Here is the current status of Citizens Property Insurance

Citizens Property Insurance, Florida’s insurer of last resort, is now the largest insurer in the state.

Recently, Rhode Island Senator Sheldon Whitehouse – who is also chairman of the Senate Budget Committee – launched a federal investigation into the citizens. In a letter to Gov. Ron DeSantis, Whitehouse cited concerns about Florida’s “uniquely large and growing exposure to climate-related property losses” as well as the possibility of a federal bailout.

Florida Insurance Commissioner Michael Jaworski and Citizens Executive Director Tim Serio spoke about the insurer Friday with Tom Hudson on The Florida Roundup.

Serio said citizens have never asked for a bailout from the federal government, and he doesn’t see a scenario where that could happen. He also said there is a misunderstanding about how the insurer works.

“I mean, the good thing about Citizens is that we always have the ability to pay claims because we not only have legislative power, we have a legislative mandate that if our reserves are depleted and we still have to pay claims, we have to charge a surcharge for Citizens policyholders,” Serio said. “And if that’s not enough, we need to impose assessments on all policyholders in Florida.”

Cerio added that while this is good for Citizens policyholders, it comes with minimizing assessment risk.

“That’s why we always talk a lot about making sure we’re charging stable actuarial rates, which right now, generally speaking, we’re not.” And we worked very hard; we want to get back to that point,” Serio said. “And there’s also so much effort to shrink citizens because the bigger we are, the more exposure there is and the more chance there’s going to be an assessment of people who not even Citizens customers.”

Jaworski said the citizens would have to shrink in half to reach a healthy number. There are currently around 1.3 million policies.

“We had a low water mark right at the beginning of this difficult half decade that we’ve had, of about 420,000 policies,” Jaworski said. as market conditions dictate. But a healthy round number for citizens is probably between 500 and 600,000 policies.

The insurer has recently shrunk amid a so-called “depopulation” program that transfers citizen policyholders to private insurance companies. Serio said the effort to downsize Citizens is a recognition of the financial threat its size poses to taxpayers.

“We have our own depopulation efforts, but obviously it’s gotten a lot easier because I think there’s recognition in the market that some of the litigation reforms are working,” Serio said. “There is more reinsurance available because reinsurers are seeing positive signs in the Florida market.

Another recent development, however, has raised more issues. A WLRN investigation in November revealed how Citizens has greatly increased the number of home inspections — which Cerio said should be called surveys — it orders. Citizens also hires field inspectors who are not licensed in Florida.

Serio said the Citizens follow the law and the investigation does not include all the facts.

“Essentially, there is a kind of general survey of the property, which we called an inspection. And that’s probably a misnomer because it implies a level of training that, frankly, is just not accurate,” Serio said. “These surveys are not true home inspections under Florida law. They do not require a licensed home inspector. And honestly, it could be someone going out with a cell phone camera and a notebook and just taking notes.

The information is then sent to a trained underwriter, who makes the decision, Serio added.

“This person in the field is not required to have a license because he does not do very complicated things. And I will tell you that is the industry standard,” Serio said

He also commented on whether citizens should hire licensed surveyors for surveys.

“For what these people are expected to do, I think it will increase the cost to the company, which will increase the cost to the other policyholders.” And these are really not inspections that require a license,” Serio said. “If they were, the state would be coming after us because they want to protect the consumer.”

Jaworski said his office has asked citizens questions about the matter and expects follow-up.

“As a regulator, we have a role to make sure that what they’re doing is appropriate and consumers are treated, ultimately, in a way that’s consistent with Florida law,” Jaworski said. “So we’re really focused on the aspects of what they’re doing and as far as complying with Florida law. There are some nuances in the law as it relates to who is qualified to inspect a property with and without an offer.

Serio said the citizens responded, clarifying the nature of the surveys and specifying what constitutes a licensed home inspection under Florida law.

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