While some private insurers were approved to take policies from the state’s “insurer of last resort,” they may later pull that offer for internal business reasons.
TAMPA, Fla. – Some Florida homeowners experienced the joy of getting a lower rate and getting out of state-backed Citizens Property Insurance. But then, they found out that the offer was too good to be true.
If you’re with Citizens, and another company gives you an offer that’s within 20% of your premium, you’ll be kicked out of Citizens. But some Citizens customers are getting offers way below their current premium.
But private insurance companies can make you an offer, then take it back. This can happen again, and again, creating chaos and confusion for Citizens customers.
Last month, Florida senators got an update from Citizens. “We hit 1.412 million policies in Citizens,” said Tim Cerio, CEO of Citizens Property Insurance. He said Citizens has taken on too many policies. Now, the focus is de-population: Getting people out of Citizens.
“Why? Well, fewer policies means less exposure for all of us. If the state-backed carrier can’t pay out claims, all Florida taxpayers would be on the hook.
“There are frankly some very good policies in Citizens that could be attractive to the private market for a takeout,” Cerio said.
Five different private insurance companies want Citizens customers. For the October takeout, state regulators said they could take up to 184,000 policies.
Soon, Citizens customers started getting offers in the mail. Robert Norberg, an insurance broker, said it wasn’t all bad.
“In many cases the rate was lower than the actual Citizens rate,” Norberg said. “So therefore they felt, okay great! Let’s take that new company.”
Then, the new company took it back.
Norberg says at least a dozen homeowners he reps got a letter withdrawing that great offer. 8 On Your Side confirmed it happened more than 25,000 times in October.
“It is very confusing when the letter comes,” Norberg said. “Of course they were upset, they were like, ‘How can they do this to me?’”
A Citizens spokesman says a company can make you an offer, then take it back. If that happens, you’ll automatically stick with Citizens. But the question is for how long?
“There will be more assumptions coming out of Citizens,” Norberg said. “They’re right back in the pool. So they will likely get another assumption offer, and it may not be lower than Citizens this time.”
So heads up to all Citizens customers. The depopulation process includes this step that allows private companies to withdraw offers.
They do it for different reasons. For example, they might have too many policies in a specific location or too many policies of the same characteristics – age of home, age or roof – and so on.
Insurance companies always want a diverse portfolio to spread out the risk.
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Author: kerrys