State-run insurer Citizens Property Insurance Corp. announced this week that it was approved to drop 1,752 homes worth $700,000 and above from coverage after their policies expire next year.
The move is the latest in the insurer’s efforts to reduce its risk exposure. Over the past four years, Citizens has been actively shedding its policy count, even encouraging consumers to sign over to private insurers.
The Office of Insurance Regulation approved Citizens’ plan to drop luxury policies. It is considered the final step of a multiyear “step-down” process meant to transfer high-end properties from the state-run insurer to the private market.
As of Jan. 1, 2017, homes with insurable values between $700,000 and $799,999 will no longer be entitled for coverage through Citizens.
Of the 1,752 homes affected by this change, 324 are in Broward County and 362 are based in Palm Beach County, reported Sun Sentinel.
Florida Association for Insurance Reform (FAIR) president and CEO Jay Neal asserted that consumers being dropped by Citizens should not worry—there is no shortage of private carriers who are more than eager to insure expensive properties, even if they are in coastal areas considered high-risk.
"These [luxury properties] are the homes they want to insure," added FAIR vice president for public policy Paul Handerhan. He explained that since owners of such properties tend to keep their homes properly maintained and have the money to make emergency repairs, insurers see them as better risks.
Citizens has managed to trim down its policy count from approximately 1.5 million in 2012 to currently around 490,000. The insurer’s shedding approach managed to reduce its risk exposure from about $500 billion in 2012 to $142 billion in 2016.
By dropping luxury home policies next year, Citizens could potentially shed another $1.3 billion.
FAIR has pledged to help those policyholders dropped by Citizens and unable to find private insurers willing to offer coverage.
