The facts are, Citizens Property Insurance Corp. is a last resort insurer for Floridians unable to get Florida homeowners insurance for their residences. The key words in that factual statement are “last resort.” Yet the corporation is now considering making itself a mere stopping point on the way to a truly last resort for already troubled policyholders.
In the latest twist in a twisting nightmare for homeowners insurance policyholders in Miami Florida, the corporation is acting under pressure from Gov. Rick Scott and Republican allies. Citizens is being pressured to divest itself of some of its 1.4 million Florida homeowners insurance policyholders, who turned to Citizens when they were rejected by private insurers or couldn’t afford premiums set by the insurers.
The corporation simply is saddled with too many risky obligations. Not even raising rates by a legally allowable 10 percent has fully mitigated the claims risk for the corporation. While its $5.6 billion in reserves could comfortably handle the aftermath of a 1-in-25-years storm, a 1-in-100-years storm still would devastate its books.
Hence, the pressure to move some riskier policies by subsidizing a sale of the policies to private insurers. While discounting policies to move them off the corporation books indeed might induce private insurers to buy, the question is, what will become of the affected homeowners? Private insurers will raise premiums on the policies, putting at least some Florida homeowners back in the same untenable spot they were in before Citizens took them on.
Citizens also is trying to mitigate the worst of the policies by raising premiums on sinkhole coverage and reinspecting homes with the probable intent of raising premiums following the “discovery” of fraudulent Florida homeowner declarations. All of these preemptive activities are putting new pressure on some already desperate homeowners.
The fact is, the governor’s motivation is valid. Having the quasi-state corporation burdened with high-risk policies creates another financial pressure point for a state at a desperate financial time. Yet ham-handedly shoveling homeowners insurance policies back into a system that already has rejected them doesn’t pass the smell test. These are the times that try men’s souls—without a fragrant solution in sight.