HCI’s Homeowners Choice Takes On 53.7K Florida Citizens Policies; TypTap Goes Next

Homeowners Choice Property & Casualty Insurance Co. recently assumed approximately 53,750 policies from Citizens Property Insurance Corp., Florida’s state-backed insurance company.

The policies assumed amount to approximately $196 million of in-force premium.

The insurer said the assumption, which was effective November 21, is based upon an approval in September 2023 by the Florida Office of Insurance Regulation. Homeowners Choice was approved for 75,000 policies, made 72,958 offers and assumed 53,750 policies – a 74% acceptance rate.

The insurer’s holding company parent, HCI Group, said more than 70% of the policyholders assumed will see savings over the expected renewal offer from Citizens.

“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,” said Paresh Patel, HCI’s chairman and chief executive officer.

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

The take-outs by HCI companies are part of efforts to depopulate Citizens and slow its growth. Citizens had 1,344,620 policies in-force as of October 31, about 73,00 less than it had at the end of September.

Financial Results

Tampa-based HCI Group reported improved results in the third quarter including $15.7 million in net income in the third quarter, up over Q3 last year, when the group saw a $52 million net loss.

“The company benefited from an improved operating environment in Florida and rising interest rates on our interest-bearing investments,” Patel said announcing the results. “We believe we are seeing the impact of insurance reforms recently enacted by the Florida Legislature.”

Like many other carriers that have worked hard to manage Florida’s distressed marketplace and outsized claims litigation costs in recent years, HCI has significantly cut back on policies. In the third quarter this year, the group’s insurers held 194,000 policies in force, down from 246,000 in Q3 2022, according to the group’s third-quarter filing with the U.S. Securities and Exchange Commission.

At the same time, net premiums earned climbed, from $107 million last year to $122 million this year for the HCI carriers, thanks to premium increases.

HCI’s loss ratio also fell, from 131% to 55%.

In 2023, Homeowners Choice and TypTap won regulatory approval to stop writing flood insurance policies in Florida.