Oct. 09--Another 142,500 policies have been OK'd for removal from the state-run Citizens Property Insurance Co., bringing the total approved for takeout to 1.3 million in 2015.
The actual number of offers made by private insurers will be much smaller than the number approved, and the percentage of Citizens customers who accept a transfer is declining.
Persuading policyholders to switch to a private insurance company is becoming a tougher sell, Citizens' data shows.
In 2014, 70 percent of Citizens policyholders made the switch to private companies after receiving letters stating their policies would transfer unless they sent back an "opt out" letter. Through September 2015, 57 percent made the switch, Citizens spokesman Michael Peltier said Thursday.
Why the dropoff? Citizens officials aren't sure yet, Peltier said.
One reason might be that Citzens customers are becoming "assumption resistant," he said.
"As the pool of Citizens policies shrinks [from 1.5 million in 2012 to about 573,000 in September], we may have people who have declined offers before and for some reason decide to stay with Citizens."
Also, the share of high-risk coastal and wind-only policies remaining in Citizens is increasing because private companies have cherry-picked the least risky inland policies. These long-time Citizens coastal customers have been bypassed by the private companies since the depopulation program began in 2012, largely because they couldn't compete with Citizens' artificially low rates.
By law, Citizens is allowed to increase those rates by 10 percent each year until they reach "actuarial adequacy" -- or what the rates should be on the private market.
Now that Citizens' rates for coastal and wind-only customers are approaching market rates, private companies are taking a second look, but that doesn't mean those Citizens customers are willing to take the leap, Peltier said.
Companies may begin sending takeout letters to the 142,500 newly approved policies in December. That brings the number of policies approved for takeout beginning in September to 708,907 -- more than the 586,000 policies that remain with Citizens.
Policies approved for takeout exceed the number of actual Citizens policies, Peltier said, because companies pursue far fewer policies than the state approves. In September, for example, 101,050 policies were approved for takeout but only 46,182 assumption offers were made.
Still, Citizens is confident that enough policyholders will agree to transfers during the last four months to bring the company down to 500,000 policies by the end of the year and 450,000 by the end of 2016.
Companies approved for the December round of takeouts are: Anchor Property & Casualty (20,000 residential); Heritage Property & Casualty (55,000 residential, 1,500 commercial); Olympus Insurance Co. (10,000 residential); United Property & Casualty (55,000 residential, 1,000 commercial).
rhurtibise@sun-sentinel.com, 954-356-4071
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