Citizens Property Insurance Corporation
Encyclopedia
Citizens Property Insurance Corporation was created in Florida in 2002 to provide property insurance
for home-owners who could not obtain insurance elsewhere, an insurer of last resort. It is a government established, not-for-profit insurer in Florida
. It is the largest insurer in the state.
It is not connected with for-profit insurers with similar names.
related claims over the preceding few years, Citizens became not the insurer of last resort but the insurer of only resort for many Floridians. The cost of insurance and its availability became an important "hot button" issue in Florida, especially in the 2006 elections
.
in 1992 devastated Miami. Citizens was originally created as an "insurer of last resort," with many large risk carriers leaving the state while homeowners still needed to retain insurance coverage.
"In 2002, the Legislature merged FRPCJUA with the Florida Windstorm Underwriting Association (FWUA) into one entity, forming the Citizens Property Insurance Corporation."
passed a law that combined 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.
Up until the beginning of 2007, Citizens Insurance charged its customers the highest legal rate (highest approved rate by the Office of Insurance Regulation) so as to avoid competing with private carriers. Insurance agents were actually prohibited from writing policies
through Citizens if there was a private (not surplus lines) carrier who could write the risk. With the recent changes by the Florida legislature, agents may write a Citizens policy for customers if a comparable policy offered by a private carrier is 15% greater (Florida Senate Bill 2498 (the Glitch Bill) signed into law by Governor Crist
on June 11, 2007). Also, customers are now allowed to keep their Citizens policy if they do not wish to be insured by an assuming carrier - an insurance company who is taking the risk from Citizens; previously customers who were "taken out" were not allowed a choice.
After 2010, eight global insurance carriers, including State Farm, entered, or re-entered the Florida market. While the cost of reinsurance
dropped 10% in 2010 and was expected to drop further in 2011, the cost of insurance to consumers remained the same.
In 2010 State Farm and Renaissance jointly formed DaVinci Reinsurance Ltd. which insured more than 3.5 million homes in 2010.
According to testimony in legislative committee on March 29, 2011, Citizens had over $240 billion dollars in risk exposure if Florida is hit by a "century storm". Citizens' reserves were approximately $15 billion. This actuarially unsound situation resulted in a call for Citizens to raise its rates and become, once again, the insurer of last resort.
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
for home-owners who could not obtain insurance elsewhere, an insurer of last resort. It is a government established, not-for-profit insurer in Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
. It is the largest insurer in the state.
It is not connected with for-profit insurers with similar names.
History
Up to 2010, as more and more companies pulled out of the Florida market due to the extraordinary number of hurricane and sinkholeSinkhole
A sinkhole, also known as a sink, shake hole, swallow hole, swallet, doline or cenote, is a natural depression or hole in the Earth's surface caused by karst processes — the chemical dissolution of carbonate rocks or suffosion processes for example in sandstone...
related claims over the preceding few years, Citizens became not the insurer of last resort but the insurer of only resort for many Floridians. The cost of insurance and its availability became an important "hot button" issue in Florida, especially in the 2006 elections
United States general elections, 2006
The 2006 United States midterm elections were held on Tuesday, November 7, 2006. All United States House of Representatives seats and one third of the United States Senate seats were contested in this election, as well as 36 state governorships, many state legislatures, four territorial...
.
Prior to 2002
Florida Residential Property and Casualty Joint Underwriting Association was created after Hurricane AndrewHurricane Andrew
Hurricane Andrew was the third Category 5 hurricane to make landfall in the United States, after the Labor Day Hurricane of 1935 and Hurricane Camille in 1969. Andrew was the first named storm and only major hurricane of the otherwise inactive 1992 Atlantic hurricane season...
in 1992 devastated Miami. Citizens was originally created as an "insurer of last resort," with many large risk carriers leaving the state while homeowners still needed to retain insurance coverage.
"In 2002, the Legislature merged FRPCJUA with the Florida Windstorm Underwriting Association (FWUA) into one entity, forming the Citizens Property Insurance Corporation."
After 2002
From their web site: In 2002, the Florida LegislatureFlorida Legislature
The Florida State Legislature is the term often used to refer to the two houses that act as the state legislature of the U.S. state of Florida. The Florida Constitution states that "The legislative power of the state shall be vested in a legislature of the State of Florida," composed of a Senate...
passed a law that combined 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.
Up until the beginning of 2007, Citizens Insurance charged its customers the highest legal rate (highest approved rate by the Office of Insurance Regulation) so as to avoid competing with private carriers. Insurance agents were actually prohibited from writing policies
Insurance contract
In insurance, the insurance policy is a contract between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for payment, known as the premium, the insurer pays for damages to the insured which are caused by...
through Citizens if there was a private (not surplus lines) carrier who could write the risk. With the recent changes by the Florida legislature, agents may write a Citizens policy for customers if a comparable policy offered by a private carrier is 15% greater (Florida Senate Bill 2498 (the Glitch Bill) signed into law by Governor Crist
Charlie Crist
Charles Joseph "Charlie" Crist, Jr. is an American politician who was the 44th Governor of Florida. Prior to his election as governor, Crist previously served as Florida State Senator, Education Commissioner, and Attorney General...
on June 11, 2007). Also, customers are now allowed to keep their Citizens policy if they do not wish to be insured by an assuming carrier - an insurance company who is taking the risk from Citizens; previously customers who were "taken out" were not allowed a choice.
After 2010, eight global insurance carriers, including State Farm, entered, or re-entered the Florida market. While the cost of reinsurance
Reinsurance
Reinsurance is insurance that is purchased by an insurance company from another insurance company as a means of risk management...
dropped 10% in 2010 and was expected to drop further in 2011, the cost of insurance to consumers remained the same.
In 2010 State Farm and Renaissance jointly formed DaVinci Reinsurance Ltd. which insured more than 3.5 million homes in 2010.
According to testimony in legislative committee on March 29, 2011, Citizens had over $240 billion dollars in risk exposure if Florida is hit by a "century storm". Citizens' reserves were approximately $15 billion. This actuarially unsound situation resulted in a call for Citizens to raise its rates and become, once again, the insurer of last resort.