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Citizens customers have another week to take up private insurance offer

FILE - Men walk past destroyed homes and debris as they survey damage to other properties, two days after the passage of Hurricane Ian, in Fort Myers Beach, Fla., on Sept. 30, 2022.
Matias J. Ocner
Miami Herald
Hurricane debris is scattered throughout a Tamiami Village mobile home community on Thursday, Sept. 29, 2022, in North Fort Myers, Fla.

Citizens Property Insurance Corp. announced a deadline extension for customers to either accept or decline an offer to switch to a private insurer.

Time will run out now on Oct. 10. Previously, the state-run company had given consumers until Friday to respond to the offer letters, but a delay in the mailing of these called for the extension.

The letters were sent out to more than 300,000 Citizens policy holders as part of the company’s Depopulation Program. The goal is to reduce its customer base, which has topped 1.4 million.

Mark Friedlander, director of corporate communications for the Insurance Information Institute, said Citizens is meant to be a temporary backstop when a customer is unable to find coverage in the private market. It was designed to be a “last resort” and offers the lowest premiums in the market.

READ MORE: Citizens ordered to rethink and revamp their proposed rates

The fact that the company is currently the largest home insurer in Florida, he said, is “a really bad scenario.”

“They are widening their risk exposure gap because they’re not bringing in enough revenue. Citizens having 1.4 million (policies) today is not sustainable,” Friedlander said. “If they were to suffer a substantial loss event, like a major hurricane striking South Florida, where they have the majority of their policies, that could deplete their reserves.”

The Florida Office of Insurance Regulation approved applications from five private insurers, referred to as “take out” companies, to assume up to 184,000 of the state-ran policies as part of the program’s phase for October.

If a private offer is 20% greater than the Citizens’ renewal premium, policyholders have the option of declining and staying with Citizens. If the offer is less than 20%, policyholders must make the switch. Customers who received the letters must decide by the deadline if the new policy offers will suit them.

“(The program) was developed to reduce the number of Citizens' insured properties and exposure,” said Shiloh Elliot, press secretary for Florida’s OIR. “The program allows new and existing insurance companies to assume policies currently covered by Citizens in an attempt to transfer policies back to the private insurance market.”

According to Friedlander, more policies in the private market would provide balance. Otherwise, if Citizens is faced with a large number of claims they cannot cover, there is potential for Florida to implement multi-year surcharges, better known as “hurricane tax.”

“What happens in that case, they are allowed to charge multi-year surcharges to replenish their funds. Initially, their own customers would get a surcharge, but every consumer in Florida could be surcharged on all of our bills,” Friedlander said. “In these take out offers it’s very clearly explained that you are subject to this multi-year surcharge and how much it could be.”

An important caveat is that anyone who ignores the letter and does not opt out will be automatically switched to the new private company’s designated rates. Customers must act to avoid possibly paying more than they can afford.

“So, whatever you do, don’t ignore the letter. Don't throw out the letter. If you’re confused about what’s in the letter, call your insurance agent,” Friedlander said. “The goal is to bring this down to a manageable level.”

Michael Peltier, media relations manager for Citizens, said Citizens customers who manage their policies online also got an email notification.

“We urge customers to review any offer they receive and talk to their agent, who is in the best position to help them find the best coverage options,” Peltier said. “I tell our customers to make sure they open their mail or email if they see something coming from Citizens.”

OIR scheduled additional assumptions for November and December. To date, the agency has approved more than 623,000 policies for takeout in 2023.

Lillian Hernández Caraballo is a Report for America corps member. 
Copyright 2023 WMFE.

Lillian Hernández Caraballo
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