Citizens Property Insurance announces it will end its emergency assessment on insurance policies two years ahead of schedule
Florida’s Citizens Property Insurance has announced that it will, in fact, be putting an end to emergency assessment it has levied on insurance policies. The assessment, which is often referred to as the “storm tax,” is being put to rest two years ahead of its scheduled expiration. For some homeowners, this may come as a financial relief, but insurance costs are expected to only fall by an average of $40 over the next two years.
Storm tax has helped the organization recover from its crippling debt
The storm tax was introduced by Citizens in order to help the organization recover from losses it experienced from 2004 to 2005. During that time, Florida has been hit by eight major storms, leaving Citizens Property Insurance with a deficit of more than $1.7 billion. The storm tax was meant to be in place for a decade, but the organization has made significant strides in recovering from its debt obligations in recent years. As such, the storm tax is no longer being considered necessary.
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Assessment is no longer needed in order for the insurer to satisfy financial obligations
When the assessment want introduced, it imposed a 1.4% fee on all homeowners insurance policies that Citizens was responsible for. This was reduced to 1% in 2011 because of the increased number of policies that the organization sold after 2007. According to Citizens chief financial officer, Jennifer Montero, the organization will have enough money to satisfy its debt obligations by June 2015.
Homeowners insurance rates have been on the rise in Florida for the past two years
Over the past two years, Citizens has been raising rates on the coverage it offers to homeowners. The organization was pressured by state lawmakers to do so as a way for Citizens to recover from its massive debt. Homeowners throughout the state, especially those in risk-prone areas, have been quite vocal with their disapproval of higher insurance rates. Citizens has also been shedding policies as a way to mitigate its financial exposure, allowing private insurers to take up these policies.