Florida’s Citizens Property Insurance Corporation’s Board of Governors has approved a $2.46 billion risk transfer program as the state heads into the 2016 hurricane season, the insurer said in a statement.
By unanimous vote, Citizens Board approved a package that includes traditional reinsurance and capital market risk transfer “to protect policyholders and eliminate the risk of assessment on all Florida policyholders in the event of a catastrophic storm or series of events,” Citizens said.
The state’s insurer of last resort said that combined with its $7.4 billion surplus and protection from the Florida Hurricane Catastrophe Fund, Citizens has assets available to handle a 1-100 year storm along the coast and still have the financial stability to handle a second 1-16 year storm.
“This risk transfer package represents a well-reasoned approach to protecting Citizens policyholders and Citizens’ surplus,” said Chris Gardner, Chairman of Citizens Board of Governors. “We have a responsibility to all our stakeholders to protect the significant gains Citizens has made over the past several years.”
The company said the 2016 risk transfer program responds to Citizens’ smaller footprint by shifting multi-year coverage down from higher levels and lowering the threshold at which the coverage would be tapped.
The program also provides coverage for commercial non-residential properties not covered under the Florida Cat Fund. Citizens now insures 490,000 policyholders, down nearly 20 percent from the 590,000 policyholders it covered in June 2015.
The board authorized Citizens staff to spend up to $204 million for the 2016 risk transfer program, down from $283 million spent in 2015 for $3.9 billion in risk transfer coverage.
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