(The Center Square) – Florida’s Insurance Commissioner is pushing back on a U.S. Senate investigation into Citizens Property Insurance Company, which is backed by the state government.
“The committee is … increasingly concerned about Florida’s uniquely large and growing exposure to climate-related property losses, Citizens’ rapidly expanding market share, and state law allowing Citizens to levy special assessments on all policyholders in the event that losses exceed its ability to pay,” U.S. Sen Sheldon Whitehouse, D-R.I., said in a recent statement.
He’s chairman of the Senate’s Budget Committee chairman.
“If Citizens,” he continued, “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.”
Citizens is financially sound and can’t become insolvent, Florida Insurance Commissioner Michael Yaworsky told The Center Square.
“As a matter of law, Citizens can’t go insolvent,” he said. “The state will back it or ultimately there could be assessments. We’re not close to needing assessments but if we ever got to that point Citizens would literally have the authority to draw an assessment from the general population.”
Citizens is currently well capitalized, Yaworsky said.
“It has reinsurance capacity to cover a monumental, one-in 99-year event without piercing much of its reinsurance power,” Yaworsky said.
He acknowledged that homeowner’s insurance rates have been increasing in the state as a result of storms in recent years.
“I’m not saying it’s a wonderful experience for consumers,” the commissioner said. “I’m not saying that people aren’t hurting right now. But most states would not have the capacity to deal with what we have dealt with.”
Yaworsky said Whitehouse has created a scenario where “Florida is broke and mostly underwater.”
“I don’t see that playing out as they envisioned,” Yaworsky said. “Florida has been in situations before where we have taken responsibility to ensure that we have insurance coverage in the state. If I were in the federal government and wanted to look into a success story, I would look at Florida.”
There has been some recent good news in the Florida insurance market, he added.
A new company, Condo Owners Reciprocal Exchange, has been approved to enter the state’s market. It will likely take over 6% to 8% of condominiums insured by Citizens, Yaworsky said.
“We think that is an excellent sign of private market confidence that our market is in a place that is sustainable,” he said.
Insurance reforms enacted by the state Legislature have also helped, Yaworsky said.
“We’re seeing really good reaction to the changes from reinsurers, insurers, from investors looking to begin writing private policies in the state,” he said.
