Citizen Zero — a smarter way for Florida to manage insurance risk

Florida’s homeowners are in crisis. Insurance rates have soared, and Citizens Property Insurance — the state-run “insurer of last resort” — has grown into Florida’s largest property insurer, at one point reaching 1.4 million policies and half a trillion dollars in exposure.

This expansion places every taxpayer at risk when the next major hurricane hits.

This is not just a problem for Citizens policyholders. If Citizens runs out of money after a catastrophic storm, all Floridians with home, auto, or business insurance could face assessments to cover the losses.

The system is broken, and delaying reform only increases costs and risks.

For years, policymakers have attempted to shrink Citizens through “takeouts,” where private insurers selectively assume policies. But this process is too slow and limited. While cherry-picking the best risks has been helpful in removing policies, it generally leaves Citizens with the riskiest policies. We need a structured transition that incentivizes insurers to assume Citizens’ policies to reach “Citizens Zero.”

The Quota Share Model: A smarter approach

A quota share model — a widely used strategy in global reinsurance markets — can shift risk to private insurers while stabilizing Florida’s fragile insurance system. Implemented correctly, this model can phase out Citizens as an insurer and transform it into a risk manager, achieving the goal of  “Citizen Zero.”

Why takeouts alone won’t work

Florida’s reliance on takeouts has failed to meaningfully reduce Citizens’ highest-risk exposure due to several factors:

— High-risk homes – Many coastal properties are uninsurable in the private market under traditional underwriting standards.

— Rising reinsurance costs – Private insurers must purchase reinsurance, and skyrocketing prices make it difficult to take on more Florida policies.

— Market instability – Insurers frequently enter and exit Florida’s takeout market, making one-time policy transfers an unreliable long-term solution.

Citizens dominates in high-risk areas because it offers below-market rates subsidized by taxpayers. As long as homeowners can obtain cheaper coverage through Citizens, private insurers will struggle to compete, perpetuating the cycle.

How the Quota Share Model works

Instead of waiting for private insurers to assume policies selectively, Florida should create structured risk-sharing agreements to encourage insurer participation. A quota share model works as follows:

— Risk sharing – Citizens and private insurers split premiums and financial responsibility for claims at a fixed percentage.

— Private market involvement – Private insurers handle underwriting, claims, and customer service, reducing Citizens’ role.

— Gradual transition – Citizens receives payments for capital costs and a share of premiums, allowing a structured shift to private coverage.

This model distributes risk across multiple carriers, ensuring a stable, long-term shift away from government-backed primary insurance.

Steps to achieve Citizen Zero

To implement this model, Florida should take the following steps:

— Transform citizens into a risk manager – Instead of a full-service insurer, Citizens would become a quota share facilitator, ensuring gradual risk transfer to private insurers.

— Implement competitive bidding – Private insurers bid on quota share participation, promoting market-driven risk-sharing agreements.

— Reduce administrative costs – Citizens eliminates underwriting, claims processing, and customer service, lowering expenses.

— provide temporary state reinsurance – Short-term state-backed reinsurance would encourage insurer participation until the market stabilizes.

— Increase private market participation – Over time, private insurers assume a greater share of policies, eventually privatizing Citizens’ risk entirely.

Case study: Monroe County

If this model can work in Monroe County, one of Florida’s most challenging insurance markets, it can work anywhere. A possible pilot program could include:

— An 80/20 risk split – Citizens initially retains 80% of risk, with private insurers assuming 20% to allow a gradual transition.

— Private market administration – Private insurers manage claims and underwriting, reducing Citizens’ role.

— Competitive bidding – Insurers bid for quota share levels, ensuring efficient risk distribution.

— State reinsurance support – Temporary state-backed reinsurance would attract insurers to the market.

— Gradual phase-out – Private insurers assume more risk as conditions improve, leading to full privatization.

Skeptics may argue that private insurers won’t participate. However, a structured bidding process, temporary state-backed reinsurance, and a gradual transition period would mitigate this concern.

This approach isn’t theoretical — it has been used successfully elsewhere:

— National Flood Insurance Program (NFIP) contracts private insurers to handle policy servicing and claims.

— Texas Windstorm Insurance Association (TWIA) employs quota share agreements to shift hurricane risk to private carriers.

— Global reinsurance markets use quota shares to spread risk and stabilize pricing.

Florida has an opportunity to rethink Citizens — not just by shrinking it, but by redefining its role entirely.

A quota share model would transition Citizens from an oversized, taxpayer-backed insurer into a lean, market-driven risk manager. This approach would lower homeowners’ costs, reduce taxpayers’ financial risk, encourage insurers to reenter the market and ensure a stable, long-term insurance solution for Florida.

The goal of Citizen Zero is within reach — but only if we act now. Florida should commission a feasibility study on quota share implementation to assess regulatory changes, insurer participation, and economic benefits.

The next major hurricane is not a matter of if, but when. If we fail to act, we risk catastrophic financial consequences for every Floridian. The time to fix this broken system is today.

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Former Senator Jeff Brandes is the founder and president of the Florida Policy Project.

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