Policy removals slow Citizens’ growth

Jan 25, 2008

Posted on Fri, Jan. 25, 2008: Miami Herald

Policy removals slow Citizens’ growth

Seven companies that assumed policies from the state-run insurer helped curb its growth a bit in the past year.

At Thursday’s Board of Governors meeting in Jacksonville, officials reported that nearly 250,000 policies were removed from Citizens Property Insurance in 2007.

The takeouts kept Citizens’ policy count to 1,304,909, just slightly higher than the total on its book at year-end 2006 — 1,298,922 policies.

Jay Odom, one of the Citizens’ governors, praised the takeout program, saying, “Depopulation is booming.”

These seven insurers have to keep these policies on their books for three years. Unlike previous years, these firms received no bonuses for taking on the policies. For several years after it was formed in 2002, Citizens offered hefty bonuses to entice private insurers to take policies. It needs to be approved by state regulators.

The Citizens board approved a plan to continue the takeout program for 2008. The plan increases the holding time to five years and pays no bonuses.

The takeouts reduced Citizens’ exposure by $68 billion.

But Citizens is still on the hook for $485 billion — property the insurer has to pay to repair or rebuild after a massive storm. The company’s exposure increased by $76.2 billion in 2007.

The takeout program didn’t do anything to reduce Citizen’ exposure to hurricane risk in coastal areas of the state. None of the policies removed from the insurer were windstorm-only policies. Most of the wind-only policies are in South Florida, where properties are most exposed to dangerous and destructive storms.

The takeouts were multi-peril policies including wind coverage from all over the state, including inland areas in South Florida.