Florida's Citizens Property Insurance Corporation looking to trim its risk
May 30th, 2012
The following article was published in The Fort Myers News-Press on May 30, 2012:
By Tim Engstrom
Citizens Property Insurance Corp. is looking for suggestions to reduce its $500 billion risk, and interim president Tom Grady says every Floridian has thousands of dollars riding on those ideas.
Grady is touring Florida to drum up ideas to cut the amount of risk presented by the almost 1½ million property insurance policies in force in the state as the start of the 2012 hurricane season officially begins Friday. He was in Southwest Florida on Wednesday.
State-backed Citizens has about 68,614 policies in force in Southwest Florida, more than half of those in Lee County.
Grady, appointed to the interim post in March, said Citizens has about $6 billion in the bank and re-insurance of about $1.5 billion, but any claims beyond that resulting from a major hurricane would be paid through multiple assessments by everyone who buys insurance — including auto insurance — in Florida.
“Most people don’t realize that the premiums paid by Citizens policyholders are just the down payment,” Grady said. “It’s not the full price. We all would have to pay.”
A storm equivalent to Hurricane Andrew, which made landfall as a Category 5 near Homestead in August 1992, would result in claims of about $16 billion, Grady said.
“We could pay that, but we would have to tax people (through assessments) to do it,” Grady said.
In Lee County, those assessments could be as high as $1,665 for Citizens policyholders and about $832 for non-Citizens policyholders. The assessments would cover the next few years by statute, but in a worst-case scenario of multiple storms in consecutive years, the assessment could amount to as much as $21,059 for Citizens customers and $20,440 for non-Citizens customers over 30 years under current laws, Grady said.
View the original article here: http://www.news-press.com/article/20120531/BUSINESS/305310054/Florida-s-Citizens-Property-Insurance-Corp-looking-trim-its-risk