Florida's biggest insurer is focus of Senate Budget Committee probe
(Bloomberg) –Democratic Senator Sheldon Whitehouse of Rhode Island asked Florida’s biggest property insurer for documents on how it plans to address losses from climate-related weather events.
The Senate Budget Committee, which Whitehouse chairs, is requesting information related to maximum claims Citizens Property Insurance Corp., an insurer of last resort, can pay without having to levy assessments on Florida policyholders. The committee also asked for communications between Citizens, Florida Governor Ron DeSantis and the state’s insurance commissioner regarding the company’s current or future solvency, and whether Citizens has contemplated asking for a federal bailout in the event of being unable to cover its claims.
“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 said in a letter sent yesterday to Citizens, DeSantis and the insurance commissioner.
Some 30 states have insurers of last resort like Citizens that operate as nonprofits and provide coverage to those who are unable to get insurance from private companies. The number of properties Citizens insures has almost tripled to 1.2 million since mid-2020, as private insurance companies, including Farmers Insurance Group, curbed business in the state.
Citizens was created in 2002 and designed not to fail. If it exhausts its ability to pay claims, it can issue bonds, levy assessments on policyholders, and tap Florida’s hurricane catastrophe fund that it and other insurance companies pay into.
Whitehouse has also asked Citizens for details on its climate modeling, estimates of potential losses and total reinsurance coverage.
“Citizens will always have the ability to pay claims,” spokesman Michael Peltier said in a statement. He added that Citizens has reduced its policy count by shifting policyholders to the private market, following insurance reforms signed into law by DeSantis.
Peltier said Citizens recently revised its year-end exposure projections to $551 billion in total, down from an earlier estimate of $675 billion.
