Some welcome winds of change are finally blowing into the state-run Citizens Property Insurance. Fed by artificially low, actuarially unsound rates, Citizens has grown into Florida’s largest property insurer and put the 77 percent of non-Citizens homeowners, plus all businesses, charities, religious institutions, local governments and school boards at risk.
Should a large storm or series of storms hit Florida, hurricane tax assessments will be imposed on all Florida policyholders, whether they are insured by Citizens or not. These taxes would extend to other types of policies, too, including automobile and renters. Recent moves by the Citizens Board of Governors to transfer policies to the private market will significantly diminish the risk of these assessments.
The responsible decision was made to “depopulate” Citizens by putting plans in place to transfer policies to the private sector. Many of these are among the highest risk policies in some of the most hurricane-exposed areas of the state. This is a positive step forward that Associated Industries of Florida (AIF) hopes will signal the beginning of a broader movement toward returning Citizens to an insurer of last resort.
Every policy we move from Citizens back into the private property insurance market means a reduced threat of hurricane taxes levied on Florida businesses. As the “Voice of Florida Business,” AIF supports any effort to alleviate the tax burden on businesses and enable them to dedicate more resources to job creation and economic growth.
Depopulating Citizens Property Insurance through fair and transparent mechanisms makes perfect sense for the state, but it’s not the only fiscally sound possibility to reduce risks. Citizens should continue to expand its investment in risk transfer, shifting its risk away from the state and our taxpayers and into the global private markets. Citizens buys less reinsurance, on a proportional basis, of any state residual market entity, and its unfunded sister entity, the Florida Hurricane Catastrophe Fund, is unique in buying none. These purchases benefit Floridians by reducing the risk of hurricane taxes, and benefits Citizens beneficiaries by increasing the certainty that their claims will actually be paid.
Florida needs to explore every viable option for the inevitable day when disaster strikes again. We have been fortunate these past seven hurricane seasons and have dodged the proverbial bullet, but luck is not a plan and will inevitably run out.
As we prepare our families, homes and businesses this hurricane season, so must the state. Continued depopulation of Citizens, rapid implementation of the Citizens policy clearinghouse established by the Legislature and approved by Gov. Rick Scott, and continued investment on risk transfer is the best hurricane-preparedness strategy for our state.
Thomas C. Feeney III, president and CEO, Associated Industries
of Florida, Tallahassee