You may have noticed that property insurance in Florida is becoming increasingly complex and challenging for policyholders. Recently, the Sunshine State of Florida has been hit hard by natural disasters, devastating hurricanes and floods that have destroyed homes and property.
Floridian homeowners are beginning to worry about their housing claims Florida Governor Ron DeSantis, declared the inability to pay all claims of citizens’ insurance losses and serious accidents. Address WZVN TV 7 News in Naples“I think a lot of people know that citizens aren’t dead, that if you had a hurricane hit a lot of citizen property owners, they wouldn’t have much to pay,” he said.
If a storm hits, how much it dissolves
keep in mind, Citizens Property Insurance Corporation It is a government agency that provides insurance policies to homeowners who cannot find affordable coverage elsewhere. Surprisingly, Citizens Property Insurance Corporation is a government-run insurance company 1.2 million Homeowner’s policy last week. But still the Floridian faces the question; Is there enough money if a hurricane hits?
according to Florida Alternative Insurance Assistance (FORA)including flood damage, more than covered Hurricane Ian’s insured losses. 60 billion dollars In some assumptions. After DeSantis’ head-scratching comments, many homeowners are complaining that their home repair process has been delayed because they have received little or no payment on their insurance claims. Additionally, Citizens Corporation coverage is limited. 700,000 dollars In most parts of the state per home, this means that most homeowners’ claims can only be partially covered.
Citizens Insurance may impose additional fees on policyholders.
For Citizens policyholders, there is always the risk of a sudden increase in your premium after a significant statewide accident. In addition, citizens save some of the premium income to pay for future hurricane claims, but a hurricane or tornado can wipe out all of these reserves. Therefore, the deficiency in the account will be eliminated, causing Citizens Insurance to pay an additional fee, called an assessment, to policyholders.
Reviews on property insurance
Michael Peltier, Citizen Media Relations Manager He added to DeSantis, “The governor is right, if Citizens is going to run out of profits and have a deficit, we should be issuing assessments on our policyholders and the vast majority of Florida insurance beneficiaries.” Likewise, many property insurance professionals expect a significant premium from homeowners.
The reviews are believed to cost policyholders up to 45% Their policy premium. In other words, if you pay a $1,000 bonus, you might get a raise. A one-time additional payment of 450 dollars On top of your premium.
Policyholders outside of South Florida may receive a discount, though. However, as near the south coast Miami, vulnerable areas It is estimated that they will face price increases of approx. 10% every year.
On March 31, 2023 FIGA (Florida Insurance Guaranty Association) The Board of Directors approved a 1% Emergency assessment of the members. This FIGA emergency assessment may incur an additional fee. 70% A review of policyholders between January 1, 2023 and December 31, 2023.
A large amount of additional payment in the insurance industry
Citizens Property Insurance has seen a significant inflow. 1.2 million customers In the last two years. “It has become the primary insurance in many places,” said the president Palmer Insurance Agency, Josh Palmer. In addition, UPC (United Property and Casualty Insurance Company) That loss in Florida came after a major hurricane and hurricane damage 1.5 billion dollarsIt’s about 500 million dollars More than previously estimated by the insurer. Unfortunately, the funds are dangerously low, that is
- Customers can even review if citizens need more money to pay claims. 45% Current premium.
- If more money is needed, citizens can assess all the homeowners in the state 2% through their insurance carrier.
- If you need more, you can review each insurance policy 30% For many years including renter and car insurance.
Risk management measures
“The arrangement was that Citizens would use the $6.7 billion in surplus to, you know, pay back claims that would probably be affected by bankruptcy.” –Michael PeltierSpokesman of the citizens
Two important measures that I gathered from the meeting to manage the risk of paying additional fees are tax-free measures and Lightning Re Ltd. (Series 2023-1).
Tax-free surcharge
Floridian insurers must pay state taxes 1.75 percent surcharge For each policy. As Citizens is a tax-exempt organization, these 1.75 percent surcharges are used by financial sources to pay claims.
At the Citizens Board of Trustees meeting Friday afternoon, the board approved the corporation’s request for additional funding. 500 million dollars In reinsurance protection. Moreover, the Citizens’ Administrative Council voted to spend more 170 million dollars 500 million dollars in reinsurance bonds over the next three years. The staff thought it would help the insurer avoid assessing policyholders.
Lightning Re-Cat Bond March 2023
This is new Lightning Re Ltd. (Series 2023-1) Catastrophe bonds feature an industry default trigger to avoid higher market prices for citizens and provide higher coverage to reduce future insurance costs. Sources said that the index will be the connecting point 51.5 billion dollars total losses. In contrast, a cat bond will deplete its coverage in index value 66 billion dollars$2 billion in event franchise deductions. Additionally, the citizens of Florida more than doubled the target amount for this new cat bond. 400 million to 500 million dollars The reinsurance is now required from the exit. At the same time, the price guide is reduced from 11 to 11.5%; It shows strong investor interest and performance.
Citizens staff added that if Citizens pulls out of the Lightning Re deal now, the insurers could lose support from the cat bond market. however, Chairman of the board of citizens, Carlos Beruf “To me, it’s throwing money away, you know, in the trash,” he disagreed.
At the end Emergency board meeting On Friday, Citizens Governors voted 5-2 to support the Lightning Re bond plan.
What can you do as a policyholder?
It indicates that there will be a 2023 budget of citizens 407 million dollars Net income this year. If approved, the surcharge could add significant costs to policyholders struggling to make ends meet. Additionally, your current premium can be paid as required. 45%. One solution to avoiding extra charges on premiums is to get a home insurance policy in the regular approved market. While your current policy may be expensive now, it could cost you more in the future. However, it is your only option, and insurance is better than no insurance.
Insurance experts recommend that you wait to take immediate action. However, if you’re concerned about price increases, shopping around won’t hurt.
“It’s always a good idea to call your insurance agent. Get several new quotes and buy the policy. Although it can be very challenging to get the best rates from Citizens.” Mark Friedlander, director of the Insurance Information InstituteR
Conclusion
In conclusion, the potential overpayments to policyholders by Citizens Insurance in Florida is a serious concern. However, there are ways you can manage the potential costs and explore alternative insurance options to reduce costs. In order to make an informed decision about your coverage, it is important to stay informed and stay abreast of any updates or changes in the insurance industry in Florida.
“The problem is we’re in the market right now and we’re going to have a hard time getting out of the market before we’re priced out. Let’s go at it again. So maybe we won’t have a capital market opportunity this year.”Jennifer Montero, Citizens CFO.
This article is for informational purposes only. It should not be construed as financial, insurance, real estate or legal advice. The market changes; Therefore, not all information will be the same. Consult a lawyer before making important decisions.