‘Citizens ignored both emails’: Senate panel accuses Florida insurer of not cooperating with probe

Video above: Citizens CEO on US Senate probe, ‘Never heard of anyone suggesting’ fed bailout (12/06/2023)

TAMPA, Fla. (WFLA) — The U.S. Senate Budget Committee doubled down on its quest for answers from Citizens Property Insurance, the “insurer of last resort” for Florida property owners dumped by other companies.

In Nov. 2023, committee Chairman Sen. Sheldon Whitehouse (D-Rhode Island) wrote a letter to Citizens CEO, Florida’s insurance commissioner and Gov. Ron DeSantis, urging the officials to send the committee information about its underwriting policies and losses from natural disasters.

Florida lawmakers move to push Citizens customers off on unregulated insurers

As part of the probe, federal lawmakers want to gauge the possibility that Florida may ask for a bailout, which Whitehouse said is “grounded in history.” Both state and federal lawmakers have previously moved to create a mechanism forcing the federal government to help shoulder the burden of property losses from disasters.

A comment from DeSantis last month didn’t do much to quell the panel’s concerns. In an interview with CNBC, DeSantis said Citizens “is not solvent.”

“We can’t have millions of people on that because if a storm hits, it’s going to cause problems for the state,” DeSantis said.

In a March 18 follow-up letter to Citizens CEO Timothy Cerio, Whitehouse said the comment was “difficult to reconcile” with Citizens’ response to the probe. The company assured the committee that Florida law would prevent Citizens from going under.

The letter alleged that Citizens did not provide adequate answers to the committee’s questions and skipped some entirely. The chairman said the insurer didn’t send the panel any documents to back up their claims.

Whitehouse also said the officials did not address his concerns that a major storm could severely destabilize the insurance market and Citizens, passing on the unpaid claims to “residents (who) might be unwilling or unable to pay them.”

“Your December 15, 2023, letter did little to address my questions and concerns. In noting
that ‘Florida law provides a framework to ensure that Citizens remains solvent’,” Whitehouse wrote. “You simply explained what I already understood to be true: ‘if Citizens were to pay out all reserves and reinsurance following a major storm or series of disasters and there is a deficit, … Citizens would be required by Florida law to levy surcharges on its policyholders and assessments on other Florida insurance consumers until the deficit is eliminated.”

When an insurance company fails, it’s more than just their customers on the hook. The Florida Insurance Guaranty Association (FIGA) takes over the remaining claims, and if it can’t pay, the remaining cost gets passed on to homeowners in the form of an assessment. As 8 On Your Side reported last year, FIGA is an important indicator of the market’s health and all regulated insurers are required to pay into the pot.

The letter states two requests for Citizens to participate in a committee hearing went unanswered.

“Citizens ignored both emails. I renew my request for cooperation,” Whitehouse wrote, urging the company to revisit and completely answer questions from the Nov. 30 letter.

Citizens CEO on US Senate probe: ‘Never heard of anyone suggesting’ fed bailout

Citizens was urged to schedule a briefing with committee staff by Friday.

When reached for comment on Whitehouse’s first letter, Cerio told 8 On Your Side that he hadn’t heard of anyone at the company suggesting a bailout. According to Cerio, the Senate probe “demonstrates again a misunderstanding of our structure.”

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