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Citizens Property Insurance Corp. officials in a public hearing before the state’s Office of Insurance Regulation (OIR) painted a picture of an insurer that has downsized significantly while financially improving over the last several years.

Citizens President Barry Gilway said that the insurer in the past two years has gone from an entity “out of control” when it came to growth to one that is returning to being the insurer of last resort.

“I think we are at a better place than we have been in a decade,” said Gilway.

Regulators have 45 days in which to make a decision on the rate filing.

Gilway said that several factors are driving the proposed rate changes including the lack of any hurricane losses over the past eight years and five years of rate increases under the glide-path regulation that caps annual proposed rate increases at 10 percent.

According to Citizens documents, those factors have allowed the insurer to reach rate adequacy throughout the state with the exception of a few coastal counties where the insurer provides wind-only coverage.

As a result the insurer is requesting an average 5.8 percent decrease for homeowners multi-peril policies and a 3.8 percent average increase in homeowners wind-only policies.

Citizens Chief Risk Officer John Rollins said that barring a major storm, these trends should continue.

“There is so much uncertainty, so many unknowns,” said Gilway.

Gilway also said the insurer has achieved a level of stability due to the insurer’s ability to depopulate and secure reinsurance and catastrophic bonds at favorable rates.

Two years ago, Citizens had more than 1.5 million policies in force, which according to A.M. Best made it the ninth largest insurer in the country. At that point, the insurer’s personal lines and coastal accounts represented 24 percent of the Florida market; now that number has dropped to 16 percent.

Looking forward, Citizens expects that its policy count could equal less than 900,000 by year’s end depending on the success of planned take-outs by private insurers in November and December.

As a result of Citizens downsizing, its exposure had dropped more than 40 percent from a high of $500 billion to $300 billion, which means that the potential assessment risk on all Floridian citizens has declined from $11.6 billion in 2011 to $2.3 billion.

“I see nothing but coming but good news coming when it comes to taking the assessment burden off the back of Florida citizens,” said Gilway.

Gilway attributed that decrease to a number of factors including Citizens depopulation programs that have seen private insurers take out hundreds of thousands of policies out of the insurer.

Please enjoy the full article below!

http://www.insurancejournal.com/news/southeast/2014/09/02/339189.htm

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