Wednesday, September 3, 2014

Citizens Property and Casualty is the largest property Insuror in Florida

Initially conceived as the insuror of last resort, Citizens property and Casualty has become the largest insuror by far of homes in Florida.

The facts:

As of 9/30/2010, Citizens Insures 1,185,513 Personal lines policies (Home Insurance and wind Insurance combined for residential occupancy)

The next largest Insuror, State Farm Florida Insurance Company, is actively non-renewing policies to reduce their exposure to about 1/2 that of Citizens  and has been currently downgraded to a B- rating.

In spite of a Mandate to reduce policies in Florida, Citizens continues to grow.

Allstate, Nationwide, Hartford, Geico, Travelers, and other major insurance companies have reduced their exposures to a fraction of what Citizens has.

"Take out Companies", Usually small newer companies with small histories and Assetts, are the only Companies that are growing their number of homeowner policies in Florida.

Take out company bankruptcys are on the rise, and serious questions about their ability to respond to claims.

The news is even worse for the policyholders in "sinkhole alley", Pasco, Hernando, Pinellas and Hillsborough.  These counties have virtually seen the Property Insurance marketplace be turned over in total to Citizens.

What happened?



This question is complex, but started with Insurance companies not properly modeling the risk of hurricaine in Florida and by violating a principle of Insurance called "spreading the Risk", often concentrating their policies in certain areas and/or overselling homeowner Insurance with the desire to cross sell other lines of Insurance.  Prior to Hurricaine Andrew, The Insurance Companies also reserved inadequately, grossly underestimating their worse case exposure. As an example, State Farm lost every dime they ever made in Florida in this one storm AND exposed the Mutual Company to possible liquidation if the Hurricaine had only hit 10 miles north and damaged the more populous areas of Dade and Broward County. Another example is Michigan Millers Mutual Insurance Company. While largely left untouched by Andrew, The multi-billion dollar loss forced the Company to face facts. The vast majority of their business was written in the Tampa Bay area, and if Andrew would have come up through the Bay and landed in Pinellas or Hillsborough County, this A+ rated company founded in 1881 would be foreced to  expose their Mid west clients and their entire company to the possibility of bankrupty.

These scenarios caused the major companies to form Florida Only Insurance Companies and the regional Carriers to Leave the State entirely.

Enter Citizens Property and Casualty Company.  This quasi governmental company was founded to fill the void.

2014 hurricane season

The weather is getting bearable, and we are halfway through hurricane season with no storms. Go Florida! 

According to The Weather Channel, this season predicted 11 named storms, 5 hurricanes, and 2 major hurricanes. We have been fortunate here in Hurricane alley to miss pretty much any of this activity in any meaningful way. Stay tuned.


Bauknight Insurance operates two Counties in Florida, Bauknight Insurance, 13041 US Hwy 19, Hudson, FL 34667 (727) 863-5641 and Bauknight Insurance of Hernando 10488 Spring Hill Drive, Spring Hill, Fl 34607 (352-686-0612

www.bauknightinsurance.com