Fowler White Insurance Regulation & Litigation eNews

Citizens Depopulation Program Continues

The Florida Office of Insurance Regulation continues its ongoing effort to depopulate Citizens Property Insurance Corporation, returning policyholders to the private market and reducing the risk of assessments to Floridians. The depopulation effort is being accomplished through “takeouts,” whereby qualifying private insurers present policyholders with offers to replace their Citizens coverage. At its high in 2012, Citizens had nearly 1.5 million policies. Citizens reports that over 300,000 policies were removed this year through takeouts. The Office of Insurance Regulation has approved 315,508 policies for takeout in 2015.

The takeout program is part of a codified effort to “provide a variety of financial incentives to encourage the replacement of the highest possible number of Citizens Property Insurance Corporation policies with policies written by admitted insurers at approved rates.” § 627.3511(1), Fla. Stat. Section 627.3511 enumerates several such financial incentives for private insurers, including takeout bonuses for every risk the insurer removes from Citizens, subject to statutory conditions.

Citizens encourages policyholders to consider the following benefits of a takeout offer: (1) the opportunity to enter the private market; (2) a lower risk of assessments; (3) increased coverage options; and (4) lower premiums. Some of these and other benefits are explained in “Encouragement Letters” that Citizens issues to policyholders in connection with takeout offers.

Policyholders who are offered a takeout may opt to retain their Citizens coverage. However, policyholders who wish to do so must expressly opt out of the takeout by timely executing an approved opt-out form.

Citizens is actively working to provide additional information to its policyholders on a more timely basis to facilitate the takeout process. On December 9, 2014, Citizens announced several measures it has recently taken to this end, including:

requiring takeout companies to provide policyholders with additional information about proposed premiums, including a comparison between the proposed premium and the current Citizens premium;
updating Encouragement Letters and getting the letters to policyholders earlier in the takeout process;
establishing a working group to address takeout-related issues raised by policyholders; and
updating the Citizens website to provide easily accessible information about the takeout process.

These measures are expected to contribute to a successful continued depopulation effort next year. Both Citizens and the Office of Insurance Regulation will continue to report to the public on the progress of this effort.

For more information, please contact Sarah Lahlou-Amine in our Tampa, Fl. (BMO Harris Plaza) office.

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