Latest Headlines
- Five WaWa Stores In The Works For Escambia County. Here’s The List.
- Scattered Storms Likely Again Today
- Motorcyclist Critical After Jacks Branch Road Crash
- FDOT Plans Traffic Shift Thursday In Century Highway 29 Construction Zone
- Molino Man Charged With Throwing Object, Breaking Windshield Of Passing Car
- North Escambia Athletes Place In USA Volleyball Beach National Championships
- Santa Rosa Sheriff Issues Contractor Fraud Alert After Arrest
- Escambia Man Gets 10 Years On Firearms And Financial Racketeering Charges
- New Name, Same Fish: Largemouth Bass Are Now Florida Bass
- ECUA Considering Water, Sewer And Sanitation Rate Increases
Citizens To Shed Wind Policies
February 12, 2013
Trying to shed some major financial risks, state-backed Citizens Property Insurance Corp. moved forward Monday with a plan to shift thousands of coastal hurricane policies to a private insurer.
The plan, which will play out during the next few months, will lead to Weston Insurance Co. taking over wind-only policies from Citizens — including a first-of-its-kind removal of policies for condominium buildings in coastal areas.
“We have the opportunity to get this hurricane risk off the books,” Sharon Binnun, Citizens chief financial officer, said during a conference call of the Citizens board.
Citizens, which is Florida’s largest property insurer with about 1.3 million policies, has long tried to move policies into the private sector through a process known as “depopulation.” Citizens said it expects Weston to assume 23,000 wind-only homeowners’ policies, 3,000 condominium-complex policies and 5,000 commercial non-residential policies, all of which are in coastal areas.
Under the plan, Weston would agree to retain the policies for at least three years and also continue limits placed on Citizens’ premium increases. Those limits, set in state law, allow Citizens’ rates to increase 10 percent a year.
While Citizens has had success during the past year in getting insurers to take other types of policies, wind-only coverage has been trickier because of the financial risks involved.
Locke Burt, president and chairman of Security First Insurance Co., told a Senate committee last week that Citizens should stop writing wind-only policies as a way to increase depopulation opportunities. Burt, a former senator, said private insurers would be more likely to take over policies that are “multi-peril,” including not only wind but more profitable types of coverage such as burglary and fire.
The Citizens board Monday approved a key first step in the Weston plan. That step, which Citizens officials described as a “bridge,” involves Citizens paying premiums to Weston for reinsurance coverage through May 31. During that period, Weston will provide coverage for claims stemming from the wind-only policies that it is taking out of Citizens.
The arrangement will allow Weston to build up premiums in advance of hurricane season, while Citizens will reduce its exposure to wind damage through May 31 because Weston will provide reinsurance. After the transition period, Weston will provide coverage for the policies.
By The News Service of Florida
Comments
12 Responses to “Citizens To Shed Wind Policies”
Let’s get the State and Federal Government out of the tax supported business of supporting residents living on the beach and along our rivers and bays. Some of these people get to rebuild and redecorate every time we have a good thunderstorm. If they were not taking advantage of tax supported insurance, even the rich could not afford to clutter our beach with million dollar houses, and our beach would turn back into a park as it should have been left 50 years ago
walnuthillroy –
Yes, the premiums collected are bundled together and invested to produce the investment income. However, those premium dollars are held in reserve and used to pay claims. Most of the collected premium dollars collected are used to pay the claims. It’s the law of large numbers. Just because you pay $1000 per year and never pay a claim — doesn’t mean they are pocketing that $1000 as profit…it goes to pay the claim for the policy holder who has a large loss.
The use of premium dollars — for a time — as an investment generates income to fund the company. Some goes to overhead and expenses and yes, the rest is profit. Do you expect companies to provide coverage with no thought of making a profit?
Thus the problem with people who want “affordable health incurance” but can’t understand why premiums are so high. Because you and your families files claims!! If you pay a few thousand dollars in premium — but receive tens of thousands of dollars of health care claims, someone is paying in the same and getting less or no benefits. You simply can’t pay in a little — and expect alot. It simply does not compute.
To WM,
One question: Where do the insurance companies get the substantial amount of money that they invest? It wouldn’t be from the policies would it???
HenryCoe — you don’t know jack about insurance. Most of premium dollars collected go to pay claims. Insurance companies make the majority of money on investment income — not underwriting profit. Salaries and benefits of insurance company employees are a very small portion of the company’s combined ratio.
brad, Insurance companies only lose money on homeowners and property insurance because of what CEO’s and shareholders get paid. They are addicted to our money and they own our politicians. It’s that simple.
If Home Owners Insurance Companies were capped to only allowing 25% (or less) of premiums to be used for payroll and operating expenses, including the bonuses, the shareholders would be happy and premiums would be much less. That is if they were based on the actual risk to home owners based on their location.
i.e. living within a mile of the water is not the same thing if own home’s elevation is at 10 feet verses another home’s that is at 80 feet. The insurance laws are set up to not care about the actual risk and Floridians are getting ripped off.
Fred, Insurance companies lose money on homeowners and property insurance.
After Hurricane Ivan wind storm damage insurance was dropped for ALL policies within Pensacola city limits by the company providing our homeowners insurance, as well as other companies. Citizens is our only option.
This sort of this of thing has hurt our property values and with this news I would expect them to take another hit.
The insurance industry has become such a hustle, it’s beyond belief. I truly believe the insurance companies have decided that they are in the investment business and not in the indemnification business. Here’s a question for the forum – why is it that you can’t buy wind and flood insurance from the same company on the same policy? Ever talk to someone who had hurricane damage that caused their house to also flood? They end up playing the runaround game because the wind carrier says it’s flood damage and the flood carrier says it’s wind damage, so neither one wants to pay a claim. Why doesn’t FL require the carriers to carry the full package? Why do those of us who built far away from the water, and on high ground, have to pay surcharges to help pay for claims from those who foolishly build on the sand? Why are such huge palaces permitted on the beach; they are huge claims waiting to be made. We all just saw huge premium increases this year, didn’t we? Where are the financial disclosures of profits made by the insurance carriers?
As a partial answer to CW, it;s just another way to redistribute the wealth! Everyone pays much higher rates for the protection of a few and the exposure that the insurance company has because of them. I agree that if you can’t afford the property and the insurance (if it’s available) you should be turned down for a loan. Everyone who is not in a hurricane prone damage area would see their insurance premiums go down quite a bit, unfortunately that’s not going to happen.
So when will I see a reduction in my own homeowner’s insurance? It is so aggravating to me to have to be forced to pay ANYTHING to fund this insurance company.
Citizens Ins, never should have been. Why should I and others have to furnish ins. so some can live on the water front and other low area that was never fit to build on? So they can,t get ins. and can,t get a mortage without ins., who cares?