Citizens Insurance Urges Policyholders to Act
Switching Insurers by October 10 Deadline
Introduction: If you're a policyholder with Citizens Property Insurance, your mailbox is about to become a crucial point of interest. Citizens Insurance is currently dispatching letters to its 304,000 policyholders, presenting tempting offers to switch to private insurers. However, the clock is ticking, as policyholders have until the October 10 deadline to respond. Failure to act promptly may result in automatic policy transfer to a private insurance company, often at a significantly higher premium rate.
Understanding the Situation: Citizens Insurance spokespersons have confirmed that they intended to provide a 30-day response window for their customers. However, due to a mailing delay by one of their vendors, some policyholders have been given less time to make an informed choice. Out of the 304,000 customers slated to receive these letters, 24,000 were sent out on Monday, with the remaining 1,600 dispatched on Wednesday.
Customer Perspective: One policyholder, Bill LaFlamme, shared his experience. He received a letter over a week ago, offering him an option to switch to Slide Insurance, but at a substantially higher premium. "I'm currently paying about $3,400 to $3,500 a year for Citizens," LaFlamme stated. "Slide Insurance Company wanted around $6,700."
Despite the tempting offer, LaFlamme decided to stay with Citizens to avoid nearly doubling his insurance costs. He opted to communicate his choice through his insurance agent, who had already planned to contact his clients.
Industry Expert Insights: Mark Friedlander, a spokesperson for the Insurance Information Institute, offered insights into the situation. He mentioned that most offers from private insurance companies are approximately 40% higher, as per anecdotal consumer reports. According to state regulations, individuals who receive a takeout offer within 20% of their current premium will be compelled to leave Citizens.
Friedlander also highlighted the volatile conditions in Florida's property insurance market, indicating that finding a better price than the takeout offer could be challenging.
The Purpose of Takeout Offers: These takeout offers stem from state regulators' approval of certain companies to assume some of Citizens' policies. This move aims to reduce the policy count for the state-backed insurer of last resort.
Citizens' Growing Policy Count: Citizens currently hold approximately 1.4 million policies across the state. This significant growth has occurred in recent years, especially as other insurance companies have withdrawn from Florida. Experts, including Friedlander, express concerns that this exponential growth is unsustainable.
The Risks of Rapid Growth: Friedlander emphasized that Citizens was never meant to be the only insurance option in Florida. The discrepancy between Citizens' rate restrictions and private companies' pricing creates an issue where Citizens is not collecting sufficient premiums to cover the risk, leading to what's known as "not actuarially sound rates." This could potentially burden all Florida consumers with what is often termed a "hurricane tax."
Insights from a Former Deputy Insurance Commissioner: Lisa Miller, a former deputy insurance commissioner in Florida, acknowledged that Citizens' rapid growth is a concern. She explained that the government's insurance company, Citizens Insurance Company, ideally seeks to phase itself out by providing coverage when private insurance is unattainable. However, the current situation doesn't align with this goal. Miller believes that private insurers stepping in to take on Citizens' policies is a positive sign. She anticipates that although the transition may be challenging in the short term, rates will likely stabilize, if not decrease, helping to restore equilibrium in a market plagued by skyrocketing rates.
Taking Action: Policyholders who receive these takeout letters have two options for responding: they can make their choice online at Citizens Insurance Online Choice or contact their agent listed in the takeout offer letter. Citizens are actively reaching out to both agents and policyholders who have received offers but have not yet responded.
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