According to reports, as the hurricane season begins with its potential devastation, numerous Florida homeowners are hastily seeking coverage with the state’s last-resort insurance provider, Citizens Property Insurance Corporation.
As of Friday, data on the state-backed insurer’s website showed a total of 1,211,914 policies, which is an increase from the 1,207,292 policies recorded a week earlier.
In the past year, Citizens has significantly increased its size, and it now holds the largest share of homeowner policies in the state, despite the recent efforts to transfer some of them to private insurers.
Florida is facing an insurance crisis due to various reasons. These factors include widespread fraud, excessive litigation, and the heightened risk of more frequent and severe natural disasters that are associated with climate change.
As damage claims continue to rise, private insurers are taking drastic measures such as reducing coverage or completely pulling out of Florida. This has resulted in limited coverage options for homeowners in the state, leaving them vulnerable to potential damages.
In Florida, home insurance premiums have skyrocketed to become one of the highest in the nation. The Insurance Information Institute (Triple-I) reports that homeowners in Florida paid an average of $6,000 per year for home insurance in the previous year, which is more than three times the national average.
Legislators in the state have expressed concern about the growth of Citizens, a provider of coverage to homeowners who are unable to obtain it in the private market. As of late January 2020, the state-supported insurer had a total of 443,229 policies in force. However, by December 31, 2023, it had a staggering 1,228,718 policies in force throughout the state.
In February of this year, Governor Ron DeSantis, a Republican, expressed concerns about the solvency of Citizens, the state’s insurer of last resort, and its ability to handle a severe weather event. He cautioned that if a storm were to hit, having millions of people relying on Citizens could cause significant issues for Florida. “It is not solvent,” he told CNBC during an interview.
Early on Thursday morning, Newsweek reached out to DeSantis’ spokesperson and Citizens for comment via email.
If Citizens, the state-backed insurer, were to become insolvent due to a sudden surge in damage claims, the residents would ultimately bear the financial burden. However, as per the December 2023 financial report, Citizens is currently in a stable financial position with a surplus of $5 billion to meet its obligations.
If this year’s hurricane season proves to be catastrophic, Citizens would be forced to depend on financial aid from the state to cover claims. This could result in an increase in insurance premiums for all policyholders in Florida.
