Florida’s Citizens Property Insurance Corp. saw its policy count decrease last week, shedding approximately 100,000 policies. This drop brought the number of customers to its lowest total in almost three years.
Created as an insurer of last resort, Citizens expanded significantly in recent years to become the state’s largest insurer. According to recently released data, Citizens held 844,688 policies as of Friday, a decrease from 945,005 policies the previous week and 942,810 policies two weeks before that.
This decline coincided with the ability of eight private insurers to assume Citizens policies under a “depopulation” program. Through this program, private insurers seek approval to take on a specific number of Citizens policies.
A report presented to the Citizens Market Accountability Advisory Committee on Wednesday indicated that regulators approved the assumption of a maximum of 342,918 Citizens policies by insurers last week. However, the actual number of policies transferred from Citizens is typically lower than the authorized maximums.
The last time Citizens’ policy count was below 850,000 was in the spring of 2022. The insurer had 817,926 policies on March 31, 2022, before increasing to 851,006 on April 30, 2022. In 2023, Citizens held as many as 1.4 million policies, as private carriers struggled and raised rates due to financial challenges.
Insurance officials attribute the overall drop in policy count to multiple depopulation rounds and improvements in the private market. Citizens President and CEO Tim Cerio informed a House panel this month that the company anticipates concluding 2025 with slightly fewer than 771,000 policies. Additional depopulation rounds are scheduled for March and April.
State leaders have long aimed to decrease the number of policies held by Citizens, partly due to financial risks if the state faces a major hurricane or multiple hurricanes. If Citizens lacked sufficient funds to cover claims, policyholders across the state, including those not insured by Citizens, could face extra charges known as assessments.
However, the depopulation program can also lead to higher costs for customers transferring to private insurers. This is influenced by a law requiring Citizens customers to accept coverage offers from private insurers if those offers are within 20 percent of the cost of Citizens’ premiums. For instance, if a homeowner receives an offer from a private insurer that is 19 percent higher than the Citizens premium, they are obligated to accept it.
Citizens had as few as 419,475 policies in October 2019. Cerio suggested to the House Insurance & Banking Subcommittee this month that these totals might have been artificially low.
“In hindsight, there’s been some suggestion that maybe some companies did (policy) takeouts that didn’t have the financial wherewithal that they should have,” Cerio stated, which led to policyholders later returning to Citizens.
Cerio mentioned his hope for a target number of policies for Citizens in the 500,000s or low 600,000s, though State Insurance Commissioner Michael Yaworsky believes the “magic number” is around 700,000. Cerio also clarified that private companies are not selecting the riskiest policies during the depopulation process.
“The term ‘cherry pick’ is often used about the takeout process, and I would argue that is not a bad thing,” Cerio told lawmakers. “These are private companies that are deploying capital, and each of them have different appetites for risk, they have different appetites in certain areas of the state, they all have different business models. And so the idea is, as a residual insurer, we (Citizens) should have those policies that no one else wants, and so when the market hardens, we grow and policies are coming into Citizens that normally the private market would want to be interested in. Maybe somebody’s cutting the number of writings that they’re doing or they even leave the state or they actually go insolvent. That’s when we grow. As the market’s recovering, we shrink.”
