Breaking News: State Insurer of Last Resort Hits 1 Million Policies
After several months of exponential growth, including nearly 70,000 new policies since June 30, Citizens Property Insurance Corporation has hit 1 million insurance properties. Citizens Property Insurance is the state-created insurer of last resort, and this milestone further demonstrates that Florida’s insurance market is in crisis.
Causing this influx of new policies into Citizens, in the last year, seven insurance companies have been forced out of business and into receivership or liquidation. Several more insurers have announced cancellations or are not writing new policies. Companies have faced significant losses due to the amount of litigation in Florida’s property insurance market. In fact, Florida represents roughly 7 percent of the national homeowners’ market, 7 percent of the nation’s homeowners’ claims but more than 76 percent of the nation’s insurance litigation.
Why it Matters
If there is a major hurricane or several smaller hurricanes and Citizens Property Insurance depletes its reserves and is unable to pay claims, Citizens assesses Florida policyholders, also called a “hurricane tax”, to pay claims and eliminate its deficit. For Citizens customers, this could be a one-time assessment of up to 45 percent of their premium. For Floridians, this could equal up to a 30 percent assessment on homeowners’ insurance, auto insurance and other insurance premiums until the remaining deficit is eliminated.
The May Special Session called by Governor Ron DeSantis saw some initial but significant steps in removing the incentive to litigate and end bad behavior that has otherwise put Florida insurance companies out of business. Fortunately, our partners in the Governor’s office, House and Senate understand that more work needs to be done to tackle Florida’s litigation problem, which is costing Florida ratepayers when they can least afford it. The Florida Chamber will be advocating for a complete repeal of Florida’s unique one-way attorney fee statute, ending the incentive to litigate without any skin in the game and create false claims once and for all. The Florida Chamber also believes the Legislature should act to reduce the competitive position of Citizens with the private market and return Citizens Property Insurance to the insurer of last resort.
Join the Conversation
Mark your calendars for Florida’s 15th Annual Insurance Summit on December 5-7 at the Hyatt Regency in Orlando. You will not want to miss this event with state leaders, insurance executives and stakeholders as we work toward solutions. Registration will be opening soon.