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Florida hurricane insurer of last resort news
TALLAHASSEE, Fla. (AP) Jan. 19, 2012 - The state’s insurer of
last resort has halted the runaway growth of policyholders in
recent months and begun to reduce its size and the corresponding
risk it presents to millions of Floridians, the company’s
president told Gov. Rick Scott and the Cabinet on Wednesday.
Scott Wallace, who is leaving as president of state-backed
Citizens Property Insurance Corp. in early April, said its
number of policies have leveled off at roughly 1,470,000 in
recent weeks after more than a year of increasing by an
estimated 30,000 policies a month.
Wallace’s report was music to the ears of Gov. Rick Scott, who
has made it a top priority for Citizens to once again be a
last-resort backup, if not sold, instead of the state’s largest
insurer of businesses and homes. If Citizens were unable to pay
claims, the difference would have to be made up by all Florida
residents with insurance on their homes, businesses and
vehicles.
“We’re starting to depopulate and not growing and that’s all
good,” Scott said afterward. “We’re making progress.”
Wallace told reporters afterward in response to a question that
he could foresee a time when Citizens could be attractive to a
potential buyer in the private sector.
“That will require some additional change and I think we’re
headed in that direction,” Wallace said.
But that could be some time away yet. Because of the gigantic
number of policies in Citizens’ portfolio, the company’s overall
exposure is estimated at $500 billion and far exceeds its
ability to pay claims in the aftermath of a catastrophic
hurricane or series of storms.
Any shortfall would have to be made up by a surcharge on not
only Citizens’ policyholders, but also consumers who have
coverage on their homes, businesses, boats and other assets with
other companies.
Wallace said Citizens is also behind several of the bills
working their way through the Legislature that are designed to
accommodate some of the changes needed to reduce the company’s
size.
Scott also applauded Citizens for working closely with the
Office of Insurance Regulation (OIR).
Wallace said OIR has signed off on 30 of its recommendations
designed to reduce Citizens’ client base and exposure
simultaneously. They include a maximum of $1 million coverage
for properties in coastal areas, a mandatory 10 percent
deductible on sinkhole policies and the reduction of personal
liability coverage from $300,000 to $100,000.
Created by the Legislature in 2002, Citizens was designed to
provide insurance to homeowners in high-risk areas and those who
cannot find coverage in the private market. It was largely an
offshoot of an underwriting association formed by the state in
the aftermath of Hurricane Andrew in August 1992.
However, a series of storms in 2004 and 2005 led to several
private insurers either pulling out of the state or cutting back
on the number homes or businesses it would provide coverage on
and Citizens was no longer the “insurer of last resort.”
Wallace, 59, announced earlier this month that he plans to leave
Citizens in early April after six years at the company. He is
just the second CEO of the company that was formed.
“I really came to a fork in the road in my career,” he said. “I
need to take some time and figure out where I want to land.”
Copyright © 2012 The Associated Press, Brent Kallestad. |
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