TAMPA, Fla. (WFLA) — A U.S. Senate panel is raising concerns about Citizens’ ability to pay out claims after climate disasters and whether the company, Florida’s property insurer of last resort, will need a federal bailout.
At the Citizens Board of Governors meeting on Wednesday, CEO Tim Cerio provided insight on the health of the company and slammed claims it will need a federal bailout.
He said Citizens has never asked for a federal bailout, and he’s concerned the Senate investigation is causing “unwarranted panic” among policyholders.
Last week, Sen. Sheldon Whitehouse launched an investigation into Citizens. The Rhode Island Democrat told 8 On Your Side the company has small reserves and a large number of policies, a combo he fears puts taxpayers on the hook for bailing out the state-backed company.
By law, if Citizens runs out of money they’re allowed to levy an assessment—or a special surcharge—on all Floridians.
“If the assessment is so big that it’s uncollectable then that pushes this problem beyond Florida,” Sen. Whitehouse said.
Cerio pushed back against that claim during the meeting on Wednesday.
“Citizens always has the ability to pay claims. We are in a strong financial condition and we have our statutory surcharge and assessment mandate if reserves are exhausted, so claims will always be made,” he said.
Cerio also questioned concerns about American taxpayers potentially being on the hook.
“I’ve never heard of anyone suggesting the idea of a federal bailout until the Senate Budget Committees letter was published,” he said. “It is a hypothetical which I think demonstrates again a misunderstanding of our structure.”
Since Florida lawmakers overhauled the property insurance market, Cerio says there have been positive changes.
This year, Florida’s Office of Insurance Regulation approved the entrance of six new insurers into the state.
Across the board, frivolous litigation is down. Specifically for Citizens, Cerio said, 20% fewer cases are going to court this year, as compared to last.
The company is also reducing its exposure, getting smaller, so-called depopulating. This year, more than 220,000 Citizens customers were transferred to the private market.
Citizens spokesman Michael Peltier said more offers will be in the mail soon.
“The depopulation program is most popular in the winter months, December, January, February,” he said. “Over the next two or three months, we’ll see some interest and then it’ll probably die out until next fall.”
“If you get a message from Citizens, open your letter.”
That’s the major takeaway for Citizens customers.
Right now, private insurance companies are looking at the Citizens portfolio and picking out who they want. Over the next three months, there will be three more rounds of depopulation.
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