Florida’s Citizens speeds the take-outs, can hold exposure stable H2
Florida’s insurer of last resort, Citizens, is enjoying stronger than anticipated demand from rival carriers to take-out its clientele and has, in turn, cut its forecast for its 2023 policy count and exposure totals to show expected stability across the second half of the year.
Citizens is now expecting to end the year with a policy count closer to 1.3 million for a total exposure value above $500 billion, not the nearly $700 billion forecast previously, CEO Tim Cerio told a meeting of the Citizens governing board.
Increased success in take-out of Citizens’ policies follows a combination of Citizens’ outsized growth in recent periods plus early signs of recovery amongst the Florida-focused primary carriers who have suffered through recent years, Cerio suggested.
The mass of insolvencies in 2022 and 2023 that drove clients into the Citizens book left the state insurer with a better book than it would normally carry. “It’s really difficult to say we are a true residual insurer,” Cerio said. “Because of our growth, we actually have some good business.”
Mid-year reinsurance renewals also reflect a somewhat healthier market, Cerio suggested. Renewals brought in “more capacity than we anticipated,” putting sone players in position to bid for take-out of Citizens policies.
The barrier to depopulation remains the low rates still being offered by Citizens, Cerio admitted. Rules governing maximum rate increase have kept rates artificially low and actuarially unsound, Cerio reiterated.
Cerio had warned in July that Citizens remained fully on track to see policy counts rise to 1.7 million policies for $645 billion in insured value by year-end.
To end-H1, policies in force at Citizens had risen 41% year on year to 1.32 million for a total exposure of $561.7 billion, an increase of 76.2%, data from the residual carrier indicated. Policy counts rose 15% or 171,000 during just the first half of 2023 even despite the 91,000 policies already removed in round one depopulation.
Depopulation has brought concerns of bad actors stepping into the market. Cerio indicated that some of the offers being placed for Citizens policies were priced well over twice the level at Citizens. While clients have rights to discard any offer more than 20% above their Citizens pricing, those insurers could be counting on a lack of knowledge or inaction from clients to allow for individual price gouging, Cerio suggested.
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