ORLANDO, Fla. – The U.S. Senate Budget Committee is investigating Citizens Property Insurance, Florida’s property insurer of last resort that now has the largest share of property insurance holders in the state.
Committee Chairman Sheldon Whitehouse, D-Rhode Island, says Florida’s continued insurance woes are concerning in light of the state’s unique exposure to climate-related events such as hurricanes, tornadoes and flooding.
Plus, earlier this year, as part of efforts to reform property insurance in the state, lawmakers passed a bill allowing Citizens to levy special assessments on all insurance policyholders in the state if a catastrophic event were to hit and the insurance losses exceeded Citizens’ ability to cover them.
“If Citizens were unable to cover its losses, it is entirely possible that state leaders might ask the federal government for a bailout. Given the potential magnitude of Citizens’ losses, such a request would put the federal government (and by extension, all American taxpayers) at substantial risk,” Whitehouse wrote in a letter to Florida Gov. Ron DeSantis, as well as the state’s insurance commissioner and the president and CEO of Citizens.
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Property insurance premiums have skyrocketed in the state as insurance companies have either left the market or gone insolvent. As a result, many property owners have had to turn to Citizens for insurance. Earlier this fall Citizens had 1.412 million policies.
Lawmakers have introduced several changes to try and shore up insurance in the state and keep companies from leaving. They also changed the law so that homeowners who receive an offer of coverage from a private insurer that is up to 19% higher than the current premium with Citizens, the homeowner must take it.
This is part of a strategy called “depopulation,” to shift homeowners back to the private market. Citizens has shed thousands of policyholders in recent months, and is now down to holding roughly 1.2 million policies.
Lawmakers have urged critics and homeowners to be patient as these changes take effect to hopefully bring down the cost of insurance in the state.
“For the second straight month, Citizens is seeing heightened interest among private insurers to expand their business in Florida through Citizens’ depopulation program,” Citizens spokesman Michael Peltier said earlier this week. “This is an encouraging sign that the market is improving.”
Nevertheless, the committee is requesting documents from Citizens. It wants answers to several questions, including what are Citizens’ current assets and its total reinsurance coverage, and whether there are strategies for dealing with the event that Citizens goes insolvent.
The committee wants the documents and information by Dec. 21.
It’s part of a series of hearings the Senate Budget Committee has had regarding increases in property losses from natural disasters, climate change and their effects on the economy.
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