Private insurers want to get a piece of Citizens' $6.1 billion surplus
After six years without a hurricane, Citizens Property Insurance Corp. has built up a massive cash surplus of about $6.1 billion. And private insurance companies want to get their hands on it.
As Citizens desperately tries to move its policies into Florida’s limited private market, insurers are pitching creative new ideas to help with the effort. The plans, discussed Thursday at a Citizens meeting in Miami, have two things in common: They require Citizens to pay private companies millions of dollars to take over policies, and they will result in higher premiums for newly acquired customers.
If any of the plans move forward, current Citizens customers could be shifted out of state-run insurance and into newer, smaller companies with a higher risk of going belly-up. The plans could begin as early as November. The full board would have to approve any such plan, but no date has been set for a vote.
“The goal of the proposal that we’ve given to you … is to create an incentive for the customer to leave Citizens at their own will,” said Bill Martin, president of Bankers Insurance Group, which is pushing for a system of stock-market like shares for people who leave Citizens. The system would use up to $578 million of Citizens’ cash to get started.
The plans come at a time when Citizens is trying to make itself less attractive. The state-run insurer will vote Friday on how much to raise its own rates, during a board meeting at the JW Marriot in Miami. The company is looking to raise rates by a statewide average of 7.5 percent, though increases will be higher in risk-prone areas like South Florida and rates for sinkhole coverage (mostly in Tampa area) could more than double in some cases.
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