Citizens Property Insurance Corporation (Citizens), Florida’s state-run insurer of last resort, could face a shortfall in available funds to pay off insurance claims and might have to assess an $86 per policy to every homeowner in Florida if its reserves run out.
“Cash flow won’t be an issue for us,” Jessica Buss, Citizens chief financial officer, told a board of governor’s meeting yesterday in Gainesville. She said the firm started out 2004 with a $1.8 billion surplus, which should cover policyholder’s losses.
According to Buss, Citizen’s liability for damage caused by four hurricanes is about $1.8 billion. As of Sept. 30 Citizens had paid out about $1.5 billion. She said that money was been set aside for payments based on the number of claims reported so far. Nearly 112,000 claims have been reported, with about 60,000 closed. Citizens paid out $555 million.
A lot will depend on the type of policyholders who file claims, Actuarial models comparing where the storms hit and where Citizens has policyholders will show if there is a shortfall.
“Losses from the first hurricane to hit Florida, Charley, which tore through the southwest corner of the state, have been about $600 million lower than expected,” Buss said. “That’s a plus for Citizens because that means fewer claims for its high-risk account.”
Claims from Hurricane Frances, as well as from Ivan and Jeanne, are coming in higher than originally expected. “Citizens didn’t have many windstorm-only policies in the areas heavily damaged by these storms,” Buss said.
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