What Options Do HomeWise Customers Have in Homeowners Choice Deal?

Florida policyholders of HomeWise Insurance should not see dramatic changes in their renewal premium if their policies are taken over by Homeowners Choice, according to the company official.

The policyholders have the option of staying with the shrinking HomeWise or going with another insurer, although another one may be difficult to find in today’s marketplace.

Since their premiums are unlikely to change much, they would not be eligible to switch into the state-backed Citizens Insurance.

Homeowners Choice Property and Casualty Insurance Co. recently reached an agreement to take over the Florida business of HomeWise Insurance Co., a book that has up to 70,000 policyholders— 28,000 of them in Miami-Dade, Broward and Palm Beach counties.

Under the consent order issued by regulators, Homeowners Choice has to give 30 days notice to HomeWise policyholders who have the option of opting out of the deal and remaining with HomeWise. However, given HomeWise’s current financial situation, few expect many policyholders to exercise that option.

Although HomeWise transmitted roughly $53 million in unearned premiums as part of the deal with Homeowners Choice, it fell short of what is needed. State regulators required Homeowners Choice to execute a $10 million cash infusion to its surplus in order to close the deal.

In September, HomeWise lost its one financial rating while at the same time, an affiliated company, HomeWise Preferred, was placed into state receivership after regulators found it did not have the money to pay claims while in run-off mode.

That leaves Citizens or another private insurer as the remaining options for HomeWise policyholders.

Jay Mauda, Homeowners Choice vice president of investor relations, said that HomeWise policyholders would see no change in their rates until their policies come up for renewal. Even then, he said, policyholders shouldn’t see a tremendous change in their premiums.

“Some will be slightly higher and some slightly lower, but they should be comparable to what they are paying now,” said Mauda.

Under state law, since HomeWise policyholders are receiving an offer of coverage from another private insurer, they will not be eligible for Citizens coverage unless their premiums for comparable coverage are 15 percent higher than what another private carrier is offering.

Florida Association of Insurance Agents President Jeff Grady said that some HomeWise policyholders may be able to find coverage with another private insurer in the state. “That book of business is spread throughout the state so there may be other choices to consider,” said Grady. “Most will probably end up with Homeowners Choice. The market capacity is just so spotty.”

Mauda said the deal is similar to deals the insurer made in the past to assume policies from the state-backed Citizens Property Insurance Corp. Those former Citizens policies now make up the majority of the insurer’s book of business. “Homeowners Choice has shown you can successfully do these kinds of deals as we did with Citizens,” Mauda said.

Depending upon how many take its offer, the deal could potentially more than double the Tampa, Florida-based Homeowners Choice, which currently has 59,000 policyholders in the state, representing $130 million in annual premiums.

Mauda said he believes that the majority of HomeWise policyholders will see the advantage of transferring to Homeowners Choice. “Homeowners Choice has been a solid, profitable company,” Mauda said. “We believe our results speak for themselves.”

Topics Florida Carriers Homeowners