It has been 10 years since state leaders created Florida Citizens Property Insurance by merging two existing state-backed insurance pools.
It has become the largest state-backed insurer in the country with 1.4 million policies, more than 31 other state-backed insurers' policies combined, and a record $511 billion in possible losses last year – up from $461 billion in 2010 and $406 billion in 2009, according to a report Monday by the Insurance Information Institute.
That's why the insurer plans to push some policyholders out by raising rates and deductibles and offering less desirable coverage.
Insurers of last resort are those of "first choice for many vulnerable, high-risk coastal properties," according to the institute, an insurance industry group. Most of the insurers are supported both by premiums they receive and fees imposed on state residents after a disaster strikes.
But there is some good news for Florida buried in the institute's figures:
Citizens is collecting more premiums to cover potential losses: $3.1 billion in 2011, up from $2.6 billion in 2010 and $2.2 billion in 2009.
Citizens' premiums increased at a faster rate – 41 percent – than its potential losses – 26 percent – from 2009 to 2011.
Citizens' ratio of premiums to possible losses is higher than Massachusett's state-backed insurer – the next largest – and the average of the 31 state insurers the institute provided figures for.
The institute acknowledged that Citizens' $750 million catastrophe bond, more than three times what was expected and the biggest deal of its kind, is a sign of renewed interested by investors in Florida's property insurance market.
Citizens Property Insurance President Barry Gilway told the Florida Cabinet last month the insurer can pay more than $19 billion in claims if disaster strikes. That includes using reinsurance, bonds and $6 billion in reserves.
State-backed insurers and insurance pools were formed decades ago, mainly to ensure residents' access to property insurance.
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