TALLAHASSEE – The Heartland Institute, a free-market think tank, today praised the Florida Citizens Property Insurance Corporation’s plans to purchase approximately $500 million in private reinsurance. (Reinsurance is insurance for insurance companies.)
The purchase of reinsurance for Citizens High Risk Account will reduce–but not eliminate–the severity of enormous special taxes called “assessments” following a major storm. Citizens, an agency of state government that sells more property insurance in Florida than any private company, currently charges rates that nearly all analysts believe are below the “actuarial” levels necessary to pay claims.
As a result, it will have to impose these assessments following a storm. In a worst-case scenario, they could come to more than $20 billion and raise each household’s effective taxes by more than $1,500 a year.
The following statements by Florida-based insurance experts at The Heartland Institute may be used for attribution. For more comments, see the contact information below.
“Though Citizens Property Insurance Corporation poses an enormous liability on Florida taxpayers, every dollar in risk that it takes off the CAT Fund will decrease the severity of massive hurricane taxes on every Floridian. The Citizens Board made the right decision today in opting to export some of its enormous risk outside Florida by purchasing reinsurance.”
The Heartland Institute
“Serious observers know we can’t continue to rely on our children and burden Florida’s future economic growth to finance subsidized windstorm insurance for coastal property owners. The bill will come due when we are least prepared for it, after a major storm.
“We also know that this burden can be phased out over time without validating the irresponsible rhetoric and scare tactics of those who say rates for everyone will spike to unaffordable levels. The risk experts should be allowed to manage risk, and Citizens’ leadership on the issue today is a great start.”
The Heartland Institute
The Heartland Institute is a 27-year-old national nonprofit organization with offices in Chicago, Tallahassee, Florida, Austin, Texas, and Washington, DC. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site at http://www.heartland.org or call 312/377-4000.