Florida's hurricane insurance pool has too many homes to cover and not enough money to pay for even one catastrophe, said the new president of Citizens Property Insurance on a stop in Miami on Monday.
"If private insurance companies could earn a profit in Florida, they would be here," said Citizens President Tom Grady. "So, as president of Citizens, I'm here to encourage them to take a look at our policies. Some of them could be profitable for those in the voluntary market, and we'd like to have some of those taken out."
The Citizens pool was founded to be the insurer of last resort in the coastal communities where private insurers refused to write policies. But, it has become the state's largest windstorm insurer, covering 1.5 million homeowners. The potential liability is estimated at $50 billion, but Citizens, even after six storm-free years, only has a surplus of about $6 billion.
"Citizens has got to become the insurance of last resort, not first resort," said Gov. Rick Scott during a visit to the National Hurricane Center last week. "Because it's a significant problem, and hopefully we won't have a hurricane this year."
Grady said he found many customers do not realize they are currently paying assessments on their insurance bills to cover the costs of the last round of bad storms seven years ago. He said the so-called "Big One" could result in big assessments for decades to cover what Citizens spends in rebuilding costs. Private insurers cannot assess their customers.
"People don't understand that when you buy an insurance policy from Citizens, the first payment you make is just a down payment, and you have a lot more to pay when the storms come," said Grady.
Citizens is also in the midst of a statewide reinspection program to make sure customers' homes qualify for any mitigation discounts they currently receive. Grady said that so far, three out of four homes do not, resulting in premium rate hikes for those homeowners to cover the increased risks.