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Florida’s government run Citizens Property Insurance Corp. has more than 1.4 million policyholders statewide. However, that number only reflects approximately 23 percent of Florida’s homeowners insurance market leaving 77 percent of Florida homeowners subsidizing Citizens policies.
According to Americans for Prosperity – Florida, “Nearly half (45 percent) of all Citizens policies in the State of Florida are held by residents living in just four counties – Miami-Dade, Broward, Palm Beach and Monroe Counties. Only two counties out of 67 have a majority of their homeowners insurance policies with Citizens (Miami-Dade and Hernando Counties), meaning private policyholders in Florida’s other 65 counties are subsidizing Citizens’ homeowners insurance for residents of these two counties.”
AFP – Florida notes that in Miami-Dade and Hernando counties, 100 percent of renters, businesses, automobile policyholders, churches, charities, local governments and school boards are subsidizing their counties’ Citizens’ policyholders.
How did government take control of Florida’s property insurance?
It all started in 1972 when the Florida Windstorm Underwriting Association (FWUA) was created under Democrat Governor Reubin Askew to provide wind-only coverage in coastal regions. This was followed by the creation of the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA). FRPCJUA was created in December, 1992 under Democrat Governor Lawton Chiles because hundreds of thousands of Floridians were unable to find homeowners insurance following Hurricane Andrew.
Finally, under Republican Governor Jeb Bush FWUA and FRPCJUA were merged in 2002, creating Citizens Property Insurance Corporation. Citizens offers wind-only and all-perils property insurance coverage to Floridians without private insurance options.
According to a September 2012 white paper from the Insurance Information Institute:
Limited availability of insurance coverage for the most vulnerable property was a problem before 1992, yet became amplified in Andrew’s aftermath.
By the end of 1992, the FWUA had fewer than 62,000 policies and an exposure measured by total insured value of $7.4 billion.1 Five years later, with the formation of the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA), there were 417,342 policies in the FWUA, another 487,590 policies in the FRPCJUA with a combined exposure of more than $136 billion.2
As of June 2012, Citizens Property Insurance Corp., formed in 2002 through the merger of the FWUA and FRPCJUA, had more than 1.4 million policies in force with nearly $500 billion in exposure to risk.
Thomas C. Feeney, III, President & Chief Executive Officer, Associated Industries of Florida states, “It’s unfortunate that more than three quarters of Floridians, and all of Florida business owners, are burdened with the financial responsibility of subsidizing homeowners property insurance for some Floridians in addition to paying 100 percent of their own insurance premium. With estimates that suggest Citizens Property Insurance Corp. rates are roughly 33 percent below where they need to be in order to cover its risk and pay claims…”
“In addition to the unreasonable financial burden Citizens Property Insurance Corp. places on a majority of Floridians throughout the state, the structure of the state-run insurer has also allowed for subsidized, reckless development in the most hazardous and environmentally sensitive areas of Florida. It’s time to reform Citizens in order to protect Floridians from a financial perspective, while at the same time protecting Florida’s wildlife and coast,” says Manley Fuller, President, Florida Wildlife Federation.
The greatest threat to Florida, a.k.a. Citizens Insurance, is just one hurricane away from pushing all Floridians of a fiscal cliff.
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