December 2, 2023

Despite news that several Florida insurers are pulling back on managing their catastrophe risk, people are still willing to take on it, with state insurance regulators saying there is growing interest and participation in Florida’s 2023 citizen population reduction plan higher.

florida citizenship signOf course, the number of policies at Citizens Property Insurance, Florida’s last property insurer, has been growing rapidly in recent years.

At last count, Florida citizens had more than 1.32 million active policies as of July 7, 2023, representing a massive exposure to insurers of more than $561.6 billion.

By comparison, the number of Citizens policies started the year with about 1.15 million but is up sharply from about 760,000 in early 2022.

As news continues to emerge of insurers pulling back and exiting the state, no one seems willing to take property insurance risk in Florida.

Of course, Florida citizens themselves just purchased a large reinsurance program, suggesting that the traditional reinsurance and insurance-linked securities (ILS) markets are interested in this risk.

As we reported in June, there’s also the fact that certain insurers were even approved for takeaway policies for Florida citizens through depopulation programs in the middle of hurricane season, suggesting a willingness to assume that risk still exists.

Now, the Florida Office of Insurance Regulation (OIR) says there has been “increased participation and interest in citizen population reduction programs this year.”

“With seven companies currently participating in the 2023 Citizenship Reduction Plan, the number of policies applied for in the first half of 2023 exceeds the total number of policies applied for in 2022,” the regulator explained.

So far in 2023, the OIR has approved 91,000 Citizen Takeaway policies.

Looking ahead to later in the year, when demand typically picks up as hurricane season draws to a close, the OIR said it “expects continued growth in engagement” and has already received 184,000 policy applications seeking coverage by the end of hurricane season in October . population reduction plan.

This is assuming a policy in October, so it is still in hurricane season.

Any carrier that wants coverage on the next hypothetical date, which is November (the 21st, when hurricane season ends), will need to register their interest by July 28, so we expect Florida citizens to face another round by then Policy excess as well.

From 2007 to 2013, nearly 1.4 million policies were removed from citizens through takeaways, but the pace has slowed to nearly 888,000 from 2014 to 2023 so far.

Citizen’s policy also makes assumptions in December, so it will be interesting to see how much policy can be lifted during November and December.

The question, of course, is whether takeaways will outpace the flow of new policies into citizens, as carriers pulling traffic back to insurers of last resort is likely to continue as well.

However, the property insurance reforms enacted by the legislature in order to favor the growth of the food delivery business should become increasingly effective and more evident in the performance of operators, which may lead to an appetite for risk-seeking in this way. non-stop upgradin.

It will be interesting to see if those who postulate this are simply backed by traditional balance sheets, or if they leverage some capital partnerships, maybe even with ILS specialists (as seen before 2017) .

Overall, things are starting to look more encouraging for Florida citizens, whose policy numbers and risk levels are at least back on some sort of stable trajectory, and may even start to dwindle.

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