When it comes to depopulating Citizens, what’s being done now, by lawmakers, the OIR, the DFS, with media assistance and all the usual depopulation suspects… has already been done before. And, to varying degrees, it has always worked… before.
So, if it works, the question “Why?” must be asked. “Why” does Florida, with great expense and disruption, always have to force policyholders out of a state-run insurer created to be their “last resort?” Especially, now—with rates stabilized (and dropping) and 17 new property insurers clamoring to write new policies?
Think about it. In the past decades officials and lawmakers have been very creative employing various programs to take policies out of Citizens. Bonus programs were set up for both agents and insurers. Huge policy tranches were bundled for auction. And, of course, “Clearinghouses” were set up to channel policies to private carriers.
The first Clearinghouse in 2013 had an initial price tag of $45 million. It helped move many of Citizens 1.5 million policies to private carriers. Recently, with the help of yet another Clearinghouse, Citizens has moved (again) from a high of 1.42 million policies to something less than 341,000 and dropping.
Of course, this most recent decline was aided by tort reforms that brought the return of the private market including the 17 new carriers. Rates are down, reinsurance is available and the market is clearly stabilizing. (See: Governors January 13, 2026 press release)
I almost forgot. There’s yet another “Clearinghouse” to worry about. Before adjourning Lawmakers enacted SB—1028 sponsored by Senator Gruters and Representative Redondo. It creates yet another clearinghouse. This one is for Citizens Commercial policies and it inexplicably favors less regulated E&S carriers over willing admitted carriers and agents–both of which tell me that this bill is not only unnecessary, but… needs to be vetoed. (See NOTE #1 below)
All of this makes “NOW” the right time to make Citizens a true “last resort” insurer. Not an alternative, but a “last” resort.
Preparing for the Future
Instead of relying on “quick fix,” one-time reductions and artificial depopulation plans a better way to serve all Floridians is with systemic Citizen reforms supportive of long-term, across-the-board reductions that foster a competitive marketplace.
Instead of a complicated formula (See NOTE#2 below), once Citizens reaches an established low point in policy count it could be directed to implement a rate equalization factor that guarantees its rates are equal to or greater than the highest “approved” private sector rate.
This could be done in tandem with a policy form that meets the minimum requirements of the secondary mortgage market without competing with coverage in private policies. (See Note #3 below).
Think about it. If we did just these two things “NOW” we’d never have to hassle with artificial depopulation plans costing millions of dollars because Citizens policyholders would only be those that absolutely couldn’t find coverage anywhere else.
Speaking frankly: I offer the above recognizing it’s not likely to ever be implemented–for a variety of reasons, mostly political. Having said that, however, there are several statutes (that also appear in Citizens Plan of Operation) that prove I’m not the only looney bird who thinks about stuff like this.
Here, for example, consistent with statutes, is what Citizens plan of operation (Section 8(E)) states:
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: if the board determines a territory, a county or any part of any county, has a competitive market it can render every homeowner or select specific coverages (wind, sinkhole, etc.) or lines of business (Homeowners, DP’s, etc.) as ineligible for Citizens. Such can be applied to new applications, renewals or both. With OIR approval.
In today’s competitive market why should anyone in a competitive inland county, with plenty of options, need or deserve subsidized coverage from a last resort insurer?
Now is the time
Of course, this is all just me dos centavos. Others may have their own idea’s. I’m all ears.
But, consider this: ignoring specifics, 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 shrivels the assessment burden by covering only those who truly can’t find coverage anywhere else.
##end##
NOTE #1: FAIA Director of Government Affairs, BG Murphy stated the following in his post session blog:
“The low point of the session, however, was the passage of SB 1028, Citizens Property Insurance Corporation, sponsored by Sen. Gruters and Rep. Redondo. The bill creates a commercial (residential and non-residential) clearinghouse that requires agents to explore private-market options (surplus lines and admitted insurers) before a risk can be submitted to Citizens.” And: “Although the bill has now passed the Legislature, it still awaits the governor’s action. Governor DeSantis will ultimately decide whether to sign or veto the bill. FAIA, along with several other stakeholder groups, will be urging the governor to veto the measure. For more details on SB 1028 and its potential impact, be sure to read Kyle Ulrich’s recent blog post: Important Developments on Citizens’ Commercial Clearinghouse.”
NOTE#2: Citizens is challenged by a mandatory and outdated rate cap structure. In response to Florida’s intensely active 04/05 storm seasons, subsequent legislative actions, including HB-1A in 2007, irresponsibly 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 important short-term relief, they limited Citizens’ flexibility to respond to market changes in the long-term, leading to another surge in policy numbers.
NOTE #3: 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
Please view “The Johnson Strategies Story”
IMPORTANT: If you enjoyed this post you’re invited to subscribe for automatic notifications by going to: www.johnsonstrategiesllc.com. Enter your email address where indicated. If you’re already on the website at Johnson Strategies, LLC, go to the home page and enter your email address on the right-hand side. Remember, you’ll receive an email confirming your acceptance, so…check and clear your spam filter for notifications from Johnson Strategies, LLC. ENJOY!
Leave a Reply
You must be logged in to post a comment.