News & Media
Wood replica of a house inside a shopping cart with a "no" symbol beside it on an easel
Andrii Yalanskyi, Getty Images

Citizens Ins. Expanding Its Turf Beyond S. Fla.

More Orlando-area owners are being told that state-owned Citizens Ins. is their only option. In a three-county area, the number of policies rose 159% year-to-year.

ORLANDO, Fla. – Jeremy Seghers didn’t have much of a choice about moving his home insurance to the state-run insurer of last resort, Citizens Property Insurance. His broker explained it was the only policy he could get after his previous company, Southern Fidelity Insurance, was liquidated by the state last year.

“They told me, ‘Citizens is it. It’s all we got,’” the Orlando theater director said, saying the change wound up adding a few dollars to his premium.

Once the option mostly for vulnerable properties on the coasts, Citizens is writing an exploding number of policies within inland Central Florida, and experts expect the trend to accelerate for the foreseeable future.

Over the past year, Citizens’ home policies have grown from 756,219 to 1.5 million, according to the company. The counties of Orange, Osceola, Seminole and Lake grew to nearly 75,000 policies, an increase of 159% from the previous year.

Seminole policies alone more than tripled from 4,420 to 13,881.

“[Central Florida] is going the same way as the coasts,” said Wayne Lucas, owner of John Galt Insurance brokerage. Though based in Bonita Springs, he says many of his policies are based in metro Orlando. “There has been a big uptick in Citizens.”

All told, the four counties represent a total of 5% of Citizens policies but about 10% of the growth over the past year.

With insurance companies going bankrupt, leaving the state or sometimes doubling premiums, customers are often finding the only affordable option to be Citizens, which was created by the Legislature in 2002 to provide affordable insurance to homes in high-risk areas private companies are reluctant to insure.

Patti Maguire, who has owned her home near Belle Isle since 2009, said her premiums with Swyfft Insurance skyrocketed from about $1,200 annually to $3,830, translating to an extra $200 per month. Even though she is selling the house, she’s looking for a new policy in the meantime.

“For an extra $200 … that’s a lot of money for me,” said Maguire, 75, who lives on a fixed income.

Insurance companies are required to ask the state’s Office of Insurance Regulation if they plan to raise rates by more than 15% in a year. Six private insurers asked the state for rate hikes last year, including Southern Fidelity, which asked for an 84.5% hike before being forced into liquidation by the state, according to hearing notices on the agency’s website.

But companies can also raise rates without approval by increasing other factors in the policy, such as the estimated costs of replacement materials or increases in the price of reinsurance, the insurance that covers the companies in catastrophic events.

Citizens rate increases, however, are capped by the state, this year at 12%.

Citizens spokesman Michael Peltier wrote in an email that the company is woefully underfunded, something it sees as “a worsening trend.”

The company currently has a $4.4 billion surplus for claims and $422 billion in total exposure. If Citizens is unable to cover all of its claims after a major hurricane or another disaster, the state can levy an up to 2% surcharge on all insurance contracts in the state – including auto insurance and other policies – until it is paid back.

In 2007, the state charged a 1.4% assessment on all property insurance to make up for a $1.7 billion shortfall from Citizens after the 2004-2005 hurricanes. That assessment, brought down to 1% after 2011, ended in 2015.

Charles Yang, a professor of insurance and risk management at Florida Atlantic University, says adding policies at Citizens should pay for itself as more premiums become available to handle claims.

“It’s not a problem,” he said. “It’s the way we insure each other.”

Maguire said she looked at a policy from Citizens that was a couple of hundred dollars cheaper than what she pays now, but she’s nervous about adding to the company’s exposure.

“I feel like everyone is going to be on Citizens … and the state will have to cover the shortfall in the next hurricane, and that means you and I will be paying for it,” she said.

Lucas said many of his clients feel the same way. “Everyone goes to it reluctantly,” he said. But Lucas said Citizens is often the only choice, especially for people with homes more than 20 years old.

Last year, the Legislature held two special sessions focused on insurance, leading to new regulations aimed at stemming a tide of property claim lawsuits industry leaders claim are bankrupting companies. In 2021, OIR commissioner David Altmaier sent a letter to the Legislature saying that while Florida accounts for 8% of claims in the country, the state had 76% of claims lawsuits.

Yang says that seems to be more of a problem with the companies than the homeowners. “If they didn’t deny the claims, they wouldn’t have this problem,” he said.

Lucas, however, says he’s seen positive effects from the new laws already. “Other carriers are opening up a little,” he said, though he said it was still anecdotal.

Peltier said the company expects to hit a record 1.7 million policies this year in spite of the new laws.

Maguire said she’s happy the government did something to keep companies in the state as she’s had two previous insurers stop offering policies in Florida in the last five years. She just wishes that the costs would come down.

© 2023 Orlando Sentinel. Distributed by Tribune Content Agency, LLC.