Taxpayers on the hook for $400M in liability if the big one hits

Charlotte Sun and Weekly Herald–October 5, 2008
   
By TERRY O’CONNOR
North Port Assistant Editor

PORT CHARLOTTE — A fourth consecutive Florida hurricane season without a cataclysm like Hurricane Charley continues to place homeowners on more even footing with their property insurance providers. Premiums are coming down and more competition is coming, insurers say.

But restoring actuarial integrity to Citizens Property Insurance Corp., the state-provided insurance coverage of last resort, is still years away. Florida taxpayers remain exposed to $400 billion in potential liability from storm damage claims through CPIC — and that’s down 20 percent from $500 billion in 2006.

The taxpayer exposure remains enormous, said State Rep. Ronald Reagan, R-Bradenton.

"We’ve got about $7 billion in cash on hand at Citizens," Reagan said. "Who’s going to pay for the rest of it if another hurricane hits? You, the taxpayer."

A destructive followup to Hurricane Charley nearly made landfall in Florida two years ago, Reagan said.

"In 2006, two Category 5 storms entered the Gulf of Mexico," Reagan said. "There’s never been two Category 5s in recorded history in the Gulf of Mexico in one season. They just happened to miss Florida. We were just lucky. Had one of those tracked 1 degree further east we would be talking an entirely different story today."

Affordability, availability, state incentives and industry competition were among the issues discussed by panelists at a Sept. 25 insurance roundtable at the Sun. Panelists included: Reagan; Suzy Hackett, Charlotte County Code Enforcement Board member; Dawn Cash, All Phase Insurance owner; Leta Berry and her daughter, Peg Crenshaw, Port Charlotte residents; Eric Fogo, Key Agency Inc. executive vice president; and Jim Nolan, president of Nolan Family Insurance Agency Inc.

Restoring Citizens Property Insurance Corp. to its intended status as a state insurer of last resort is integral to creating more competition and shearing more unfunded liability from the state insurer. But Citizens is still too good at its job, insurers say.

"Right now, Citizens is a broader form and better coverage in a lot of situations," Nolan said. "You’ve got to get the Citizens’ coverage to mirror the majority of the private lines so it’s not providing better coverage; it’s providing equal or less. Getting Citizens to really be the last resort is what’s going to make it more competitive. To me, Citizens is a major problem from returning us to a free market."

For more on this story, see Sunday’s newspaper, or the E-edition of this Web site.