Fewer homeowners insurance policies, higher rates, cutbacks in coverage and another year spared major storm damage.
Put it all together and Citizens Property Insurance closes the hurricane season this week sitting on nearly $7 billion in reserves to place it in "the best financial shape ever," president and CEO Barry Gilway says.
One big reason for the improvement: The state-run insurer, which covers those who cannot find coverage in the open market, has steadily pushed policies back into the private market to Florida-based insurers.
Other than Citizens and State Farm, Florida is now dominated by start-up insurers that were able to grow during eight straight hurricane-free years.
Some critics and rating analysts worry that some of those untested Florida insurers could be one major storm away from disaster. In fact, even without any hurricanes, a smattering of companies that took policies out of Citizens — such as Magnolia Insurance, Homewise, American Keystone and Northern Capital — either fell into insolvency or were sold in financial disarray since 2006, costing taxpayers $400 million by one estimate.
But from Citizens' perspective, the past year has been a banner one for shoring up its finances.
"Mother Nature has been kind and again spared Florida from a major storm," Gilway said in a statement. "Here at Citizens, we have been busy taking advantage of that good fortune by continuing to reduce our exposure and policy count."
Citizens has knocked its policy count down from a high of 1.5 million in 2012 to 1.1 million as of November. This year alone, private Florida-based insurers have assumed more than 300,000 Citizens' policies.
By early next year, the insurer expects its policy count to drop below 1 million for the first time since mid 2006.
Meanwhile, Citizens has been annually increasing rates to what it considers "actuarially sound," or enough to match the risk of its exposure to property damage. In 2013, Citizens estimated that 26 percent of its homeowners policies were actuarially sound; the insurer predicts that will double to 52 percent in 2014.
Citizens has bolstered its reserves to nearly $6.8 billion while its total exposure to property damage has fallen from $384 billion to $331 billion, a 14 percent drop.
Less exposure doesn't just help the financial stability of Citizens. Every Floridian with insurance is on the hook to be assessed if Citizens is swamped with claims that it cannot pay. Since 2011, the risk of assessments to Floridians, nicknamed a "hurricane tax," has been cut in half.
Heading into next year, Citizens is becoming even more aggressive in ridding itself of policies, and some homeowners won't have a choice anymore.
Beginning Jan. 1, homeowners applying for Citizens policies for the first time will be required to go with a private carrier offering coverage within 15 percent of Citizens rates. For current Citizens customers, private carriers may offer them less coverage, but it must not be more expensive than their current policy.
On Jan. 2, the insurer is launching a clearinghouse that will try to match Citizens' policyholders with private-market companies willing to offer comparable coverage. At least 18 carriers have pledged to participate in the clearinghouse once it ramps up, Citizens said.
Despite the moves, Gilway acknowledges that the fight for a financially sound insurance market here is far from over.
"I constantly remind myself that Citizens policyholders and all Floridians are only one major storm away from the need for hefty assessments," he said. "For now, however, there is much to be proud of."
Jeff Harrington can be reached at firstname.lastname@example.org or (727) 893-8242.