Citizens Chairman Jim Malone Letter to Wall Street Journal: Fierce Storm Over Hurricane Insurance in Florida
Feb 28, 2011
The following “Letter to the Editor” was published in The Wall Street Journal on February 28, 2011:
Fierce Storm over Hurricane Insurance in Florida
By James Malone
As chairman of the Citizens Property Insurance Corp. board of governors, I applaud The Wall Street Journal for highlighting the urgency for reforming Florida’s property-insurance market (“Waiting for Hurricane Charlie (Crist),” Review & Outlook, Feb. 23).
A healthy and profitable property insurance market is essential to the future of Florida’s economy and Citizens Property Insurance Corp. wants to be a part of that solution. A healthy insurance market will have to ultimately be the result of private-market capital and private-market policies—not government solutions.
The size and exposure of Citizens is a direct reflection of the health (or lack thereof) of the private market. Citizens was created as the insurer of last resort, and it should once again function as the market of last resort. As chairman, I fully support initiatives aimed at making Citizens noncompetitive with the private market.
The sooner we get back to a healthy private market, the better. None of us knows when the next “big one” will hit Florida. The time to reform the Florida market is now.
Citizens Property Insurance Corp.
Basically any property and casualty insurance you buy in Florida is tapped for add-on premiums, courtesy of Charlie Crist’s fiasco. My legacy USAA homeowners policy, for which I did not purchase wind (hurricane) coverage, includes charges for the Emergency Management Fund, Hurricane Catastrophe Emergency Assessment, Citizens emergency assessment and the Florida Insurance Guarantee Association recoupment.
Even my automobile policy has charges for the Florida hurricane catastrophe emergency assessment, a surcharge on my personal excess auto liability policy and a charge for the Florida Insurance Guarantee Association recoupment.
Louisiana has the same, if not more hurricane exposure. Sans Charlie Crist, I think it is doing fine.
You say “the real insurers of last resort for Florida beachfront property are taxpayers in Waterloo and Denver.” Using that logic, why am I the insurer for flooding that occurs in the Dakotas, Kansas, Tennessee and Wisconsin? I refer to the National Flood Insurance Program. Since you want reform of the Florida insurance market, let’s apply those same standards to reforming the insurance of those who want to live in flood zones in our heartland.