The Assumption Agreement and Opt Outs. The Assumption Agreement is a contract between Citizens and a takeout carrier which specifies the terms under which the rights and obligations of a group of policies are transferred from Citizens to a takeout carrier. Citizens can only enter into Assumption Agreements with carriers that have been approved for depopulation of a certain number and certain types of Citizens’ policies by the Office of Insurance Regulation. A listing of consent orders between the takeout carriers and the Office can be viewed at: xxxx://xxx.xxxxx.xxx. When a takeout carrier is approved to assume a Citizens’ policy, it sends an Opt Out form to notify the insured about the pending assumption and their right to opt out of assumption and remain with Citizens. The Opt Out form is mailed approximately 30 days prior to the scheduled assumption. Examples of takeout carrier notices of assumption and Opt Out forms can be viewed at: xxxx://xxx.xxxxxxxxxxx.xxx. If the insured does not opt out, Citizens sends a Notice of Assumption and Non- Renewal notifying the insured that the Citizens’ policy was successfully assumed by the takeout carrier as of the date listed in the Notice of Assumption. The takeout carrier is responsible for claims with a date of loss after the assumption date. The insured is also informed that their Citizens’ policy will not be renewed. Questions regarding whether the Citizens’ policy or the takeout policy provides coverage for a loss may arise. This coverage question is similar to any coverage issue involving two carriers that provide successive coverage. However, the issue is complicated by the mid-term assumption of Citizens’ policy by a takeout carrier. Any claim with an unknown, unclear or debatable date of loss presents an actual or potential conflict of interest for a Law Firm that has Citizens and the assuming takeout carrier as clients.
