MIAMI.- Ron DeSantis sets off alarm bells by stating once again that the state insurance company of last resort, Citizens Property Insuranceis insolvent.
“It is not solvent and we cannot have millions of people in Citizens because if a storm hits, it will cause problems for the state,” said the Florida governor.
DeSantis made this statement while reflecting on the different insurers that are coming to the state with new capital and, as he stated, around 30% of Citizens policies are being contracted by these private companies with the ability to offer lower rates.
The US Senate Budget Committee, which shares the same concern as the Florida president, is investigating Citizens’ ability to handle technical losses, including the question of whether the state insurer might need a federal bailout.
Sheldon Whitehouse, chairman of the Senate Budget Committee, said the committee is concerned that Citizens and the state of Florida will turn to the federal government for a bailout given the potential magnitude of the losses. Additionally, he noted that such a request could put substantial pressure on the federal budget.
The Senate Budget Committee’s investigation into Citizens’ solvency began last December.
Citizens, which was originally created as a company of last resort to ensure that insurance coverage would not be interrupted as private insurers have begun to leave the state and rates have risen, has become the largest insurer of Florida with around 1.3 million policies. A volume that makes it very vulnerable to the impact of a large storm.
Already in March of last year, Governor DeSantis admitted that the insurer of last resort was not solvent.
Regardless, last December, Citizens spokesman Michael Peltier said on CNN that the state insurer is structured so that it will always be able to protect its policyholders and pay claims. The specialist also indicated that Citizens is returning policies to the private market.
The reality is that homeowners insurance rates and reinsurance costs for Florida insurers, including Citizens, have continued to rise and a change in trend is not in sight in the immediate future.
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