Citizens Property Insurance Corporation

Founding

Hurricane Andrew in 1992 was the costliest storm the United States had experienced, with $26.5 billion in damage. It took a huge bite out of the reserves for claims held by 30 insurance companies doing business in Florida. Eleven insurance companies were bankrupted, while others stopped writing or renewing property insurance policies in the state. Those that remained raised premiums and deductibles across the board and limited the number of high-risk policies they wrote. Almost 1 million coastal homeowners were unable to find any company willing to insure their homes, so the Florida Legislature authorized the formation of the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA) and the Florida Windstorm Underwriting Association (FWUA) as the insurers of last resort. The Florida Hurricane Catastrophe Fund was also created and managed by the state as a resource for Florida consumers and insurers. It is funded by assessments to every property insurance policy in the state.

Post Andrew

Hurricane damage between 1992 and 2003 was relatively manageable, with none or one major hurricane each year except 1998 (which had two). During that time, new insurance companies were started and existing carriers began writing policies again.

By 1999, Florida Insurance Commissioner Bill Nelson stated that FRPCJUA and FWUA were close to shifting most of their 711,000 policies to private insurers.

In 2002, the Florida Legislature passed legislation to merge the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA) and the Florida Windstorm Underwriting Association (FWUA). This resulted in the creation of Citizens Property Insurance Corporation (Citizens), whose goal is to more efficiently and effectively provide insurance to, and serve the needs of, home-owners in high-risk areas and others who cannot find coverage in the open, private insurance market.

High activity

There were four major storms in 2004 that made landfall in Florida, with total damages exceeding $57 billion. The following year brought five major storms, including Katrina, the most expensive Atlantic hurricane of all time.

Once again, several companies pulled out of the Florida market due to an extraordinary number of hurricane and new sinkhole related claims. Citizens became not just the insurer of last resort, but the insurer of only resort for many Floridians. As of 2005, Florida owed almost $5 billion, which would be recovered through insurance policy assessments.

The cost of insurance and its availability became an important "hot button" issue in Florida, especially in the 2006 elections.

Through 2006, Citizens Insurance charged its customers the highest rate approved by the Florida Office of Insurance Regulation to avoid competing with private carriers. Insurance agents were prohibited from writing policies through Citizens if there was a private (not surplus lines) carrier that would write the risk. If a qualified insurance company was willing to take a group of policies, Citizens Insurance would transfer them to that company and cancel coverage. Customers had no recourse.