Future Uncertain for Florida's Insurer of Last Resort

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Citizens, the state-run insurer, ran up a $516 million deficit after the storms of 2004. That cost is already being passed on to every homeowner in the state, and with Wilma taking aim, state lawmakers are asking what’s next.

Rep. Franklin Sands, (D) Broward County, FL, says, "How are we going to be able to keep, with all these increases, affordable for Floridians?"

The reply isn’t comforting:

Bob Rinker of Citizens Property Insurance says, “With a $516 million assessment last year, which is a deficit, we are not charging enough.”

Citizens is already proposing doubling some coverage. That worries Jeb Bush, who has called the insurance market near crisis and says the state's very economy is at risk.

Gov. Jeb Bush says, "And the fact we have another storm coming just exacerbates this problem.”

Several lawmakers are calling for the state to assume all wind coverage in Florida, just as the feds cover all flood losses in the U.S.

One positive of the plan is that it spreads the risk among a large, large base. The downside is that it would only cover losses of up to a half million dollars. Citizens’ executive director is hopeful more companies will want to write coverage in Florida.

Bob Rinker, Executive Director, says, “Yeah, we’ve got a prospect list of over a dozen companies.”

But with Wilma on the horizon, the dram of new insurance companies showing up to take on risk is just a dream.

Gov. Jeb Bush has again renewed his call for a national catastrophic fund. Such a system would include the major disasters risk for all insurance customers in all 50 states.