State-Backed Citizens Insurance May Put Early End to Storm Tax
A 1 percent charge imposed on most homeowners' policies to help the state-backed Citizens Property Insurance Corp. cover losses from the last of the 2005 hurricanes may come off the books two years early.
Citizens' Board of Governors will be asked Wednesday to put an end date of July 1, 2015, on the storm assessment, which has been slated to continue until June 30, 2017, according a proposal on the board's agenda.
Citizens Chief Financial Officer Jennifer Montero is recommending the change, noting that the state-backed insurer is on track to have collected enough money to meet its remaining debt obligations by the middle of 2015, according to the agenda item.
Citizens imposed the storm assessment in 2007 on insurance policyholders throughout the state ---- whether they were Citizens customers or not --- to recoup $887 million of the roughly $1.7 billion deficit created by Hurricane Wilma, which hit South Florida in October 2005. The state picked up $623 million of the costs from Wilma, while the remainder was covered by additional assessments on Citizens policyholders.
The storm assessment, initially set at 1.4 percent and reduced to 1 percent in 2011, is imposed on a variety of types of property-insurance policies.
The potential early end of what critics have labeled a storm "tax" comes two months after the Office of Insurance Regulation issued orders for insurance companies to end on Jan. 1 a 1.3 percent "emergency assessment" for the state-run Florida Hurricane Catastrophe Fund, which provides backup coverage to insurers.
The so-called "Cat Fund" charge, imposed on most home and auto policies, had previously been set to end July 1, 2016.
That assessment has hit policyholders for $2.9 billion, which has gone to reimburse insurance companies for claims from the eight hurricanes that hit Florida in 2004 and 2005, the last time any hurricane made landfall in Florida.
Citizens officials have moved more than a half-million policies the past couple of years into the private market, in part to lessen the potential assessments that could be needed after future storms.
Citizens, which will reduce rates next year for most customers, had 933,807 overall policies in place as of July 31. The company has an eye on bringing the number to around 850,000 later this year and to about 650,000 by the end of 2017.