A Citizens Property Insurance Corp. surcharge imposed on most Florida homeowners’ policies because of damages from the last of the 2005 hurricanes will end two years earlier than planned.
The state-owned insurer’s Board of Governors unanimously voted Wednesday to end the 1 percent charge on July 1, 2015. The storm assessment, on the books since 2007, was previously scheduled to continue until June 30, 2017.
In recommending the change, Citizens Chief Financial Officer Jennifer Montero told the board the balance of the remaining debt on the bonds issued for the 2005 storm is expected to be paid off next year.
Citizens imposed the storm assessment in 2007 on insurance policyholders throughout the state — whether they were Citizens customers or not — to recoup $887 million of the roughly $1.7 billion deficit created by Hurricane Wilma, which hit South Florida on Oct. 24, 2005. The state picked up $623 million of the costs from Wilma, while the rest was covered by additional assessments on Citizens policyholders.
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Citizens has been working to reduce the number of policies it carries. Chief Risk Officer John Rollins said assessments should be an incentive for homeowners to seek private coverage rather than going with the state-run carrier.
The storm assessment, initially set at 1.4 percent and reduced to 1 percent in 2011, is imposed on a variety of property-insurance policies.
The announcement of the early end to what critics have labeled a storm “tax” comes two months after the Office of Insurance Regulation issued orders for insurance companies to end on Jan. 1 a 1.3 percent “emergency assessment” for the state-run Florida Hurricane Catastrophe Fund, which provides backup coverage to insurers.
The so-called “Cat Fund” charge, imposed on most home and auto policies, had previously been set to end July 1, 2016.
That assessment has hit policyholders for $2.9 billion, which has gone to reimburse insurance companies for claims from the eight hurricanes that hit Florida in 2004 and 2005, the last time any hurricane made landfall in Florida.
“It is good that we finally are retiring all of these surcharges which are still around almost 10 years after the last hurricane,” Sam Miller, executive vice president of the Florida Insurance Council, said last week.
The changes in the end dates of the assessments come as Citizens continues to work on reducing its overall number of policies through mass takeouts by private companies and through an electronic clearinghouse. The clearinghouse compares coverage for policies, new or up for renewal, between what is offered by Citizens and certain private carriers.
Citizens, which two years ago had 1.47 million policies, was down to 933,807 as of July 31. President and CEO Barry Gilway said the company expects to be down to about 850,000 policies by the end of the year. Also, Citizens has been approved to reduce rates in 2015 for most of the homeowners it covers, primarily those with inland properties.