Florida-Based Property Insurers CEO Group
Editorial
October 5, 2011
Citizens Property Insurance Corporation would assess private insurers to make up the deficit if unable to get full reimbursement from the Florida Hurricane Catastrophe Fund. “We would be assessing more quickly…That’s what we would have to do,” Citizens Chief Financial Officer Sharon Binnun told the Senate Banking & Insurance Committee Tuesday.
Sen. Alan Hays, R-Umatilla, noted that Cat Fund Chief Operating Officer Jack Nicholson stated to the committee last month the plan is dangerously over-exposed in light of the country’s economic crisis. If a storm or series of storms is bad enough and the more than $18 billion in coverage is triggered, the Cat Fund might be unable to sell more than $11 billion in bonds it would need. Granted, this is an unlikely scenario, but Citizens and private insurers would get pro rata shares of what the Cat Fund could not pay as reimbursements.
Citizens has included $6.6 billion in Cat Fund reimbursements as part of its 2011 financing plan. What happens if the Cat Fund cannot deliver all of that, Hays asked Ms. Binnun. Citizens would cover the deficit by moving to assessments, she said, so assessments would be triggered by a smaller storm event.
Can Citizens consider the negative impact of assessments on insurers who would have their own hurricane claims to pay and might also not get full recovery from the Cat Fund? Hays asked.
The statute requires that Citizens impose the assessments. If there are insolvencies, surviving insurers would be required to pay more, their pro-rata share of the deficit.
