Citizens Property Insurance Corporation has $5 billion in reserves to deal with potential losses as the 2006 hurricane season moves into the traditionally active month of August, according to Bob Ricker, president.
“We are in excellent shape financially to deal with losses this year,” Ricker said. “We have taken several steps to keep Citizens on a sound financial footing.”
Ricker said the sale in early July of about $3.05 billion in revenue bonds gave the state’s not-for-profit insurance company a total of slightly more than $5 billion available to pay storm-related claims.
Citizens had about $2 billion available before the bonds were sold. Another $5 billion is available through the state’s catastrophic fund, which becomes available after storm damage exceeds a certain level.
In addition to the money on hand, Citizens is receiving a one-time, $715 million appropriation from the Legislature that will lower the assessment Citizens made on policy holders through insurance companies to pay off damages from the 2005 storm season.
“The appropriation reduced the regular assessment to 2 percent of annual premium for one year. A 10 percent emergency assessment will be spread over 10 years,” Ricker said. “Citizens’ financial strength is particularly important because of the issues facing the private sector.
“Until we can find a way to limit the volatility in the private market,” he said, “Citizens is going to be the only company writing insurance policies in certain parts of the state.”
“Without Citizens, property owners would be left unprotected and that would be devastating to the state’s economy if we have major storms,” Ricker concluded.
Source: Citizens Property Insurance Corp.
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