Spurned by private carriers, South Florida
homeowners again forced into state-run Citizens Insurance
Article Courtesy of The Sun Sentinel
March 24, 2018
State-owned Citizens Property Insurance Corp., the
so-called “insurer of last resort,” is poised to again become the first
choice for many homeowner insurance customers in Broward and Miami-Dade
But this isn’t like 2012, when the company was bursting at the seams
with nearly 1.5 million policies that were unwanted or abandoned by
hurricane-weary, private-market insurers.
This time, private-market companies say escalating costs from claims
abuses and excessive lawsuits in the region are causing them to sharply
reduce the number of homes they are willing to insure in Broward and
At Keyes Insurance in Miami, company president Ryan Papy said 100 new
policies have been written with Citizens so far in March — a sharp
increase. “Last July, out of 284 policies we wrote, just six were with
Citizens,” he said.
Papy said more Broward and Miami-Dade customers have no choice but to
use Citizens because private-market options are dwindling rapidly
compared with just a few months ago. Traditionally, when Keyes solicits
competitive bids for new customers, it gets offers from six to seven
insurers, he said. “Now [price quotes from private insurers] are much
higher, and there are only two to three insurers bidding,” he said.
Palm Beach County — though lumped by association into conversations by
insurers about abuses in the “tricounty” area — was the source of just 5
percent of suits filed against Citizens over residential claims in the
first seven months of 2017, the company reported in September.
Sixty-four percent came from Miami-Dade and 24 percent came from
Broward. All counties outside of the tricounty region accounted for the
other 7 percent.
Private-market insurers aren’t afraid to insure homes in Palm Beach
County, said Steve Schleifer, owner of Atlantic Insurance Agency in
“In Palm Beach, I rarely have to place anyone with Citizens,” he said.
Citizens CEO Barry Gilway has been warning since early 2017 that South
Florida homeowners would begin to “repopulate” the company if the state
Legislature failed to pass reforms to quell excessive claims and
litigation by water damage restoration contractors armed with
“assignments of benefits.” But for five years, including the current
one, bills have died amid stalemates between legislators representing
insurers or trial attorneys.
Insurers still willing to cover older homes in Miami-Dade and Broward
want so much money that clients have little choice but to go with
Citizens, Papy said.
Papy produced examples of recent comparison quotes solicited by his
company on behalf of clients. For all three, only two companies
responded with price quotes for a year of coverage: Fort
Lauderdale-based Universal Property & Casualty, which replaced Citizens
in 2016 as the state’s largest insurer, and Citizens.
Responding to a March 20 solicitation to cover a $250,000 home in
Pembroke Pines built in 1994, Universal asked for $4,003, while Citizens
requested $3,073. For a $460,000 home in Plantation built in 1978,
Universal wanted $7,710, while Citizens quoted $5,461. To insure a
Pembroke Pines house built in 1982 and valued at $260,000, Universal
sought $3,803, while Citizens proposed $2,059.
While Citizens’ prices might be lower than other insurers, its customers
could get hit with a special assessment if the company’s surplus is
depleted following a devastating hurricane or series of storms. And it
doesn’t offer some coverage available from private-market insurers.
One reason Citizens can offer lower prices is the company is barred by
state law from seeking rate increases of more than 10 percent a year.
Private-market insurers, meanwhile, face no such restriction and several
with large market share in South Florida — including Heritage Property &
Casualty, People’s Trust, SafePoint, and Universal — all raised rates
9.9 percent or more for most of their tricounty customers last year.
They have also taken steps to reduce their exposure in the region, by
canceling or declining to renew existing policies and by choosing not to
write new policies for homes in territories deemed at high-risk for
Of the 10 companies that insured the largest numbers of personal
residential home and condo-owner multi-peril policies in Broward and
Miami-Dade counties at the end of 2016, seven had fewer policies in the
two counties a year later, according to market share data maintained by
the state Office of Insurance Regulation.
Those seven insurers were Heritage (9,683 fewer policies), People’s
Trust (12,551 fewer), Federated National (891 fewer), Homeowners Choice
(3,440 fewer), Florida Peninsula (4,208 fewer), United Property &
Casualty (4,761 fewer), and Florida Family (2,143 fewer).
Picking up the slack were Universal, with 24,521 more policies, and
Citizens, with 5,295 more.
Citizens spokesman Michael Peltier said the company does not yet have a
county-level breakdown of new policies added through mid-March. But
South Florida agents are telling the company that they are writing more
policies with Citizens, Peltier said, and those will be evident in
market-share reports over the next few months.
Dulce Suarez-Resnick, vice president of sales and marketing for NCF
Insurance Associates in Miami, said homeowners with the fewest insurance
options in Miami-Dade and Broward are those with older homes, and homes
without updated roofs, impact windows or hurricane shutters.
In addition, homeowners with a claims history not resulting from
hurricane damage will face challenges finding insurance outside of
Citizens, Suarez-Resnick said.
Heritage recently told state insurance regulators that it has flagged
1,369 former Citizens home- and condo-owner policies with two or more
claims to “review and potentially non-renew” over the next year.