Florida Citizens shows signs of beginning to shrink, HCI takes out 53,750 policies

HCI Group subsidiary Homeowners Choice Property & Casualty Insurance Company, has completed a successful takeout of approximately 53,750 policies from Citizens Property Insurance Corporation, Florida’s state-backed insurance company, with the insurer of last resort now showing signs that thanks to depopulation its exposure is starting to reduce.

The takeout is the latest from Florida Citizens, as the property insurer of last resort for the state looks to downsize its exposure as primary insurers show rising appetite to assume risks it had been insuring.

Citizens had 1,344,353 policies in-force as of November 17th, a figure that had increased from 1,334,620 at the end of October.

But, there is now evidence that the depopulation efforts are gathering pace and Florida Citizens had reported its first decline in policies for a long time recently, having sat at 1,407,805 policies in-force at the end of September.

What these takeouts do, is shift the risk from the state and ultimately taxpayer backed Citizens back into the private insurance market, which of course will raise insurers demand for reinsurance as their exposure grows.

HCI Group said that the policies assumed amount to approximately $196 million of in-force premium and the assumption will be as of November 21st, having been approved in September 2023 by the Florida Office of Insurance Regulation.

Interestingly, while it’s often assumed that Florida Citizens would be the cheapest insurer available, HCI claims that more than 70% of the policyholders it is assuming risk from will actually see savings over the expected renewal offer they would have received from Citizens.

Homeowners Choice had been approved to takeout up to 75,000 policies from Florida Citizens and made 72,958 offers, with 53,750 policies to ultimately be assumed, which is a 74% acceptance rate.

“Homeowners Choice has successfully completed the transition of a significant number of policies that were previously identified by our technology as attractive policies for assumption. The strong acceptance rate was the result of Homeowners Choice offering policyholders a competitively priced renewal policy and expanded coverage compared with their existing Citizens policy,” Paresh Patel, HCI’s chairman and chief executive officer commented.

HCI Group’s other subsidiary, TypTap Insurance Company, is expected to assume policies from Citizens Property Insurance Corporation in both December 2023 and January 2024.

As the Citizens depopulation efforts pick-up pace and insurer appetite to assume policies from Citizens grows, the Florida market landscape will adjust, as risk shifts back to the private side.

This will have an influence on dynamics at the reinsurance renewals next year, with a number of insurers taking part in the depop program likely to grow their portfolios and require more reinsurance as a result.

Read all of our news and analysis on the Florida insurance and reinsurance market.