Steve Pociask, President, American Consumer Institute
Regarding Citizens Property Insurance Corp. Rates
“A recent report by the Insurance Information Institute revealed that an overwhelming majority of Florida homeowners – 77 percent – are subsidizing the Citizens Property Insurance Corp. policies held by the remaining 23 percent.
While the American Consumer Institute understands that some homeowners struggle to find an alternative property insurance provider, it is unfair for a majority of Floridians to subsidize other homeowners’ property insurance, especially when Citizens’ policyholders are paying below market rates.
Florida Insurance Consumer Advocate Robin Westcott has said that Citizens rates must ‘reflect actual risk so that policyholders are not bearing any financial burden beyond what is necessary…’ Her statement underscores the importance of having risk-based rates that protect both Citizens and non-Citizens consumers. While public officials are rightfully concerned about the effect on Citizens’ policyholders, public officials should also be concerned about the 77 percent of consumers who currently subsidize Citizens policyholders.
Citizens has taken steps to purchase more traditional reinsurance and a two-year catastrophe bond to transfer hurricane risk to the private market. Efforts like this should be continued because it transfers risk from Florida consumers and reduces the potential for hurricane taxes on all Florida homeowners, businesses, charities, religious institutions, renters, automobile policyholders, local governments and school boards.
A study conducted earlier this year by the American Consumer Institute revealed that 70 percent of Floridians oppose these hurricane taxes, especially if the Florida Hurricane Catastrophe Fund is unable to meet its financial obligations in the event of a major storm or series of storms.
As Florida looks for ways to return Citizens to an insurer of last resort, it is important that the equal consideration be given to the best interests of all Floridians, whether they are insured by Citizens or the private insurance market.”
The American Consumer Institute Center for Citizen Research is a 501(c)(3) nonprofit educational and research institute. For more information, visit www.theamericanconsumer.org.Tweet