With the state Hurricane Catastrophe fund flush and state-run insurer Citizens Property Insurance’s successful depopulation, it would seem that Florida is ready for another hurricane.
Projections show that both the catastrophe fund and Citizens have enough reserves to avoid imposing a multi-year assessment to pay for any financial shortfalls.
“The good thing for Floridians is if we do get that massive storm coming through, unlike anything you have seen in history, there would be no assessment,” said Citizens president and CEO Barry Gilway. “We're going into the wind season again in the best shape ever in several different ways.”
Citizens, in an effort to reduce its exposure, encouraged most of its customers to seek coverage on the private market. From its peak of nearly 1.5 million policies in 2012, the insurer of last resort managed to drop by approximately 66% to 484,788 by January 2016.
Thanks to its reduced exposure, Citizen has a surplus of about $7.4 billion and the capability to raise a total of more than $16 billion to pay claims through reinsurance and bonding—enough to handle even so-called 1-in-100-year storms, reported
The Gainesville Sun.
Many customers of Citizens were transferred to newly formed insurers, who currently insure about 70% of all insured property in the state. Understandably, questions about how these new companies could handle storm damage crises such as the ones that occurred between 2004 and 2005 were raised.
Recently-appointed insurance commissioner David Altmaier assured that many insurance changes have occurred since the 2004-2005 storms—such as higher capital requirements for new insurers from $4 million to $15 million and the low cost of reinsurance—that have made insurers in the region more financially stronger.
“There are a lot of market conditions that are present today that give us some optimism that were we to experience catastrophic seasons similar to '04 and '05, that our insurance companies would be in a better position to handle those losses and to also be able to secure reinsurance at a fair price in subsequent seasons,” Altmaier said.
Despite all this, Florida has some of the highest average property insurance premiums in America, at $2,115 a year for a typical homeowner's policy compared to the national average of $1,096, according to the National Association of Insurance Commissioners based on 2013 premiums.
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