When it comes to depopulating Citizens most observers would say that what’s been done, now and in the past, has worked.
So, I must ask: if it works why does Florida, with great expense, disruption and often outright confusion always have to force policyholders out of a state-run insurer created to be their last resort? Particularly today with rates stabilized and 17 new property insurers clamoring for business.
Think about it. Over the past decades Florida has been incredibly creative in developing various methods to remove policies from Citizens. Multiple bonus programs were set up—some for agents, many for insurers. Huge policy tranches were bundled for auction. And, of course, elaborate “Clearinghouses” were established to channel policyholders to private carriers.
The price tag on the first Clearinghouse was $45 million, and it helped “takeout” many of Citizens 1.5 million policies circa 2013. Recently, with the help of yet another Clearinghouse, Citizens has moved (again) from a high of 1.42 million policies to something less than 336,000 and still dropping. A reduction of 76%.
Of course, Florida’s unprecedented and highly effective tort reforms kickstarted this most recent decline. Rates are now down, reinsurance is available and the private market is clearly stabilizing. (See: Governors January 13, 2026 press release)
Nevertheless… in the final hours of the 2026 legislative session, lawmakers enacted yet another “Clearinghouse.” This one removes Commercial policies utilizing Excess and Surplus Lines carriers. (See NOTE #1 below)
Insurer bonuses, agent bonuses, bundled tranches, multiple clearinghouses–all this, and one final irony: Florida officials appropriately tout the success of Citizens depopulation efforts and the commensurate reduction in potential assessments. But they often do it while simultaneously publicizing Citizens rate reductions that impede depopulation and promote upward pressure on assessments. (See NOTE #2 below)
Time For A Change
Instead of relying on expensive quick fixes why don’t we consider making Citizens a place where people really don’t want to be insured. You know, a last resort–not just in name but in fact.
One component would be to charge a truly non-competitive rate. Once Citizens reaches an agreed upon low point in policy count a rate equalization factor could guarantee rates that are greater than the highest “approved” private market rate in any area. Not higher on average–higher than the highest rate already approved by OIR.
Don’t laugh, at least one other state does this via a 10% surcharge. Occasionally, in times of market crisis, it will temporarily suspend the surcharge. The Louisiana Citizens program uses this approach. (See NOTE #3 below)
If we followed Louisiana’s model (or something like it) in tandem with a policy form that meets only the minimum requirements of the secondary mortgage market (so as not to compete with private coverage), we’d be in fine stead. (See NOTE #4 below).
In fact, if we did just these two things “NOW” we could stop hassling with depopulation plans altogether because Citizens would only have policyholders that absolutely couldn’t find coverage anywhere else. (See NOTE #5 below)
Speaking frankly: I offer this knowing it’s not likely to be implemented; for a variety of reasons, mostly political. Having said that, there are some statutes that prove I’m not the only loon who thinks this way.
Here, for example, as required by law, is what Citizens plan of operation (Section 8(E)) says starting on page 17:
The Board may establish, subject to approval by the Office, different eligibility requirements and operational procedures for any line or type of Coverage for any specified county or area if the Board determines at a duly noticed public meeting that such changes to the eligibility requirements and operational procedures are justified due to the voluntary market being sufficiently stable and competitive…
Said another way: by denying eligibility under the statutorily prescribed criteria above, Citizens board has an alternate pathway to channel policies out of Citizens and into our increasingly competitive market. It can even select specific coverage (wind, sinkhole, etc.) or lines of business (Homeowners, DP’s, etc.) as ineligible. And such can be applied to new applications, renewals or both.
So, here’s another question: in today’s stable and competitive market why should anyone in an inland county with plenty of other options need or deserve coverage from a subsidized last resort insurer?
In Summary
Florida’s insurance market is finally on firm ground. Rather than continuing to compete with private carriers looking for business, NOW (while Citizens population is low and the market is stable) is the time to build a true market of last resort–one that minimizes both the assessment burden and administrative workload by covering only those who truly can’t find coverage anywhere else.
Feel free to log in and share your thoughts.
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NOTE #1: SB-1028, by Senator Gruters and Representative Redondo, creates a Clearinghouse for commercial policies similar to the existing personal lines clearinghouse—an agent submits a risk to the clearinghouse to determine if there are any private market options available. It allows Surplus Lines insurers to participate and to make eligibility terminating offers. Several stakeholder groups are urging the governor to veto the measure.
NOTE #2: One example–In a March 4 press release, Citizens President/CEO, Tim Cerio correctly stated that “Most Floridians now have many options as financially sound private insurers compete for their business.” The release also outlined pending rate reductions: “Citizens…will reduce rates for its homeowners multiperil policyholders by an average of 8.8% in 2026…wind-only policyholders will see an average 5.5% reduction.”
NOTE #3: New From The States, April 2024: “By design, Louisiana Citizens charges 10% above the most expensive policy in a given parish so as not to compete with the private market and to discourage homeowners from choosing Louisiana Citizens unless absolutely necessary.” See: https://www.newsfromthestates.com/article/proposal-lower-louisiana-citizens-insurance-rates-narrowly-fails-tied-vote.
Also, Insurance Business, July 12, 2024, by Terry Gangcuangco: “Louisiana Citizens Property Insurance Corp. will halt its mandatory 10% premium surcharge for the next three years, with policies issued or up for renewal after the New Year not including the surcharge. The suspension, as per a new law that went into effect this month, will last until the end of 2027.”
Authors note: it is significant that, by temporarily suspending a surcharge, Louisiana avoids the politics involved reinstating it once the market has stabilized.
NOTE #4: Under Section 10(A)(2) Citizens Plan states “The corporation shall adopt the following policy forms: …Basic personal lines property policy forms that are policies similar to an HO-8 policy or a dwelling fire policy that provides Coverage meeting the requirements of the secondary mortgage market, but which Coverage is more limited than the Coverage under a standard policy.”
NOTE #5: In response to Florida’s 04/05 storm seasons, subsequent legislative actions, including HB-1A in 2007, reset Citizens’ rates and froze them at 2006 levels. The requirement for Citizens’ rates to be non-competitive and benchmarked against the top 20 insurers was also removed. While these steps offered short-term rate relief they also limited Citizens’ flexibility to respond to market changes and contributed to another surge in policy count.
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