By Jim Saunders ©2024 The News Service of Florida
TALLAHASSEE — The chief executive of Florida’s Citizens Property Insurance Corp. on Wednesday pushed back against financial questions raised by the chairman of the U.S. Senate Budget Committee, saying the insurer “will always be able” to pay claims.
Citizens President and CEO Tim Cerio released a statement after Senate Budget Chair Sheldon Whitehouse, D-R.I., sent a letter Monday that cited a recent comment by Gov. Ron DeSantis that Citizens is “not solvent.” That came after Whitehouse in November requested financial information from Citizens and raised the possibility that the insurer could seek a federal bailout if Florida gets hit by a major hurricane.
In his statement Wednesday, Cerio cited a Dec. 15 response that Citizens provided to Whitehouse.
“We believe we fully addressed the concerns raised in Chairman Whitehouse’s prior letter by pointing out in great detail the mechanisms under Florida law that ensure Citizens will always be able to pay the claims of its insureds (customers),” Cerio said in the statement. “We also highlighted that neither Citizens, its predecessor entities, nor the state of Florida, have ever sought a federal bailout to cover hurricane losses. We also expressed concern that the chairman’s letter could cause misplaced panic in a Florida insurance market well on its way to recovery.”
Citizens has access to billions of dollars in cash and reinsurance coverage to pay claims. It also could collect money from policyholders across the state — including from non-Citizens policyholders — through what are known as “assessments” to cover claims.
“Again, as outlined in our previous response to the chairman’s November 30 correspondence, we can think of no scenario in which Citizens would be required to seek federal financial assistance,” Cerio said in the statement. “If Citizens exhausts its surplus and reinsurance coverage following a major storm or series of storms, it is required by Florida statute to levy surcharges on its policyholders and assessments on non-Citizens policyholders to eliminate any deficit.”
Whitehouse’s letter Monday cited a DeSantis comment last month that Citizens is “not solvent.” The comment came during an interview on CNBC.
“The bottom line is that, according to Florida’s own governor, Citizens faces a major solvency crisis and would be unable to pay out all claims and expenses should a major storm hit Florida,” Whitehouse wrote in Monday’s letter. “This would, in turn, create the risk that Florida could seek a bailout from the U.S. government, further tapping into federal resources.”
Whitehouse also said Citizens had not fully addressed his November requests for information. He said he sought “information and documents responsive to seven specific questions about Citizens’ storm exposure, risk modeling, possible need for a federal bailout, and discussions with relevant state leaders about those subjects.”
In the statement Wednesday, Cerio said Citizens officials “will certainly meet with Budget Committee staff to provide information and documentation about Citizens’ structure, function, and claims paying ability. It is important to note that much of the information sought by the Budget Committee is already available online and is regularly discussed during our public board meetings.” He also appeared to address DeSantis’ comment.
“The governor has been consistent and clear in his concern that if there were a major storm or series of storms, and Citizens exhausted its surplus and reinsurance, it would be required under Florida law to levy an emergency assessment on the policyholders of Florida — 83% of whom are not even Citizens customers,” the statement said.
Citizens was created as an insurer of last resort, but it has grown in recent years to become the largest property insurer in the state because of financial troubles in the private market. As of Friday, it had 1.18 million policies, according to its website.
State officials have long tried to reduce the number of policies in Citizens, at least in part because of concerns about financial risks if the state gets hit by a major hurricane or multiple hurricanes. It reached as many as 1.412 million policies in fall 2023 before seeing reductions because of a “depopulation” program, which involves moving policies into the private insurance market.
