Privatizing Citizens?
Citizens Property Insurance Corporation Jim Malone created a buzz today when he suggested that Citizens’ risks should be privatized in some manner. Malone lamented that Citizens continues to grow as its rate levels remain subject to a glide path cap while the private market’s rate increase due to cost drivers in the market.
So, can Citizens be privatized? Recent storm-free years have allowed it to accumulate surplus. However, its rates remain well below the private market in some areas and for some types or programs. In addition, Citizens relies significantly on FHCF coverage, and recent discussions have raised the possibility of gradually reducing the size of the FHCF. At the same time, a private insurer would need to buy additional reinsurance and would not be able to pass its shortfalls to the public at large through assessments.
It is an interesting challenge, and the mere mention of the possibility will cause some groups to sharpen their pencils. It’s an ambitious goal, but worth considering whether it can happen or what the impediments might be.