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State-owned Citizens Property Ins. is growing rapidly, and Fla. insurance regulators recently authorized \u201cextraordinary\u201d terminations for thousands of homeowners insured by Universal Insurance of North America, Gulfstream Property & Casualty and Southern Fidelity.<\/span><\/span><\/p>\n<\/div>\n TALLAHASSEE, Fla. \u2013 As another hurricane season bears down on the state, more than 50,000 Florida home insurance customers will soon receive notices that their policies have been canceled or won\u2019t be renewed.<\/span><\/span><\/p>\n State insurance regulators recently authorized \u201cextraordinary\u201d terminations of thousands of policies of Florida-based insurers Universal Insurance of North America, Gulfstream Property & Casualty, and Southern Fidelity.<\/span><\/span><\/p>\n And the bloodletting will likely continue over the coming months with other insurers seeking to shed risky or unprofitable policies while refusing to insure older homes with roofs, electrical systems and plumbing that have not been upgraded to comply with current building codes, said Paul Handerhan, president of the consumer-focused Federal Association for Insurance Reform.<\/span><\/span><\/p>\n \u201cFor the average consumer, the outlook is not bright,\u201d he said. \u201cThere will be less options at higher price points.\u201d<\/span><\/span><\/p>\n The consent orders by the state Office of Insurance Regulation authorizing the early cancellations did not specify locations of affected policyholders, and officials of the companies did not respond to requests for information. But if recent history is any guide, affected consumers are likely disproportionately located in Broward, Miami-Dade and Palm Beach counties, as well as in the Orlando metro area.<\/span><\/span><\/p>\n Insurers have been reducing their exposure in the three South Florida counties for several years, saying they are the source of inflated damage claims, excessive litigation and outright fraud. The trend recently has spread to Orange, Seminole, Osceola and Lake counties in Central Florida, insurers contend.<\/span><\/span><\/p>\n The consent orders, signed by Insurance Commissioner David Altmaier, said approval of the cancellations and nonrenewals \u201cis an extraordinary statutory remedy reserved to address insurers which [otherwise] are or may be in hazardous financial condition.\u201d<\/span><\/span><\/p>\n Many, though not all, Florida-based insurers have been reporting operating losses over the past five years as a result of rising claims costs, more frequent severe weather events, increased lawsuits and higher costs of reinsurance \u2013 insurance that insurers buy to guarantee they can pay all claims after a catastrophe.<\/span><\/span><\/p>\n Here are details of what Altmaier authorized in the consent orders:<\/span><\/span><\/p>\n Homeowners who get a notice of cancellation or nonrenewal should move quickly to secure coverage with another company, the Office of Insurance Regulation says on its website. Terms of the consent orders require the companies to work with affected customers and their insurance agents to help them find new carriers.<\/span><\/span><\/p>\n Many, if not most, of those customers will end up with little choice but to buy a policy from state-owned Citizens Property Insurance Corp., the so-called \u201cinsurer of last resort.\u201d Citizens policies are considered inferior to private-market policies because the company limits personal liability coverage and subjects its customers to surcharges if Citizens can\u2019t pay all claims after a catastrophe.<\/span><\/span><\/p>\n Citizens has been rapidly growing as private-market insurers cancel and decline to renew Florida policies. That growth is worrying legislators who know that an inability by a swollen Citizens to pay all claims after a major storm will trigger not just surcharges for Citizens customers but surcharges for all property insurance customers in Florida.<\/span><\/span><\/p>\n Citizens, which expands and contracts as market conditions warrant, is growing by about 5,000 policies a week and could reach 700,000 by the end of the year. In 2018, it had fallen to 452,000 policies.<\/span><\/span><\/p>\n Handerhan said policyholders who receive notices of cancellation or nonrenewal should contact numerous agents if necessary to find out if another company will insure them at an affordable price. They should settle for Citizens only if they cannot find a viable alternative, he said.<\/span><\/span><\/p>\n Citizens spokesman Michael Peltier said he doesn\u2019t know how many of the canceled policies will end up at Citizens. But the company is ready for them, he said.<\/span><\/span><\/p>\n \u201cWe are in a good position to handle any policies that come our way,\u201d he said by email. \u201cWe have been in ramp-up mode for some time as we respond to market conditions over the past year.\u201d<\/span><\/span><\/p>\n Ultimately, owners of older homes in Florida will have some serious and expensive decisions to make if they want to avoid going with Citizens, Handerhan said. More and more companies are deciding it\u2019s too expensive to insure homes that don\u2019t conform to current building codes, he said.<\/span><\/span><\/p>\n As a result, \u201cowners of older properties are going to have to dig into their pockets and come up to current code\u201d before insurers will accept their business, he said.<\/span><\/span><\/p>\n Joesph Petrelli, president of the insurance strength rating firm Demotech, said further cancellations could follow, thanks to the Florida Legislature\u2019s failure to pass legal reforms that would have sharply restricted roofing companies\u2019 aggressive marketing practices and slashed financial incentives for attorneys who sue insurers.<\/span><\/span><\/p>\n\n