Citizens Property Insurance Corporations
There are currently two states in the U.S. in which the governments actually play direct role in providing home and property insurance to the residents including Florida and Louisiana. Although those two states have different geographical or demographical characteristics, the circumstances lead to the same issue where residents find it difficult to get coverage.
Citizens Property Insurance Corporations in Florida was founded for at least two good reasons, hurricane and insurance business. Due to the geographical location of the state where hurricanes or windstorms are common, insurance companies are forced to greatly raise premium fee. More than that, it gets more difficult for home owners to have their properties insured properly. Inspections about everything are more thorough before approval, and many times the applications for property insurance are denied simply because it is too risky. To overcome the problem, the state’s government founded Citizens Property Insurance Corporations where people can get easy approval.
Before state-owned insurance was founded, many private insurance companies had gone through near-bankruptcy situations. They had to stay competitive in the market, yet the claims for hurricane coverage were beyond financially accountable. They had to abandon the business to prevent further loss. On the other hand, the market should not completely disappear, so Citizens Property Insurance Corporation came to keep insurance market in balance. In 2009, a regulation came out allowing private insurance companies to raise premium 10% a year in Florida. In order to keep the market existing, Citizens Insurance is state-mandated to ask even higher premium fee, yet this is a non-profit organizations.
More or less the same thing occurs in Louisiana, although the main reasons are different. While Florida has hurricanes as their biggest problems, Louisiana is not actually prone to natural disasters. Instead of geographical locations, the state’s biggest issue is the demographical conditions. Louisiana is the place where many new lawyers are practicing their skills. Private insurance companies have to deal with lengthy processes and judicial procedures for many claims; in some cases, insurance companies have to pay for the cost.
To stay profitable, private insurance companies have to raise premium and the application process for insurance is more difficult as well. Louisiana Citizens Property Insurance Corporations is also a not-for-profit organization to get the market going in balance.
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The premium fee, however, is also higher than its private counterparts and it should be used by residents of Louisianan as last resort in case they can’t get coverage from private companies. The good thing is that both Louisiana and Florida Citizens Property Insurance Corporations provide their services as professional as private insurers.