An exodus of national insurance companies from Florida, along with local private insurers canceling plans, has left many homeowners with only one option: Citizens Property Insurance Corp. Citizens is a state-backed nonprofit home insurance company created to be an insurer of last resort. With 1.3 million policies in force, three times more than five years ago, Citizens is now the largest provider in the state. However, Hurricane Helene and Hurricane Milton have made landfall in Florida, leading to potentially billions of dollars in claims for Citizens.
Florida Gov. Ron DeSantis has warned that Citizens is not solvent and could face issues if a major storm were to hit. Senator Sheldon Whitehouse also expressed concerns about Citizens potentially becoming insolvent and the possibility of a federal bailout. The only way to qualify for insurance from Citizens is if the lowest private insurer quote is more than 20% higher than Citizens’ quote, with a property value cap of $700,000 or $1 million in specific counties.
While the recent hurricanes will strain Floridians and Citizens, the insurer is structured differently from a private insurer and cannot go bankrupt. In a worst-case scenario, Citizens can implement premium surcharges to ensure all claims are paid. Additional policyholders, including those with auto, boat, pet, or renters insurance, may see a premium increase to cover Citizens’ claims. Governor DeSantis mentioned that more private insurance companies are entering Florida, and Citizens’ policies are being offloaded to them.
Despite the potential claims from the recent hurricanes, Citizens has about $15 billion available and reinsurance policies to cover claims. It is expecting a drop in policy count by the end of the year as more private companies take over policies from Citizens. While the insurer has the financial resources to handle claims without surcharges, private insurers may cancel policies due to state guidelines on premium increases following hurricanes.
If fewer private insurers operate in Florida, Citizens may need to raise rates and rework policies to accommodate more customers. Bobby Atwood, a homeowner forced to turn to Citizens for coverage after being dropped from a private insurer, finds it reassuring that his policy won’t get canceled. Despite the potential for increased costs, policyholders like Atwood appreciate the stability and security of knowing their policy won’t be at risk. Ultimately, the future of Citizens and its ability to remain solvent will depend on its ability to handle ongoing claims and navigate the changing landscape of the insurance market in Florida.
