Thanks to its depopulation efforts, state-owned Citizens Property Insurance Corp. saw its first month-to-month policy-count decline in years between September and October.

While that news is soothing to lawmakers and insurance regulators in Tallahassee who are eager to reduce the company’s size, it’s not exactly welcomed by many of the policyholders who felt they had no choice but accept offers from private-market insurers at costs projected to rise by up to 20% over the projected renewal cost of their Citizens policies.

The number of policies held by Citizens dropped from 1,407,805 on Sept. 30 to 1,334,620 at the end of October, said Kelly Booten, Citizens’ chief operating officer, during a meeting of the company’s Market Accountability Advisory Board on Wednesday.

Citizens’ policy count further dropped to 1,255,381 by Nov. 24, prompting the company to revise its 2023 year-end projections from 1,680,967 to 1,216,408.

The biggest reason for the decline is Citizens’ effort to reduce its size by encouraging private companies to take over Citizens policies. A new law that took effect on July 1 makes properties ineligible for Citizens if a private company offers coverage with a projected renewal cost of up to 20% more than Citizens’ projected renewal cost.

Of 99,773 policyholders who agreed to move from Citizens to a private market insurer in October, two-thirds — or 66,831 — are projected to renew with rate hikes of up to 20%, Citizens data shows.

The number of policies that moved to the private market with rates projected to fall below Citizens’ renewal cost totaled 19,138.

Through Nov. 24, the number of policies reduced through depopulation for the month was 92,886. More rounds of depopulation efforts are scheduled for December, January and February.

Lee Gorodetsky, a member of the committee, said policyholders aren’t jumping for joy about moving from Citizens to higher-priced carriers.

“I haven’t met a consumer who’s happy about this yet,” he said. “I’ve been f-bombed more often of late” over depopulation cost increases.

Until the changes took effect on July 1, Citizens policyholders had the right to decline an assumption for any reason and remain with Citizens. Now, policyholders can still decline assumptions but they can’t stay with Citizens if they get an offer with a projected rate increase of 20% or less.

But unlike in the past, when policyholders who accepted assumptions with a private market company couldn’t return to Citizens for three years, this time depopulated homeowners will be urged to shop their policies around the private market before resigning with their new insurer.

Policy costs are likely to change beyond the projections that homeowners received with their depopulation offers, and if all new offers exceed Citizens’ offer by more than 20%, they’ll be allowed back into Citizens, said Christine Ashburn, Citizens’ chief of communications, legislative and external affairs.

Among early recipients of depopulation notices, some policyholders thought they were required to immediately pay increased premiums, Ashburn said. Citizens is making efforts to let policyholders who select private companies know that they don’t have to pay any more than what they were paying Citizens until their policy comes up for renewal.

The depopulation push results from increased concern among lawmakers and Citizens officials about Citizens’ steady rate of growth since 2019, when the company reached a low of 419,000 policies.

Citizens is prohibited from raising its rates to keep up with the private market, making the company the sensible option for many in areas, like South Florida, that have experienced sharp private market rate increases in recent years.

But the larger Citizens gets, the more vulnerable it becomes to depleting its claims-paying abilities after a major storm or series of storms. If that happens, emergency assessments would be imposed first against Citizens customers and eventually nearly all insurance consumers in Florida to cover those costs.

A series of aggressive insurance reforms by the state Legislature in 2022, intended to reduce frequency and cost of litigated claims, persuaded private-market insurers to take on new policies this year. Reforms included eliminating so-called one-way attorney fees that made filing lawsuits against insurers virtually risk free for plaintiffs attorneys.

While the number of personal residential policies — which make up a majority of Citizens’ book of business — are coming down, Citizens’ commercial policies are increasing.

Citizens insured 47,439 buildings at the end of October — a 194% increase compared to the 16,143 buildings insured a year earlier. Insured value of commercial buildings covered by Citizens increased from $21.9 billion to $103.2 billion during that time.

About half of commercial buildings insured by the company are condominiums. Half are also located in the southeastern part of the state.

The rate of increase has tapered off since peaking in June and July, Booten said.

Faced with stricter structural inspection requirements, condo associations are finding private market insurance more expensive and difficult to obtain. Many have turned to Citizens, insurance agents said last week.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at rhurtibise@sunsentinel.com.