Thanks to yet another hurricane season that wasn't, Citizens Property Insurance is clicking on all financial cylinders.
The state-run insurer of last resort has been on a relentless mission to push its policies back into the private marketplace. Its incentive to become smaller: Under state law, all Floridians can be assessed to bail out Citizens if it's swamped by claims from a major storm.
So far, it's clearly winning the war of attrition, even as it weathers criticism for being too aggressive in shedding policies.
Citizens started the hurricane season in June with 929,517 policies with a total exposure of $294 billion in insured property. As of Nov. 28, Citizens' policy count has dropped 22 percent to 727,125, reducing its exposure to $229 billion.
Go back a year, and Citizens' total number of policies is down 27 percent, leading to an $86 billion reduction in overall exposure, according to a season wrapup report released Tuesday.
It's a far cry from just two years ago when Citizens was more than twice the size, saddled with 1.5 million policies across the state.
A ninth straight hurricane-free year also has allowed Citizens' surplus to swell to $7.6 billion, which makes it less likely that all Floridians will be assessed after a future storm.
Its bottom line was also helped by cutting back coverage on structures like pool screens and by a sweeping legislative overhaul that makes it much harder for property owners to file sinkhole claims even if they pay explicitly for sinkhole coverage.
"Citizens already is looking ahead to 2015, capitalizing on the growing strength and vibrancy of Florida's private insurance market to increase consumer access to private-market insurance options," Barry Gilway, Citizens president and CEO, said in a statement.
Citizens has come under fire, however, for the tactics it has used to shrink and for the companies that have been allowed to take policies. Its two main "depopulation" strategies are to authorize small Florida-based insurers to assume Citizens' policies and to have agents check with an online clearinghouse before placing new — and more recently renewal — business with Citizens.
The so-called takeout program puts the responsibility on policyholders to opt out of being placed with another insurer. But some homeowners have objected, saying they never received opt-out forms from their would-be carriers, and they are concerned about the financial strength and track record of some small insurance companies that have never dealt with a major hurricane.
Separately, Citizens is widening the online clearinghouse it launched this year to more insurers. If those insurers — many of the same companies participating in the takeout program — offer to take a renewal policy at a premium equal to or less than Citizens, customers have no choice. They have to go with the private carrier.
Unlike the takeout program, however, the clearinghouse offers some consumer protection for those forced out of Citizens. If the new insurance company raises rates by more than 10 percent a year, cancels a policy or goes out of business, policyholders can return to Citizens as a renewing customer during the first three years.
In 2015, look for Citizens to continue to shrink. Florida Insurance Commissioner Kevin McCarty recently approved requests by nine private insurers to take out up to 180,040 more homeowners policies in January.
Citizens spokesman Michael Peltier indicated the company is getting close to its size goal, figuring there will be roughly 600,000 to 650,000 higher-risk policies remaining with the "insurer of last resort" that private companies will refuse to take.
Contact Jeff Harrington at firstname.lastname@example.org or (813) 226-3434. Follow @JeffMHarrington.