The Florida House of Representatives and Senate has distributed budget proposals without any provisions to pay Citizen’s Property Insurance Co.’s $516 million deficit. Unless legislators make unforeseen last minute changes, Florida homeowners could face a one-time fee of 6.8 percent to make up the shortfall in the state-sponsored insurer of last resort’s budget.
The one-time charge would be added to Florida insurance policies when a homeowner renews a policy. For someone with a $2,000 annual premium, that means an additional $136.
“As far as we know, unfortunately, the assessment was not funded,” said Bob Lotane, a spokesman for the Department of Financial Services. Once the budget is approved, “that’s going to be it and they’re probably going to have to look toward assessing.”
State Chief Financial Officer Tom Gallagher had suggested using additional sales tax money generated by post-hurricane spending to offset Citizens’ shortfall. Legislative leaders said they would consider allocating money to Citizens, but had to balance it with other priorities such as growth management.
Hurricane-related spending will generate an extra $752 million in sales tax money through June 2006, according to estimates.
Citizens spokesman Justin Glover told the Fort Lauderdale Sun-Sentinel on Tuesday that he had not yet seen the budget. The company held off any action on its deficit, in hopes that legislators might take some action to make up for the shortfall.
The 2004 hurricanes caused an estimated $2.4 billion loss for Citizens. Of that, $1.8 billion came from the company’s high-risk, or windstorm, account. The company can’t take money from other accounts to cover the loss.
The company’s Board of Governors will have to approve any assessment. Glover said the board won’t meet again until June, and that their agenda for that meeting has yet to be set.
Unlike private companies, Citizens can assess Florida policyholders from any company, not just its own, to make up for its losses. The deficit “shows … Citizens’ rates are not high enough to cover its losses,” said Sam Miller, executive vice president for the Florida Insurance Council.
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