Citizens Property Insurance Corp., the insurer of last resort for Florida homeowners, reported that the number of policies it has in force dropped below 1 million for the first time since 2006.
Citizens and other insurance industry officials hailed the announcement as a milestone in the effort to reduce the corporation's exposure to risk. All Florida policyholders would be on the hook if Citizens could not pay claims following a major storm.
The Florida Legislature created the nonprofit Citizens to provide insurance to property owners who could not find coverage in the private insurance market. Citizens now has 942,321 policies in force, a drop of 36 percent from a high of almost 1.48 million policies in October 2012.
"Today's announcement marks the culmination of efforts from all Citizens' stakeholders," Chris Gardner, chairman of the Citizens Board of Governors, said in a press statement. "A lot of credit needs to go to the state leaders, insurance regulators and agents who have helped Citizens reach this critical milestone."
Following eight years with no major storms, officials say Florida's private insurance market shows signs of rebounding as new investors and companies look to expand in the state.
Almost 500,000 policies have been shifted from Citizens to qualified private insurance carriers to provide comparable or better coverage at competitive rates, Citizens said. In January, Citizens launched the Property Insurance Clearinghouse to provide access to more private options for new applicants and current policyholders.
"The sustained reduction of Citizens policies will continue to enhance the Florida insurance market for the benefit of the consumer," Donovan Brown, state government relations counsel for the Property Casualty Insurers Association of America (PCI), said in a press statement. "While we still have much work ahead of us to improve our market from the failed policies that ballooned Citizens, Florida's residual market slipping below 1 million policies is proof we are moving in the right direction in protecting Floridians."
Brown said that barring a major catastrophe, PCI's member companies are "cautiously optimistic" that the new clearinghouse will help reduce the size of Citizens even further and reduce the exposure of a potential hurricane tax on Florida's consumers.