Florida’s insurer of last resort, Citizens, is likely on track to break its policyholder number record, according to insurance market sources.
Citizens already had more than a million policyholders before category four hurricane Ian churned through the state late last month, despite no major hurricane hit since 2018’s Michael.
Now, it could see policyholder numbers balloon to well over 1.5 million, sources said, and some have predicted it could potentially hit two million.
“Citizens is now going to probably get to two million policies because of [insurance companies] non-renewing here,” Kenneth Tolson, Crawford global president, network solutions, told Insurance Business. “You’re going to see more companies shedding policies [and these] moving to Citizens.”
Read more: Hurricane Ian: Loss tally continues
The Insurance Information Institute (Triple-I) has predicted that the state’s insurer could average 30,000 to 40,000 new customers every month following Ian’s impact.
At this rate, it would surpass its all-time high policy count, of just over 1.48 million, in 2023. The past record was set, according to Citizens, in November 2011, with exposure of $517.4 billion at the peak.
Insurers in Florida are currently barred from non-renewing or canceling policies until November 28, under an emergency order issued by the state’s Insurance Commissioner David Altmaier.
“Between September 28, 2022, and November 28, 2022, no insurer or other entity regulated under the Florida Insurance Code shall cancel or non-renew, or issue a notice of cancelation or non-renewal of a policy or contract of insurance covering a property or risk in Florida, except at the written request or written concurrence of the policyholder,” the order, issued late September, set out.
This means that any rush towards Citizens is unlikely to be seen until the end of November.
However, with the failure of multiple insurers – including six so far this year, with Fed Nat the latest to have been placed into receivership – Citizens policyholder numbers had already been on the up prior to Ian.
From July 2021 to July 2022, its policy count had climbed from 641,000 to above 900,000, and this went on to breach the one million mark in the following months.
It saw a historic low of 419,475 in November 2019, when exposure was $107.4 billion.
“Our last estimate pre-Hurricane Ian was that we would approach 1.2 million policies by the end of the year,” a spokesperson for the organization confirmed.
The insurer of last resort said on Thursday that it expects to see at least 225,000 claims arising from Hurricane Ian, with current estimated losses ranging from $2.3 billion to $2.6 billion.
“We have not made any projections that bring us to two million policies,” a spokesperson told Insurance Business on Thursday.
Florida was already facing up to an insurance crisis before Ian hit, with premiums some of the most expensive across the US.
Florida homeowners can expect to spend an average of $4,231 on their property insurance premium, more than three times the US average of $1,544, based on Triple-I analysis.
One factor that the insurance industry has argued is driving up premium costs for Floridians is the litigious environment. The sunshine state’s insurance market makes up 79% of nationwide homeowners’ litigation, but only 9% of US homeowners’ claims, according to data from the Florida governor’s office.
The state’s legislature moved to combat its spiraling insurance costs and capacity challenge in a special session in July, though critics have argued it has further to go.
Under the statute of limitations, homeowners have three years to bring claims from the date a hurricane hits.
Prior to Hurricane Ian, 27 domestic insurance companies in the state were on its insurance regulator’s “watch list” due to their financial status, Triple-I has said.
“We don’t expect a complete collapse of the Florida domestic market but it would not surprise us if several smaller regional insurers fail in the wake of Ian due to the expense pressures of a high volume of windstorm claims combined with excessive litigation,” cautioned Triple-I corporate communications director Mark Friedlander.
“This will increase the volatility of the state’s private property insurance market.”
