WASHINGTON — Democratic United States Senate Budget Committee Chairman Sheldon Whitehouse has sent a second letter to Citizens Property Insurance Corporation asking for more information as the committee expresses concern for "possible future requests for a federal bailout."
Senator Whitehouse said the new letter came after Florida Governor Ron DeSantis said on CNBC that Citizens Property Insurance Corporation "is not solvent."
According to Senator Whitehouse's letter, Citizens replied in December to a previous letter from the committee, saying, "Florida law provides a framework to ensure that Citizens remains solvent."
Whitehouse said that referred to the law that states if Citizens had to pay out all reserves and reinsurance, the company would be required to levy surcharges on its policyholders and assessments on other Florida insurance customers to make up the difference.
For his part, Citizens Property Insurance CEO Tim Cerio previously said the company had no problems with funding.
"We will always be able to pay claims," Cerio told ABC Action News sister station WPTV in January.
However, the WPTV report noted that Cerio's statement was because of the ability to "tap into leveling assessments on nearly all Florida residents to help Citizens if it does run out of money."
Cerio said that is part of the reason for Citizens to lower the number of policies it has, which is roughly 1.3 million as of January of this year.
Still, Citizens' depopulation is running into the reality of property insurance rates from private companies accelerating at prices unsustainable for most homeowners, and that's part of what has the Senate Budget Committee looking into the committee.
"The bottom line is that, according to Florida’s own governor, Citizens faces a major solvency crisis and would be unable to pay out all claims and expenses should a major storm hit Florida. This would, in turn, create the risk that Florida could seek a bailout from the U.S. government, further tapping into federal resources," Whitehouse said in the letter released March 19, 2024.
UPDATE:
Citizens Insurance replied to the Budget Committee's letter and said, "We believe we fully addressed the concerns raised in Chairman Whitehouse's prior letter by pointing out in great detail the mechanisms under Florida law the ensure Citizens will always be able to pay the claims of its insureds."
Citizens said it would meet wit the Senate Budget Committee staff to provide "information and documentation about Citzens' structure, function, and claims paying ability."
