Citizens Insurance hits over 1M policies as
Florida homeowners turn to last resort
Private insurers dropping
Article Courtesy of Channel 6 Click Orlando
By Jim Saunders
Published September 24, 2022
TALLAHASSEE – Barry Gilway,
president and CEO of Citizens Property Insurance Corp., said Wednesday
the state-backed insurer has been a “roller coaster ride” for the past
Right now, it is continuing to pick up speed.
Citizens last week reached 1.055 million policies — more than double the
number two years ago — as private insurers drop customers to try to curb
financial losses. Meanwhile, the industry continues to grapple with
underlying problems, including costs of critical reinsurance and large
amounts of claims-related litigation.
Gilway briefed the Citizens Board of
Governors during a meeting Wednesday and said private
property insurers are projected to have $1 billion in losses
this year. Five insurers have been declared insolvent and
placed into receivership since February, with tens of
thousands of customers of those companies turning to
Citizens for coverage.
“If the (financial) numbers remain in the red, and companies
aren’t put in a position where they are making a reasonable
rate of return, you’re not going to have a stable market,”
A key issue for the market is reinsurance, which provides
backup coverage for carriers. It is particularly important
in Florida, which depends heavily on Florida-based insurers
rather than larger national companies.
Gilway said 40 percent to 50 percent of policyholders’
premiums typically go to reinsurance costs, and Florida
carriers are expected to continue facing a tight reinsurance
“This is an industry in collapse. Citizens is growing
exponentially,” said soon to be former Senator Jeff Brandes.
Barry Gilway, president and CEO of Citizens Property
Insurance Corp., said Wednesday the state-backed insurer has been a
“roller coaster ride” for the past two decades.
Florida State Senator Jeff Brandes reacted Wednesday
after a Board of Governor’s meeting where the President and CEO of the
State-backed Citizens Property Insurance Barry Gilway said his company
has reached more than one million policies this week. That’s more than
double he said from two years ago. He said this comes as private
insurers continue to drop customers to curb their losses.
“Until we fix the overall private market, people will continue to flood
into Citizens, but two Citizens can no longer be a direct competitor
with the private market, which means Citizens rates have to go up, "
said Senator Brandes.
Citizens was was created 20 years ago as an insurer of last resort for
In Gilway’s September President’s report , he said Citizens has been a
rollercoaster ride since forming in 2002. He said it’s based on
companies becoming insolvent and the business moving into Citizens to
stabilize the market.
“For the 3rd year in a row, the private industry really is going to show
a billion-dollar loss, with no storms to speak of. This is driven by
litigation,” said Citizens Property Insurance President and CEO Barry
This coming as News 6 has done a series of investigations detailing the
state’s property insurance crisis. Experts have told us there have been
excessive lawsuits from roof repairs.
“This is a legislative problem, Citizens is doing everything it can,”
said Senator Brandes.
The last time citizen’s policy count topped one million was when Florida
was hammered by a barrage of hurricanes in 2004 and 2005. It remained
above that mark until early 2014 according to data on the insurer’s
A commentary released last week by the AM Best ratings agency pointed to
reinsurers seeing losses in Florida, “despite moderate hurricane
seasons, further suggesting that current prices are not adequate to
cover the claims inflation and fraud in the market. Consequently,
reinsurers have been pulling back from the Florida property market or
significantly raising prices.”
“Pricing will continue to impact business plans and companies’ ability
to use reinsurance structures with adequate limits to protect against
severe storms,” the ratings agency said. “AM Best expects reinsurers to
remain selective in the risks they reinsure, placing further burdens on
the Florida homeowners market, which has seen four property insurers,
along with a Louisiana-based insurer that wrote policies in Florida,
declared insolvent since late February.”
Florida lawmakers during a May special session approved spending $2
billion in tax dollars to provide another “layer” of reinsurance to
insurers that otherwise might not be able to buy it in the private
market. But that was a stopgap move to help insurers, many of which
needed to have reinsurance contracts in place in June.
Lawmakers also took steps to try to curb litigation costs, but Gilway
and many other industry officials argue that more needs to be done to
address lawsuits and attorney fees. The issue, however, is always
controversial, as groups such as plaintiffs’ attorneys contend that
lawsuits help hold insurers accountable for properly paying claims.
“For the third year in a row, the private industry really is going to
show a $1 billion loss, with no storms to speak of,” Gilway said. “This
is driven by litigation.”
Citizens was created as an insurer of last resort and has seen wild
swings in its numbers of policies during the past two decades.
After Florida was hammered by a barrage of hurricanes in 2004 and 2005,
Citizens’ policy count topped 1 million and remained above that mark
until early 2014, according to data on the insurer’s website. But the
policy count dropped below 500,000 in 2016 and remained under that level
for more than four years.
In September 2020, Citizens hit 511,055 policies and steadily increased
to 1,055,366 policies as of Friday, with thousands of customers a week
flowing in. Gilway said Citizens insures about 13 percent of the market
and is expected to be at 15 percent by the end of the year.
In certain areas of the state, however, it is a far-bigger player. For
example, it has 39 percent of the residential market share in Miami-Dade
County and 30 percent in Broward County, Gilway said.
State leaders have long sought to hold down the number of policies in
Citizens, in part because policyholders throughout the state could face
additional costs — known as “assessments” — if Citizens runs deficits
after a major hurricane or multiple hurricanes. Citizens policyholders
would be hit hardest by assessments, but other insurance policyholders
could also face additional costs if deficits are large enough.
“The entire state’s on the hook,” Citizens board member M. Scott Thomas
said during Wednesday’s meeting.