A closer look at five insurers taking a big chunk of citizens property insurance policies gas welder salary

Florida Insurance Commissioner Kevin McCarty’s office maintains takeout companies "have all met or exceeded Florida’s rigorous statutory requirements to attain a license . . . to sell property insurance in the state." Moreover, the five insurers approved to take up to 210,000 Citizens policies all have "A" ratings with ratings agency Demotech.

Gavin Magor, senior financial analyst with Weiss, cited issues with each of the five insurers: Homeowners Choice has grown too fast and, despite rising capital, may have trouble dealing with a major event, he said; American Integrity has been profitable, but its assets have not been growing in tandem with its business; Florida Peninsula had a first-quarter loss; Southern Oak has insufficient reserves and poor overall stability; Southern Fidelity P&C is too new to be rated but it’s tethered to Southern Fidelity Insurance, a C-rated company.

The granddaddy of onetime Citizens’ takeout companies, Poe Financial Group, was swamped with hurricane payouts and fell into Chapter 11 bankruptcy reorganization in August 2006 after storms caused more damage than it could cover. To pay for Poe, the state assessed everyone in Florida who buys homeowner or auto insurance. Lightning struck again with Magnolia Insurance, which was the biggest participant in a Citizens takeout program in 2009, the year before it went out of business. Another takeout firm, HomeWise Insurance Co., failed in 2011 and its policies were assumed by Tampa-based Homeowners Choice, which is the single-biggest takeout company participating in this round. Scott Wallace, the past president of Citizens Property Insurance, is now president of Homeowners Choice.

Consumer advocates and Citizens officials both say homeowners who receive a takeout proposal should do their homework and talk to their insurance agent. It’s up to policyholders to opt out within 30 days or they are automatically shifted into the private companies.

Sean Shaw, founder of Policyholders of Florida, suggests home­owners investigate how long an insurer takes to pay claims, how long it has been around and who runs it. Some, he said, may opt to stay with Citizens as a safer bet regardless of cost.

Takeout companies are supposed to offer coverage that is similar to Citizens, but they do not have to offer it at a similar price. It can be difficult to know what the new premium will be at the time of the takeout, but industry experts say homeowners who agree to the takeout should brace for higher prices.

Unlike Citizens, the private companies do not have to limit annual rate hikes to 10 percent. Despite a seven-year hurricane-free streak, private insurers have sought aggressive rate increases this year, sometimes hiking costs twice as fast as Citizens.

The letters landing in the mailboxes of homeowners this week highlight the same threat, reminding homeowners, in bold type, that: "If you are considering electing to remain covered by Citizens, you will continue to be subject to special Citizens policyholder surcharges as high as 45 percent."

With Citizens raking in hundreds of millions of dollars in premiums each month, experts say it would take a catastrophic storm season—worse than anything Florida has seen in a century — for homeowners to see a 45 percent "hurricane tax." While Citizens’ coverage cutbacks and unpopular home inspections have made some customers eager to leave the company, some home­owners say they plan to reject a takeout proposal.