“We can think of no scenario in which Citizens would be required to seek federal financial assistance.”
That was the pronouncement made by Citizens Property Insurance Corporation chief executive Tim Cerio (pictured) in his response to a new letter from US Senate budget committee chairman Sheldon Whitehouse questioning the insurer’s solvency.
Back in December, following a November correspondence from Senator Whitehouse, Cerio cited what he considered “a fundamental misunderstanding of how Citizens Property Insurance Corporation operates” and an underestimation of the insurer’s claims-paying ability.
At the time, the CEO said: “Citizens purchases adequate levels of reinsurance to cover its losses, has ample reserves, has various financing tools at its disposal, and the State of Florida has a strong fiscal position given the state’s continued economic growth and record net in-migration.
“Importantly, if Citizens were to pay out all reserves and reinsurance following a major storm or series of disasters and there is a deficit, then depending on the extent of the deficit, Citizens would be required by Florida law to levy surcharges on its policyholders and assessments on other Florida insurance consumers until the deficit is eliminated.”
More than three months later, a new letter came, claiming that the questions raised in 2023 had not been sufficiently addressed.
“As you are certainly aware, Florida Governor Ron DeSantis told CNBC at the end of last month that Citizens Property Insurance Corporation ‘is not solvent’,” Whitehouse told Cerio in his letter on Monday. “This is, of course, difficult to reconcile with your assurance to me in December 2023 that ‘Florida law provides a framework to ensure that Citizens remains solvent’.
“Given Governor DeSantis’s statement and your deficient response to my prior letter, my concerns about Citizens’ solvency remain. Accordingly, I ask that you adequately address them, and I renew all requests for information and documents set out in my prior letter.”
The senator, in a separate statement, claimed that the insurer “has failed to cooperate” with the committee’s probe.
In his response on Wednesday, Cerio declared: “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 that ensure Citizens will always be able to pay the claims of its insureds.
“We also highlighted that neither Citizens, its predecessor entities, nor the State of Florida, have ever sought a federal bailout to cover hurricane losses. We also expressed concern that the chairman’s letter could cause misplaced panic in a Florida insurance market well on its way to recovery.”
He added that Citizens will have the reserves and reinsurance coverage for this year’s hurricane season to handle a one-in-100-year storm without having to levy assessments on non-Citizens policyholders. Cerio also offered assurances that his camp would provide information and documentation about Citizens’ structure, function, and claims-paying ability.
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