Now that the hurricane season's begun, state-backed insurer Citizens Property Insurance assures everyone, it’s in the best shape it’s ever been.
That may be cold comfort for former customers now with smaller insurers, or current customers living on the coast who may still see rate increases.
Citizens CEO Barry Gilway says after shedding thousands of policies, the company is in a very good position.
“We have never been this strong financially,” adds Gilway. “Exposure’s dropped from $510 billion to less than $300 billion. What that’s allowed us to do is just build surplus.”
Some consumer advocates have criticized how the insurer reduced its exposure. They say former Citizens policyholders were transferred to insurance companies that don’t have enough funds to can’t handle a major hurricane.
Now, Citizens has about $19.4 billion in funds available, says Gilway, which is enough to cover a one-in-100-year storm.
Still Gilway cautions that Citizen’s coastal policyholders shouldn’t expect rates to go down: “The coastal account is still underpriced.” Gilway notes that policies for coastal properties “will still need close to a 10-percent increase.”
State law limits Citizens from raising rates above 10 percent a year.
Disasters are certainly not unique to South Florida: Parts of California see regular wildfires or earthquakes and Oklahoma gets hammered by tornadoes. But those areas don’t seem to have the same insurance problems.
Gilway says the difference is about Florida’s susceptibility.
“What’s special about hurricanes is the consistency of hurricanes, although Florida has obviously been hurricane free for eight years," add Gilway, "We’re gonna get the big bang. It’s not 'if.' It’s 'when.'”