Florida’s Citizens Eyes Risk Transfer
Florida’s Citizens Property Insurance Corp. has set the goal of moving at least $1 billion in risk back to the private capital markets while looking to lawmakers to make statutory changes that will assist the insurer in its depopulation efforts.
CEO Scott Wallace said the insurer is focusing on depopulating the insurer and reducing the exposure it represents to all Florida policyholders. “We are doing everything we can as quickly as we can to focus on our goals,” said Wallace. “Clearly, there is a lot of work to be done to reduce the size and significance of Citizens.” Currently, the insurer has 1.47 million policies in force with a total exposure of a half trillion dollars.
Wallace said the insurer is taking several approaches to achieving depopulation and reducing its financial exposure. The step with the most immediate impact could be transferring at least $1 billion in risk back to the private capital markets, which Wallace said became a goal following last year’s purchase of $575 million in private reinsurance and $900 million in catastrophic bonds.
Meanwhile, the insurer is no longer covering properties valued at more than $1 million in its coastal account. It has also implemented a 10 percent mandatory sinkhole deductible and reduced its personal liability coverage from $200,000 to $100,000.
On the depopulation front, Wallace said that 17,000 policies are slated to be removed from the insurer on Feb. 14 by Peninsula Insurance Co. The insurer’s reactivated depopulation committee is expected to consider eliminating ceding commissions and evaluating methods to package Citizens’ policies so they are more attractive to private insurers. In 2008, private companies assumed 385,000 policies from Citizens but since then the number of assumed policies has dropped significantly to just 59,700 policies in 2010.