Florida residual insurer Citizens plots burst of 2024 policy take-outs

The Florida state insurer of last resort Citizens CPIC handed over 114,559 policies to the private sector in its depopulation drive in the first months of 2024 and expects a minimum of another 244,500 to year-end. 

“We think we are going to have a very successful depopulation in 2024,” CEO Tom Ceres told his company's board of governors. “We think the market is going to continue to recover, capital is going to continue to flow into the Florida market.” 

“We are pretty optimistic,” he said. 

Take-outs by the private sector in 2023 of 275,324 were nearly 17 times the prior year sum and five times the five-year cumulative tally. Ceres thus compares 2023 to 2013, where a similar 24% of total policies were removed still ahead of a pending peak in depopulation. 

Those take-outs helped push Citizens to a considerably lower policy count and exposure tally at end-2023 than had been feared when the 2023 budget was crafted. Mark the year-end policy count at 1.23 million accounting for $552.8 billion in insured value, well below forecast for 1.7 million policies and $675 billion in insured value. 

That outperformance vis-a-vis budget could repeat in 2024, albeit as less of a surprise now that trend has turned. 

Citizens budgeted 2024 with a year-end policy count of 1.24 million for $679 billion “but I think I can honestly say to you that we think we are going to come in well below that,” Ceres said. 

Following early 2024 depopulation, Citizens was down to 1.17 million policies by end-February for a total exposure of $522.2 billion, the company's latest data release indicated. 

The pick up in policy take-outs suggests the private insurance sector “is getting healthier,” Ceres added. Legal reforms that have already taken the steam out of courtroom case counts deserve “tremendous credit,” Ceres said. Impact of those late 2022 reforms will become more visible in 2024 as more policies renew under the new legal regime, he said. 

For the year just completed, Florida home-grown and locally-focused homeowner insurers trimmed their net underwriting loss by nearly 2/3 to $397 million while the rest of the market pulled itself to an underwriting gain, a dataset recently compiled by reinsurance broker Gallagher Re had indicated. 

The Florida specialists, excluding the array of firms put down or to run-off since early 2022, took 9.5 points off their combined ratio to fall within 1.3 points of the underwriting break-even point. The field is roughly evenly split between firms with a net underwriting gain and those still sporting losses. In 2022, net underwriting losses had outnumbered net underwriting gains 2.5 to 1.

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