Florida Citizens depopulation seeing more interest & participation: OIR

Despite the news of a range of insurance carriers pulling-back to manage their catastrophe exposure in Florida, there remains an appetite to assume this risk and the state insurance regulator says that it is seeing greater interest and participation in the Florida Citizens Depopulation program in 2023.

Of course, Florida’s property insurer of last resort, Citizens Property Insurance Corporation’s policy count has been rising fast in recent years.

At the latest count, as of July 7th 2023, Florida Citizens had over 1.32 million policies in-force, which is a huge over $561.6 billion of exposure for the insurer.

For comparison, Citizens policy count began this year at around 1.15 million, but had grown dramatically from approximately 760,000 policies at the start of 2022.

With news of carriers pulling-back and exiting the state continuing to emerge, it might seem like nobody wants property insurance risk in Florida.

But, of course, Florida Citizens has itself just purchased a large reinsurance program, demonstrating appetite for this risk from both traditional reinsurance and insurance-linked securities (ILS) markets.

Also telling, as we reported back in June, is the fact certain insurance carriers are even getting approval to takeout policies from Florida Citizens, through the depopulation program, right in the middle of the hurricane season, showing the appetite to assume that risk remains.

Now, the Florida Office of Insurance Regulation (OIR) has said that it seeing “greater participation and interest in the Citizens Depopulation program this year.”

“There are currently seven companies participating in the Citizens Depopulation program for 2023 and the number of policies being requested in the first half of 2023 is more than the total number of policies requested in 2022,” the regulator explained.

So far in 2023, the OIR has already approved 91,000 policies for takeout from Citizens.

Looking ahead to later this year, when the appetite would typically be expected to rise as hurricane season draws to a close, the OIR said it is “anticipating continued growth in participation,” and already has 184,000 policies requested for the October assumption date of the depopulation program.

That’s for assuming the policies in October, so still within hurricane season as well.

Any carriers wanting to assume policies at the next assumption date, in November (the 21st, so right at the end of hurricane season), need to register their interest by July 28th, so we should expect another glut of policies to leave Florida Citizens then as well.

From 2007 to 2013 nearly 1.4 million policies were removed from Citizens through takeouts, but the pace slowed to almost 888,000 between 2014 and 2023 to-date.

There will be a December assumption of policies from Citizens as well, so it’s going to be interesting to see how many can be taken out through these November and December dates.

Of course, the question is whether takeouts will outpace new policies flowing into Citizens, as with carriers pulling-back the flow to the insurer of last resort is also likely to persist.

But, going in the favour of takeouts growing, the property insurance reforms made in the legislature should increasingly take effect and also become more evident in carriers’ results, which could see the appetite to source risk in this way escalate.

It will also be interesting to see whether those assuming are doing so backed solely by their traditional balance-sheets, or whether some leverage capital partnerships, perhaps even with ILS specialists (as had been seen prior to 2017).

Overall, things are beginning to look more encouraging for Florida Citizens to get back on a track towards some kind of at least stability in its policy count and exposure levels, perhaps even the start of a reduction.