Ready For A New Homeowner’s Insurer? Citizens New Eligibility ‘Clearinghouse’ Process Is Dramatically Different

2014 begins with a new, dramatically different, approach to property insurance eligibility from the state insurer (and Florida’s largest home insurer), Citizens Property Insurance Corporation (aka Citizens), that stands to impact every home in our state that either seeks new coverage from the state or has coverage with them at this time. If you purchase home insurance, have or want to consider Citizens for your coverage, you need to know about Citizens Clearinghouse program and we have prepared an overview of the program for you that you can read here.

Ever since Hurricane Andrew visited our shores in 1992, the property insurance market has not been the same. Most well-known insurers have long ago left the market by non-renewing hundreds of thousands of policies that, in total, impact millions of homes. That storm and other subsequent storms (Katrina, Wilma and others) have kept insurers away, seen them change their approach to business and many organizational structures and in some cases threaten their financial survival (click here to read about how the market almost put State Farm Florida out of business).

Today’s property market is dominated by the state run insurer that was designed as a last resort for coverage, Citizens, along with new, often untested (and mostly unrated), insurers that only write in Florida and Excess/Surplus insurers that the state does not, cannot, regulate. Given the threat of large, catastrophic, storm losses (Andrew resulted in about $ 18 Billion in damage, a then record by a wide margin while Katrina was closer to $ 50 Billion), a seemingly never ending growth in new homes and along with them more and more values at risk, the market is likely never to return to what it was on August 23rd, 1992 (the day before Andrew hit).

Over time, the last resort insurer that the state of Florida created to help when others could not has become the first choice, so says the state, for too many consumers. Some of this is due to the market conditions mentioned above, but interestingly, some of its growth (recently to over 1,200,000 policies and currently at 1,062,000) can be attributed to the limited number of insurers (often just one) that certain types of agents have available. So called ‘exclusive’, ‘direct’, or ‘captive’, agents such as an Allstate or State Farm office have typically offered limited to no insurer choices other than Citizens in the years since Hurricane Andrew. Over the past two decades when a consumer contacts an Allstate or State Farm agent seeking homeowner’s insurance they are commonly placed with Citizens because that agent’s office, as a result of their parent company requiring them to only sell that companies insurance coverage and the parent not writing much (or any) new home/wind insurance leaves them no other choice. Since insurers such as Allstate and State Farm have not sought much (or any) new homeowner’s coverage in a region such as South Florida in the last two plus decades, and since their agents contractually are required in most instances to sell only their parents products, those agents have had little choice but place their client’s coverage in Citizens.

Independent agencies, such as Morris & Reynolds, are, by their very nature, independent of any insurer and typically represent many different insurers. For homeowner’s insurance, for example, our agency offers more than three dozen different insurers for the various types of homes our client’s might have. In fact, we have an annual process in place to shop every policy that we write among all of the insurers we represent. That’s right, we shop every policy, every year in search of the best insurer, coverage and cost. I can’t say what every independent agency does in this regard, but I can say that here at Morris & Reynolds we like as many choices as possible for our client’s coverage and take great pride (as well as spend a great deal of time and energy) shopping every renewal, every year.

The new Citizens Clearinghouse will act a bit like our approach here at Morris & Reynolds in that every new and renewal policy will be shopped among participating insurers. Over the course of 2014 about 18 insurers, mostly Florida based companies, will participate in the Citizens Clearinghouse. What is important to know is that if you are shopping for new coverage and don’t have Citizens and one of these insurers offers coverage on your home, and is within 15% of Citizens premium, then you will not be allowed to purchase a policy from Citizens. If you already use Citizens, as of your renewal (starting in May under the current plan), if another insurer offers coverage at a premium that is the same or less than Citizens would charge then, by law, Citizens will not renew your coverage. All of the important details are in the attached article and I strongly suggest you read it or contact one of our fine agents or underwriters, as we will be happy to help answer your questions.

2014 marks our 64th year in the insurance agency business and the 104th that my family has been in the insurance profession. From all of us here at Morris & Reynolds we wish you a happy, healthy, New Year and thank you kindly for allowing us the honor of providing your protection.

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