Florida taxpayers are now at risk of being socked with an enormous insurance bill, because Florida’s state-run agency, the Citizens Property Insurance Corporation, announced this week that it will forgo the purchase of private reinsurance in favor of coverage from the state’s Hurricane Catastrophe Fund.
“Florida Citizens’ Property Insurance Corporations is spending almost $550 million—including $173 million in money it just shouldn’t spend–in taxpayer premium dollars in order to buy reinsurance from a taxpayer-backed insurance fund that probably cannot pay its own claims,” said Eli Lehrer, a Senior Fellow and insurance policy expert at the Competitive Enterprise Institute.
“One really has to question if Citizens’ Board of Governors is living up to its fiduciary duties,” said Lehrer. “The Catastrophic (‘Cat’) Fund has very little in the way of hard assets and would simply impose enormous taxes on Florida residents were a major storm to hit. This decision is a loser for consumers, business, non-profits, and the state.”
While about $373 in coverage from the Cat Fund comes from the Fund’s mandatory coverage law, another $173 comes from the Cat Fund’s Temporary Increase in Coverage Layer (TICL), which both houses of the legislature have voted to phase down in the coming years. “TICL coverage isn’t coverage at all,” Lehrer explained. “The State has no practical way of funding it.”