Florida homeowners will pay a 2.5 percent surcharge on their insurance premium when they renew policies in a plan approved last week by state regulators, a move to help bail out the state-backed insurance company for people who can’t get private coverage.
State lawmakers earlier this year voted to pump $715 million in surplus state tax dollars into shoring up Citizens Property Insurance after it came up short of what it needed to pay claims in 2005.
Had it not been for taxpayers picking up much of the tab, homeowners would have been facing an assessment closer to 11 percent, the Office of Insurance Regulation 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 it out. Customers of Citizens pay the assessment as well.
The $163 million assessment will help Citizens pay off a nearly $1.7 billion deficit from last year. The company isn’t expected to have a deficit this year because the state saw no landfalling hurricanes.
The new charge is on top of a nearly 7 percent assessment Florida homeowners had to pay to make up for Citizens’ deficit from the 2004 hurricane season.
Even after the 2.5 percent assessment for the 2005 shortfall, a small amount will still be outstanding. That will be paid off with another emergency assessment, but that will be much smaller because it will be spread out over 10 years.
Citizens has more than 1.2 million policyholders in Florida. It
paid more than $5 billion in claims during the 2004 and 2005
hurricane seasons.
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On the Net:
OIR order:
http://www.floir.com/pdf/citizensregularassessmentorder.pdf
Topics Florida Homeowners
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