TALLAHASSEE - Citizens Property Insurance Corp.'s new CEO said Wednesday the state-backed insurer would try to transfer up to 500,000 inland policies to the private sector as its first order of business.
Speaking to reporters a month after taking the reins, CEO Barry Gilway said he would like Citizens to shrink its exposure to under 1 million policies, in large part by reducing the number of policyholders in non-coastal areas who represent the fastest growing sector for Citizens. The corporation now insures about 1.5 million policyholders.
To do that, Gilway said he plans to tap into the network of private insurance agencies and woo potential carriers to pick up the less risky, non-coastal residential policies known as PLAs now being handled by Citizens.
"Step number one is getting the PLA policy counts down to where they were at least two-and-a-half or three years ago," Gilway said. "That's where the huge increase has occurred, and that provides the greatest opportunity to provide financially viable alternatives for our insured."
Going forward, Gilway said Citizens rates need to be higher to more accurately reflect the risk, instead of relying on assessments to make up the difference in the event of a serious storm. Many Citizens policyholders don't realize that they will be on the hook for hefty assessments if a major storm occurs.
But he also said that policyholders should not be required to immediately foot the bill for their entire insurance coverage, saying the spike in premiums would be too severe.
"Step two? You'll probably have to talk to me after 90 days," Gilway said.
Since its inception 10 years ago, Citizens has been transformed from the insurer of last resort to the state's largest property insurer, with potential losses eclipsing $500 billion.
Despite the challenges facing the insurer, Gilway said Florida has led the nation in looking at ways to transfer some of the financial responsibility to private re-insurers, including the recent transfer of more than $750 million in risk to private, non-traditional investors.
While access to private capital is a positive step, Gilway said reducing the number of policyholders under the Citizens umbrella is the only way to provide long term savings.
The Citizens Board of Governors has scheduled a workshop next week to address rates and other changes to make private insurers more willing to return to the market.
"As an insurer of last resort, our basic objective should be to provide coverage and provide a solution for individuals where there simply isn't any other choice in the marketplace," Gilway said.