WFSU Local
Lynn Hatter
May 11, 2011
TALLAHASSEE, FL (wfsu) – The state’s largest property insurer is looking to increase the money on hand in case a hurricane hits Florida this year. Lynn Hatter reports Citizens property insurance company is looking to the private market to raise the money.
Citizens’ wants to get 900-million dollars by taking out bonds on Wall Street. It hopes investors will see the five years of hurricane-free seasons as a good thing and take the risk. Citizen’s Chief Financial Officer Sharon Binnum says the company also wants to purchase up to 500-million dollars of reinsurance in case a storm hits and those primary reserves are exhausted.
“If we have a storm that is in excess of 6.3 billion in losses for the HRA, we would have 4-500-million dollars of private reinsurance that would come into play, that at that layer would have resulted into assessments, would no longer result in assessments.”
Citizens’ is the largest property insurer in the state with more than 1.3 million policy holders. Most of those people are located in coastal areas in the path of hurricanes. The legislature failed to pass a bill to shrink the company, despite growing worry over its ability to pay claims. Critics say the company’s insurance rates are too low and don’t truly reflect the risk of homeowners who live on the coast. One of the critics is Barney Bishop, head of the powerful business lobby, Associated Industries of Florida.
“Frankly there’s talk in the last couple weeks about the governor calling a special session on Citizens, we hope he does because it needs to be fixed. It could actually bring the potential bankruptcy of the state of Florida, because we’re selling reinsurance to insurance companies, and the paper we’re selling isn’t worth that. So we’re in dire straits.”
Artificially low rates for homeowners, has helped drive out other companies, turning Citizens from the insurer of last resort to one of the few insurers willing to write policies in Florida. If a hurricane does it the state and there’s not enough money to cover claims, taxpayers would see it reflected in higher premiums for things like auto insurance.
http://www.publicbroadcasting.net/wfsu/news.newsmain?action=article&ARTICLE_ID=1801634
