Citizens Property Insurance is buying reinsurance and bonding so it will have enough cash if a major storm hits Florida this hurricane season. The purchase will allow the state run insurer to absorb more than seven billion dollars in damage, but as Whitney Ray tells us, critics say it’s not enough protection. They want lawmakers to dismantle Citizens in a special session.
Every year Citizens Property Insurance gambles. The board weights its risk, and places its bet on how bad the hurricane season could be.
This year, the board voted to buy 400 million dollars in private reinsurance and issue 900 million dollars in bonds in order to have cash on hand to pay claims.
“The catch 22 is if we buy reinsurance and there is no storm that money that we’ve spent on that reinsurance is not recouped,” said Christine Ashburn, Citizens Director of Legislative and External Affairs.
Christine Ashburn, Citizens Director of Legislative and External Affairs, says the purchase will allow citizens to pay more than seven billion dollars in claims.
“Citizens paid out in all eight storms in 04, 05, about 5.5 billion dollars so this would put us in a much better position,” said Ashburn.
But critics of Citizens aren’t satisfied. They say if one major storm hit a large Florida city, Citizens would be on the hook for more than 15 billion dollars.
“I mean if there is a one-hundred year storm this year, no that’s not going to be enough,” said Sam Miller, Spokesman Florida Insurance Council.
Lawmakers could have passed Citizens reform legislation when they were here last week, but they went home with no reform. Now opponents are working behind the scenes to get Governor Rick Scott to call lawmakers back for another shot at Citizens.
But there are still concerns over how lawmakers would vote, and calling the legislature back to Tallahassee without a deal would be viewed as a waste of money.
Legislation passed in 2010 allows Citizens to raise rates up to 10 percent a year. The legislation that failed this session would have raised the cap to 20 percent and also would have allowed the state run insurer to begin dropping its most expensive policies.