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How safe is Fla. home insurance without Citizens?

TALLAHASSEE, Fla. – Feb. 12, 2016 – Florida, land of the nation’s costliest home insurance, has reached a new era in early 2016. State-run Citizens Property Insurance Corp. is no longer the company with the most policies.
Most of the homegrown and start-up companies ringing up the fastest customer growth have never had to find out how they will hold up under a hurricane. Florida has dodged a direct hit for a record 10 years as another hurricane season looms on the horizon June 1.
“With Citizens declining, the market is somewhat untested,” said Rich Attanasio, vice president of A.M. Best’s property and casualty division. “It doesn’t mean those companies aren’t well-managed or can’t absorb big storms. It just means it hasn’t been proven out one way or another.”
How do consumers make sense of it?
An updated Palm Beach Post insurance guide now offers more information than ever before. It includes A.M. Best ratings alongside grades from Weiss and Demotech, as well as state complaint data obtained in public records requests and analyzed by the newspaper.
In March and April alone, regulators have approved another 137,670 offers to Citizens customers from private insurers. Actual offers and acceptances may be substantially lower than that, if recent history is any guide, but the potential pitches represent about one in four remaining Citizens customers.
Passing a big historic milestone, the state-run insurer downsized below 500,000 policies in January. It’s the smallest Citizens has been since its 2002 founding.
Make no mistake: The Citizens transfer offers are not coming from big national brand names. Smaller Florida-based companies, many whose years of existence can be counted on one hand, are driving nearly all the growth.
A.M. Best, the Oldwick. N.J.-based rating agency founded in 1889, does not rate all of Florida’s insurers. In fact, it rates nine of the state’s top 25 at the moment.
The agency does not have minimum size requirements, Attanasio said, but “the company has to be engaged with us.”
Risk management, back-up coverage through reinsurance contracts, how fast a company is growing and how much money it has at hand to deal with unexpected problems – all of it figures in, he said.
“It’s having that dialogue with the company, understanding what the strategy is,” Attanasio said.
As for Citizens, it counted 484,788 policies by last month, less than a third of its 1.5 million size a few years ago. Around one in 10 of its remaining customers is in Palm Beach County.
The achievement marked “an important milestone,” said Chris Gardner, chairman of the Citizens board of governors. “Much of the credit needs to go to the private property insurance market, which under the watchful eye of the Office of Insurance Regulation has grown strong over the past several years.”
Company officials pointed to “stress tests” run by state regulators last year suggesting at least 67 private insurers are up to the challenge, even if one of those did not initially have enough reinsurance to pass muster. Officials did not release results for individual insurers.
Florida Insurance Commissioner Kevin McCarty said the outcome means consumers “should have confidence.” State Chief Financial Officer Jeff Atwater said he would “still like it to be more transparent.”
Not everyone has expressed confidence in the new marketplace during the past year or two. A group representing big insurance companies warned of “troubling questions about the financial strength” of small Florida-based firms taking Citizens customers in record numbers.
Between 2003 and 2009, 11 of 29 companies that took policies out of Citizens became insolvent, were ordered to stop writing business, or were taken over by other companies, noted Michael Carlson, executive director of the Personal Insurance Federation of Florida. Its charter members include State Farm, Allstate and Progressive.
But Florida-based companies say the picture is much brighter than it has been.
“Our state’s insurance market has become much healthier, more competitive and homegrown with 67 Florida-based companies writing 72 percent of all homes,” said William Stander, executive director of the Florida Property & Casualty Association. He credits entrepreneurs, Commissioner McCarty and the “formation of new, financially secure Florida-based insurance companies.”
Universal Property & Casualty Insurance Co. of Fort Lauderdale now appears to be the state’s largest with about 544,000 customers at last check, though a state database lags a bit with numbers from the third quarter of 2015.
One of the top five companies, Heritage Property & Casualty Insurance Co. of Clearwater, did not exist four years ago.
Heritage has been saluted by one trade publication as the fastest-growing property and casualty insurer in the United States. Its engine of growth is clear: Close to 9 out of 10 of its customers have come from Citizens takeouts and other state-facilitated transactions according to recent disclosures.
Heritage had just fewer than 250,000 customers heading into the fourth quarter of 2015. It’s on the lookout for more. State regulators approved Heritage to make 56,500 offers out of a total of 71,500 potential pitches given the green light for March.
Again, that’s not necessarily how many offers it will actually make or Citizens customers will accept. Citizens customers are automatically switched if they do nothing under such offers, but even so, customers are getting choosier, records show.
Still, it points to where most of the action has been in Florida. The Post insurance guide can help consumers strap in for a new era.
Copyright © 2016 The Palm Beach Post (West Palm Beach, Fla.), Charles Elmore. Distributed by Tribune Content Agency, LLC.
 
Source: Florida Realtors Feed

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