Herald-Tribune
by Sen. J. D. Alexander
May 2, 2011
An April 14 Herald-Tribune article by Paige St. John suggested that state legislators are exaggerating the financial risk posed by Citizens Property Insurance Corp. and that Citizens is “the strongest and most profitable” insurer in our state.
These assertions and editorialized statements could have been overlooked or ignored if they did not present a false and misleading picture for Herald-Tribune readers and all of Citizens’ customers.
As Senate budget chair for the third year now, I am very familiar with the financial outlook of our state, as well as state programs that are fiscally sound or on the verge of complete financial failure.
Citizens is an example of a state program that is only one storm away from disaster.
The very real possibility that Citizens could face billions of dollars in losses and does not have the money to pay for its claims, in my opinion, is the greatest financial threat facing our state’s economy and already overburdened taxpayers.
Government-run Citizens derives what St. John calls its “financial strength” through its unique ability to tax every Floridian who has a home, auto, boat or business policy if a hurricane hits and Citizens runs out of money to pay claims. Simply put, Citizens will tax Floridians if and when it runs out of money.
Today, state government is Florida’s largest homeowners’ insurer, with 1.3 million policies, representing 18 percent of the market and growing. Citizens’ executives freely admit the state insurer’s rates are too low – in some parts of the state, by nearly 200 percent.
While it is true that Citizens is the only property insurance available in some high-risk coastal areas, its taxpayer-subsidized undercutting has driven out the private market and left all taxpayers vulnerable to massive tax increases or budget cuts.
If we think the budget cuts and decisions being made in Tallahassee are bad now, filling in the budget holes after Citizens goes bankrupt would be the equivalent of filling in a sinkhole with a teaspoon.
Citizens’ own executives testified earlier this year that the state insurer had $11.3 billion in cash and other assets to pay claims this coming hurricane season, but losses from a very large hurricane could easily run more than $22 billion, with Florida taxpayers having to make up the $11 billion shortfall.
St. John may be able to dismiss the odds of another major hurricane, or even a series of such hurricanes hitting Florida, but even she cannot editorialize or turn an $11 billion tax increase into sunshine.
When the next major hurricane strikes, Citizens’ policyholders will see their premiums increased by 45 percent overnight and every Florida family will be on the hook for $14,000 per household in tax increases. I would not characterize that as financial strength and neither should St. John.
State Sen. J.D. Alexander, R-Lake Wales, is chairman of the Senate Budget Committee.
http://www.heraldtribune.com/article/20110502/COLUMNIST/110429349/-1/news300?p=1&tc=pg
