Storm Free Years and Stronger Private Market Improve Citizens’ Position
After the devastating series of storms in 2004 and 2005, Florida has enjoyed a run of essentially storm-free years. This has led to improved conditions in the private insurance market, and consequently to reductions in the policy count of Citizens Property Insurance Corporation. Citizens therefore expects that it in 2015 it will be able to pay claims from a 100-year event without having to assess Floridians. This alleviates a potential financial burden on Floridians throughout the state, even those who do not have policies with Citizens.
Just three years ago, Citizens projected that it might have to assess more than $11 billion in a 100-year storm scenario. However, Citizens had more than 1.4 million policies at that time, its rates were still gradually increasing under a legislatively-mandated glide path, and it had not accumulated much surplus. Fast forwarding to the president, Citizens’ policy count is down to about 727,000 and is likely to drop below 700,000 in the coming months. Citizens also has been able to add to its surplus, and it has been able to take advantage of favorable reinsurance market conditions to transfer some of its risk. Citizens’ board recently approved a recommendation for staff to secure the reinsurance coverage necessary to handle a 100-year event without assessments.
“Thanks to the hard work of dedicated Citizens employees and a steadily improving private market, we are on the verge of eliminating, in the event of the 1-in-100 year storm, the need for the dreaded ‘hurricane tax’ that has hung over heads of Floridians for far too long,” Gilway said. “This is incredibly good news for Citizens policyholders and all Floridians who have been on the hook.”