The Senate Panel is seeking to answer big questions about the insurer’s exposure if a storm hits.
The US Senate Budget Committee has requested a slew of documents and information from Florida’s Citizens Insurance, the home insurer of last resort in the state. The investigation has raised questions regarding climate risk and whether a major hurricane would cause the insurer to have to obtain help from the federal government.
The committee is aiming to learn more about the insurer’s ability to pay claims in worst case situations.
Governor Ron DeSantis received a letter from Committee Chair Sheldon Whitehouse (D – Rhode Island), which was also sent to Florida Insurance Commissioner Michael Yaworsky and Citizens Insurance President and CEO Tim Cerio. The letter requested information regarding the insurer’s models for potential financial exposure in the case of “worst case hurricane scenarios” as well as models indicating the ability of the insurer to pay claims in such situations.
The letter focused on the tremendous amount of growth the insurer had experienced in recent years, as its policies have ballooned. It also pointed to state laws permitting the insurer to obtain “assessments” from its policyholders in the state, as well as from policyholders with other insurers, in order to pay its claims.
“If Citizens were unable to cover its losses, it is entirely possible that state leaders might ask the federal government for a bailout,” said the letter from Whitehouse. “Given the potential magnitude of Citizens’ losses, such a request would put the federal government (and by extension, all American taxpayers) at substantial risk.”
According to Citizens Insurance, the insurer would be able to pay claims following a major disaster.
Michael Peltier, a spokesperson for the insurer, emailed a statement saying that the insurer would be capable of paying claims filed after a major disaster.
“As Florida’s insurer of last resort, Citizens is structured so that it will always be able to protect its policyholders and pay claims,” said Peltier’s email. “If Citizens were to pay out all reserves and reinsurance following a major storm or series of disasters, it is required by Florida law to levy surcharges and assessments on its policyholders and all Florida insurance consumers until any deficit is eliminated. As such, Citizens will always have the ability to pay claims.”
