Blog: Fun facts about Citizens Property Insurance

Oct 3, 2012

The following article was published in the South Florida Sun Sentinel on October 3, 2012:

Fun Facts about Citizens Insurance

By Mike Mayo


Higher rates. Less coverage. And — for many customers — no other alternatives.

That’s my motto for Citizens Property Insurance.

The state-run insurer of last resort is now the windstorm insurer of only resort for many South Floridians — myself included — and we’re pretty much helpless now that insurance regulators have approved an average 10.8 percent rate increase for next year.

And it’s all the more galling when you consider how healthy and wealthy Citizens — which a lot of politicians falsely decry as broken or broke — actually is.

Here are some fun facts, from Citizens’ latest financial report:

–Citizens has surplus/cash reserves over $6 billion.

–Citizens will collect $3.1 billion in premiums this year from its 1.4 million policies in force.

–Citizens had net income of $433 million for the first six months of 2012.

Unlike private insurers, who are beholden to shareholders and get to play shell/accounting games with subsidiaries and related companies, Citizens doesn’t have to pay dividends or ship away profits. So when there’s a streak of storm-free years (cross your fingers, but the last hurricane was Wilma in 2005), the money just piles up.

So how come policyholders can’t get a little relief? And how come we can’t use some of those reserves to wipe out those running surcharges from the heavy storm years of 2004-2005 that are still tacked onto all Florida insurance policies (including auto, etc.)?

I suppose that would make too much sense. Meanwhile, I can’t quite comprehend how Citizen’s costs and expenses are so high. Their windstorm lines should be pure profit.

But the company says it has had to pay out some $378 million so far this year in losses/claims from fires, sinkholes, mold, theft, etc. It also reports $288 million in underwriting expenses. And then there are other expenses, like bond repayments and interest.

So after taking in $1.5 billion in premiums for the first six months, the company is still left with $433 million in profit.

And politicians keep chirping about gloom and doom about potential exposure if The Big One comes. Fact is, Citizens is in better shape than all those small fly-by-night private startups that sprouted when the Insurance Giants bailed out on us. What’s going to happen to those private firms when the Big One hits? Will they be solvent?

Meanwhile, my home insurance rates — including windstorm, fire/theft/peril and flood — have tripled in the 12 years since I’ve been in my home. And in those 12 years, the private insurer that handled my non-wind policy dumped me (said my house was too old), so now that’s handled by Citizens, too. My deductibles have skyrocketed. And now I’m going to be socked with even higher rates.

It’s getting beyond ridiculous.

The answer for many Floridians? Becoming ex Floridians.

View the original article here: