180 Day Cancellation Requirements for Policies in Force for More Than Five Years Affects Citizens Assumptions

Senate Bill 2860 provides, among other things, that an insurer will be required to give insureds at least 180 days written notice prior to the effective date of a nonrenewal, cancellation or termination of a policy for a covering a residential structure which has been insured by that insurer or an affiliated insurer for at least a five year period immediately prior to the date of the written notice. In consultation with Citizens Property Insurance Corporation (“Citizens”), we have been advised that Citizens believes that this provision applies to policies which are assumed pursuant to a takeout program.

According to Citizens, this new provision will significantly affect Citizens assumptions going forward. Specifically, Citizens is currently unable to identify with certainty which policies in its database would be subject to the new 180 day notice requirement. As such, we have been advised by Citizens that it will treat all policies as being subject to this requirement until Citizens is able to make a determination as to which policies are impacted. This, of course, will substantially reduce the number of policies available for assumption.

It is expected that Citizens will issue some guidance on this matter shortly. We will continue to monitor this issue and provide additional information as it become available.

 

Should you have any questions or comments, please do not hesitate to contact this office.