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Domestics: They are Picking up the Slack |
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02/26/2008 |
Florida domestics are once again a significant force in the Florida property insurance market, as they were prior to hurricane Andrew. Universal Property & Casualty Insurance is now the fourth largest hurricane insurer in Florida, behind Citizens, number one, State Farm, number two, and Allstate, number three. Universal has 6.8 percent of the market share or 364,000 policies.
The Office of Insurance Regulation reports that other Florida domestics have 2.8 million policies or 37 percent of the market. Domestic insurers have 3.2 million policies or 44 percent market share, compared to 1.3 million policies or 21 percent market share for Citizens; 16 percent market share or 1 million policies for State Farm; and 331,000 policies or 6.3 percent market share for Allstate. (This data is through the third quarter of 2007.)
Florida domestics’ market share is almost double what it was in 2005.
Florida OIR reports that 28 new property insurance writers came to the state from January 1, 2006, through December 31, 2007.
These are so-called “admitted insurers” whose rates are established by OIR. Another six surplus lines carriers began to write in the Florida market. These new players produced $3.65 billion in new capital, OIR reports. They are largely small Florida-based insurers, or domestics.
This expansion by domestics is fueled, in part, by the $250 million Capital Build-Up Incentive Program established by the 2006 Legislature, providing low interest capital loans to insurers under certain circumstances. In addition, smaller existing companies and start-up companies are not over-exposed like established and larger insurers and can selectively write new business. They are doing that, often at rates significantly lower than rates from Citizens Property Insurance Corporation.
Thirteen companies qualified for capital loans from the program, the Florida Association of Insurance Agents notes in Market Watch, February, 2008. These companies have the ability to write up to 1.7 million policies.
Citizens President Bruce Douglas: Florida domestics are writing new business and competing with Citizens. Citizens’ growth has been modest the last year, largely because of Florida domestic insurers. Almost 250,000 policies were removed from Citizens in 2007 and many more did not go into Citizens due to the level of private market activity, mainly among domestic companies.
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