Home Insurance Here’s what to know if you’re being ‘depopulated’ from Citizens

Here’s what to know if you’re being ‘depopulated’ from Citizens

by Cedric Guzman

Tens of thousands of customers of state-owned Citizens Property Insurance Corp. are receiving surprising news in their mailboxes. They are receiving letters from Citizens’ “Depopulation Unit” stating that their policies have been assumed by a private-market company. However, this is not a cause for celebration, as the private company’s estimated annual premium is higher than what the policyholder was paying Citizens.

For example, Delores Smerkers, a retiree from Davie, saw her Citizens policy renew for $5,523, $650 more than what she paid the previous year. A few months later, she received a letter stating that her coverage was being assumed by Safepoint Insurance Co. The estimated cost to renew her Safepoint policy was $6,650, an increase of $1,127. This substantial price hike was not something she could afford, but since it was less than 20% above her Citizens premium, she was ineligible to reject the offer and stay with Citizens.

This situation is especially difficult for people on fixed incomes, like Smerkers and her disabled husband. They are struggling to afford the increasing insurance premiums as they try to live out the remainder of their lives in their modest home. Many other Citizens policyholders are in a similar situation, as over 300,000 policyholders are receiving letters stating that their policies have been selected for removal by one or more private-market companies.

The removal process is automatic for those who don’t take action, and policyholders are ineligible to remain with Citizens if the private company’s estimated renewal premium is less than 20% higher than Citizens’ estimated renewal premium. Currently, only 9% of policyholders have selected a private company, while the majority have not yet made a selection.

Some policyholders have been confused about the estimated renewal premiums listed in the letters. These premiums are just estimates and don’t have to be paid right away. Even if a policyholder accepts the transfer, the coverage remains in place at the current Citizens rate until the policy expires. However, these estimates could change prior to the policy renewal date, potentially affecting eligibility to remain with Citizens.

The current round of depopulation efforts is different from previous ones due to the 20% threshold. This threshold is being used to reduce the number of policies held by Citizens, as concerns have grown about the company’s renewed growth. If a major hurricane were to cause significant damage, Citizens could face difficulties paying claims and would have to levy surcharges and assessments on policyholders to make up the shortfall.

In the past, Citizens customers targeted for removal could opt out for any reason. However, a new law implemented this year has set the 20% threshold, making more policyholders ineligible to stay with Citizens. This has led to an increase in private companies willing to assume Citizens policies, signaling an improved insurance market.

However, policyholders who were able to remain with Citizens should not get too comfortable, as they might be targeted again in the future. Agents are preparing for a fresh round of depopulation offers to start going out in late September. With reforms enacted by the state Legislature to reduce potential losses and enticements for lawsuits, experts believe more companies will reenter the market and provide better options for policyholders.

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