HCI assumes policies worth $200m in premium with Florida Citizens takeout

The depopulation of Citizens Property Insurance Corporation, Florida’s state-backed insurance company, continues apace and HCI Group, the Florida-focused insurance holding company, has assumed another more than 42,000 policies from the residual market carrier.

In total, the more than 42,000 policies represent premium of around $200 million for HCI Group, which is a relatively meaningful boost to its business.

HCI only hit in-force premiums of $1 billion after a December 2023 takeout and assumption of policies by its digital insurtech company TypTap, from Florida Citizens.

In this latest Florida Citizens takeout, HCI’s underwriting entities Homeowners Choice assumed approximately 22,000 policies, while its TypTap Insurance Company assumed approximately 20,000 policies, effective October 22nd.

“We successfully navigated a highly competitive Citizens’ depopulation process and exceeded our fourth quarter new business goal through the October assumption alone,” explained Paresh Patel, HCI’s Chairman and Chief Executive Officer. “Our technology, which enables us to select policies that best fit our underwriting and profitability criteria, combined with our strong rate of policyholder adoption, allows us to forgo additional assumptions for the balance of the year.”

Florida Citizens policy count peaked at around 1.48 million back in 2012, after which the depopulation program helped it to shrink that figure right down to as low as 420,000 by 2019.

But, after that, Citizens policy count soared again, rising to as high as 1.4 million in September 2023.

But, the takeout or depopulation program, where private market insurance carriers can select and assume policies from Citizens to service themselves, saw the number fall back to 1.17 million at the start of 2024. But the count had increased again, to 1.263 million by the end of September.

It remains to be seen how hurricane impacts from Helene and Milton affect policy count for Florida Citizens. If the storms challenge any Florida domestic market carrier, it could result in more policyholders falling under Citizens remit.

More policies are expected to be taken out by other carriers through the fourth-quarter, but so far, at this stage of the cycle, we have not seen any efforts to assume policies by alternative reinsurance capital providers, something we did see back in the 2010’s.

Also read: HCI to pay $600m-$750m for hurricanes Debby, Helene, Milton. Reinsurance assists.