Shrinking Citizens is a Double Edged Sword
As pointed out in the recent Herald Tribune article: Citizens Poised to Further Cull Policies, “Florida State insurance regulators are expected to approve the removal of nearly 600,000 Citizens customers from the state's largest property insurer, which now covers some 1.2 million policyholders,” and many Tallahassee politicians are celebrating.
But before you celebrate, consider the double edged sword. While pushing these riskier policies out to private insurers minimizes the prospect of levying an assessment on all Floridians should a big storm hit and Citizens fails, many of these policies are being pushed out to “NEW” smaller companies. Should they fail, then guess what? FIGA (Florida Insurance Guarantee Fund) can still levee those same assessments provided they are an admitted (vs. less regulated surplus lines) carrier. And why would you want one that is not admitted and does not have to follow the same rules that admitted ones have to follow? If some of these policies go to surplus lines carriers that fail, no one will be there to pay the poor homeowner if their insurance fails.
With the way things are going it seems the smart money is to going to start to self insure. Of course first you have to pay off your mortgage, then buy a big personal liability policy. If the big one hits, call Tallahassee and tell them the FEMA truck is late and you want your money now. And make it a grant not a loan. FEMA will be there to hand out money especially if it is an election year. Time to party, its all good news. Let me know what you think.