Condo Owners Reciprocal Exchange will assume up to 400 Citizens condo association policies
The Citizens Property Insurance Corp. depopulation program’s wheel continues to churn as the company looks to shutter about 400 condominium-association policies.
The News Service of Florida reported on Monday that a new Florida insurance company, Condo Owners Reciprocal Exchange, will assume up to 400 commercial residential policies from the state’s insurer of last resort.
Commercial-residential policies differ from individual condo insurance policies, though the cost of these policies is usually passed onto condo owners via association fees.
The move is just the latest effort to trim the number of policies held by Citizens through its depopulation program.
Here’s what to know.
What is a condo association insurance policy?
Sometimes called the master condo policy, a condo association insurance policy covers damage to shared areas of the condo building, such as amenities, elevators and lobbies. It also covers the exterior of the building and liability in those same spaces.
How does it differ from individual condo insurance?
The condo association insurance policy covers the exterior and shared spaces of a condo building. Individual condo insurance policies cover the unit itself, similar to a homeowners insurance policy. This includes personal property, liability if someone is injured inside that particular unit and the likes.
What is the Citizens Depopulation Program?
The Citizens Depopulation Program is a requirement of Florida law that works to offer private-market coverage to its policyholders.
Citizens is a state-backed insurer that was created in 2002 as a last-resort option for homeowners who couldn’t get comparable coverage in the private market. The company was never meant to provide homeowners with a cheaper option for coverage, but skyrocketing rates in the private market have allowed many homeowners to qualify for coverage who normally wouldn’t.
The savings Citizens policyholders have found are somewhat of a double-edged sword, which could end up costing them more if a costly storm puts the company in a position where it isn’t able to payout all of its claims.
Should payouts from policyholder claims dry up Citizens’ funds, state law requires that the company levy assessments from policyholders and non-policyholders until the deficit is paid.
Those assessments can be substantial, according to Citizens’ website, which states that policyholder assessments could be up to 45% of their premium due to the Citizens Policyholder Surcharge, quickly erasing any savings policyholders enjoyed.
Who is Condo Owners Reciprocal Exchange?
The Florida Office of Insurance Regulation (OIR) approved Condo Owners Reciprocal Exchange (CORE) to form a property and casualty insurance company in the state in November of last year.
“OIR is pleased to see more companies, jobs and capital coming into Florida’s insurance market this year,” said Insurance Commissioner Michael Yaworsky. “This announcement is further indication that the reforms are having the intended impacts on our market and further expanding the choices for consumers.”
CORE is led by Paresh Patel, CEO of HCI Group, based in Tampa. The company will begin insuring a small number of policies, according to a report from the Insurance Journal.
The move solidifies HCI’s entry into the commercial residential insurance space and opens a new avenue of growth for the firm, according to the OIR.
This article originally appeared on Pensacola News Journal: Citizens to offload 400 condo association policies to new company
