm, which started in 1948 by offering agribusiness insurance, now offers homeowners, boat, auto, group health, life and marina insurance.

Thomas Cotton, who runs the firm now, is a third-generation agent. Cotton said he was inspired to join the family business out of a sense of adventure.

"When you’re a salesman like I am, you wake up unemployed every day, and you have to do something to generate revenue," he said. "To me, that’s just exciting."