Fla.’s Citizens Insurance Seeks 2% Policyholder Surcharge

September 18, 2006

All Florida homeowners with insurance will likely pay a little over 2 percent extra on their premium when they renew to help bail out the state-backed insurance company for people who can’t get coverage from private insurers.

The board of Citizens Property Insurance approved the charge, which will help it pay off a $1.7 billion deficit from last year. The figure still must be approved by the state Office of Insurance Regulation.

The 2 percent assessment is much lower than it would have been, because state lawmakers earlier this year voted to pump $750 million in surplus state tax dollars into shoring up Citizens. Had it not been for that, homeowners would have been facing an assessment closer to 12 percent, Citizens President Bob Ricker said.

By law, when Citizens can’t pay all its claims, other insurance companies are required to place an assessment on their Florida homeowners customers to bail out Citizens. Customers of Citizens pay the assessment as well. The assessment agreed on Thursday will be $20.70 for every $1,000 in premium.

The new charge is on top of a nearly 7 percent assessment Florida homeowners are already paying to make up for Citizens deficit from the 2004 hurricane season.

Even with the infusion of state money and the assessment, the company is still short of what it needs. Citizens board plans to consider a further emergency assessment, but one that would be smaller because it would be spread out over 10 years.

Citizens, which has more than 1.2 million policyholders in Florida, has about $5 billion available to pay future claims, Ricker said.

The company paid more than $5 billion in claims during the 2004 and 2005 hurricane seasons.