A.M. Best Company, Inc., has filed this report regarding Citizens Insurance.
Florida lawmakers have passed — only a few minutes before their session ended — a bill that changes the way Citizens Property Insurance Corp. issues deficit assessments.
The bill, H.B. 1127, was voted on by the Florida Senate March 9 at 11:35 p.m. and the legislature adjourned for its regular session at 11:59 p.m., according to the Florida Office of the Senate Secretary. It streamlines the three layers the state's insurer of last resort uses to issue assessments to cover deficits on its three accounts — commercial, personal and coastal.
It gets rid of two layers of regular assessments by eliminating them on commercial and personal lines accounts, according to the bill. Regular assessments will still be levied for the coastal account, but it reduces that assessment to 2% of premiums from 6% and lengthens the time limited apportionment companies have to pay the bill. Regular assessments are levied on nearly all property/casualty policies in the state, but not on Citizens' policies, according to the bill.
If Citizens runs out of money, it will now issue assessments first to its own customers on future policy premiums; then by regular assessment for deficits in the coastal account; then by emergency assessments on both Citizens' and nearly all other property/casualty policies in the state up to 10% of the annual premium. The three accounts calculate deficits and assessments independently, so assessments can be levied when any or all of the three Citizens’ accounts has a deficit.
Regular assessments can significantly impact private insurers' cash stores, Lynne McChristian, Florida representative for the Insurance Information Institute previously told Best's New Service. She said that places a burden on private insurers because those companies are already paying claims from a catastrophic event (Best's News Service, Feb. 29, 2012). Jack McDermott, spokesman for the Florida Office of Insurance Regulation, said the OIR supported the bill because "it will attract investment."
Citizens was formed in 2002 by combining two residual-market associations and was supposed to be the insurer of last resort (Best's News Service, Dec. 11, 2011). The company has taken recent steps to shrink their share of the Florida market and cut $1.5 billion from its exposure. The company has previously told Best's News Service they want to get down to 800,000 policies from their current 1.5 million.