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Tallahassee, FL - Florida’s government run Citizens Property Insurance Corporation is putting the state at risk of bankruptcy in the even of a catastrophic hurricane. Citizens has become the largest insurer in the state by under-pricing the risks of a major catastrophe, even though the possibility of a significant hurricane is always looming. The nation’s major insurers have pulled out of the state—Allstate, Nationwide, Prudential, USAA, and most recently State Farm, which had previously insured more than a million homeowners across the Florida.
The state’s Citizens Property Insurance Corporation is now the major property insurer. At the same time, Florida is having a hard time finding buyers for bonds to support its $29 billion reinsurance exposure—with a shortfall as high as $18 billion. In the even of a major storm, who will pick up the tab?
It is clear reforms are urgently needed to foster a more robust market for property casualty insurance, preferably before the 2009 hurricane season begins.
The House General Government Policy Council has an important opportunity to enact meaningful reform. HB 1171, sponsored by Rep. Bill Proctor (R., District 20), would provide consumers a choice and a degree of certainty by allowing them to purchase insurance that cannot be assessed with a hurricane tax. HB 1171 will keep non-Citizens policy holders from having to bail out the state run insurance company in the wake of a major storm. The Senate Committee on Banking and Insurance recently passed the companion bill SB 2036.
Tom Gaitens, FreedomWorks State Director in Florida commented:
“With the hurricane season less than two months away, we need to move quickly to enact meaningful reform. House Bill 1171 is a major step in the right direction that provides consumers an opportunity to purchase insurance coverage without the potential for a hidden tax after a major storm. At the same time it encourages the return of capital and a larger insurance market with more options. Our activists are urging the House General Government Policy Council to vote in favor of HB 1171 so that this important legislation can move to the floor for a vote by the full House.”