TALLAHASSEE, Fla. – If you have coverage through Citizens Property Insurance, you need to keep an eye on your mailbox.
The company is sending out letters to 304,000 policyholders with offers to switch to a private insurer. Customers must respond by the Oct. 10 deadline, or their policies will automatically default to the private insurance company, likely at a much higher premium.
A spokesperson for Citizens confirmed to News 6 that their goal is to give customers 30 days to respond, but a vendor’s mailing delay caused some policyholders to have less time to make a choice. Out of the 304,000 customers receiving letters, 24,000 went out in the mail Monday and the last 1,600 were mailed out Wednesday.
Bill LaFlamme says he received a letter in the mail over a week ago. It gave him a choice to choose much pricier coverage through Slide Insurance.
“I’m paying about $3,400 to $3,500 a year for Citizens,” LaFlamme says. “The other company that would have taken me in is Slide Insurance Company, and they wanted like $6,700.”
[EXCLUSIVE: Become a News 6 Insider (it’s FREE) | PINIT! Share your photos]
LaFlamme says he chose to stay with Citizens rather than take a premium that was nearly double what he currently pays. He responded through his insurance agent, whom he says was already planning to touch base with his customers.
Mark Friedlander, a spokesperson for the Insurance Information Institute, says what he has heard anecdotally from consumers is that most of the offers from private insurance companies are about 40% higher. Based on state regulations, people who receive a takeout offer within 20% of what they are currently paying will have to leave Citizens.
“With the volatile conditions in Florida’s property insurance marketplace, which we have seen for many years, it might be difficult to find a price better than what the takeout offer is,” Friedlander said.
The takeout offers are a result of state regulators approving some companies to take over some of Citizens’ policies in an effort to reduce the policy count for the state-backed insurer of last resort.
Citizens has roughly 1.4 million policies statewide. They have grown at a historic rate in recent years as other companies have pulled out of Florida. Many experts, including Friedlander, say the increase in Citizens’ policies month-to-month is unsustainable.
“They’re not supposed to be the only option,” Friedlander says. “What it does is create a risk exposure in Florida where Citizens, because they are so rate restricted compared to private companies, they are not bringing in enough rate for the risk they are writing. That means the rates are what we call not actuarily sound rates, and it puts all of Florida consumers in a position to potentially pay what would be labeled a hurricane tax.”
Lisa Miller, a former deputy insurance commissioner in Florida, says that Citizens themselves will admit that they are growing too fast.
“The goal of the government’s insurance company, Citizens Insurance Company, is to put themselves out of business,” said Miller. “I know that’s counterintuitive, but the government’s insurance company is in business because it’s supposed to be a place where people go when they cannot find private insurance coverage. Well, unfortunately, there’s so much of that going on right now.”
Miller says overall, the idea that private insurers are willing to take on some of Citizens’ policies is a good sign.
“We have not seen the private market come to Citizens and ask for policies in the past couple of years,” Miller says. “I know it’s going to be painful over the next year, year and a half, but I believe that rates will level off, probably won’t come down but level off, and we’ll be at a better equilibrium than we’ve been over the past couple of years with rates shooting through the roof.”
Policyholders who receive takeout letters can make a choice online at https://www.citizensfla.com/online-choice, or by contacting their agent listed on the takeout offer letter. Citizens is reaching out to agents and Citizens policyholders who received an offer but have yet to respond.
Get today’s headlines in minutes with Your Florida Daily: