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Here's the current state of Citizens Property Insurance

New home subdivision.
Gene J. Puskar
New home subdivision.

Citizens Property Insurance, Florida’s insurer of last resort, is now the largest insurer in the state.

Recently, Rhode Island Senator Sheldon Whitehouse — who is also the chairman of the Senate Budget Committee — began a federal investigation into Citizens. In a letter to Gov. Ron DeSantis, Whitehouse cited concerns about “Florida’s uniquely large and growing exposure to climate-related property losses,” as well as the possibility of a federal bailout.

Florida Insurance Commissioner Michael Yaworsky and Citizens CEO Tim Cerio spoke about the insurer Friday with Tom Hudson on The Florida Roundup.

Cerio said Citizens has never asked for a bailout from the federal government and he doesn’t see a scenario where it would. He also said there is a misunderstanding around how the insurer operates.

“I mean, the good thing about Citizens is that we always have the ability to pay claims because we not only have legislative authority, we have a legislative mandate that if our reserves are exhausted and we still have to pay claims, we must charge a surcharge to Citizens policyholders," Cerio said. "And if they're still not enough, we have to levy assessments on all Florida policyholders.”

Cerio added while that’s good for Citizens policyholders, it comes with minimizing the risk of levying an assessment.

“So that's why we're always talking a lot about making sure that we're charging actuarially sound rates, which currently we are, on the whole, not. And we've been working very hard; we want to get back to that point," Cerio said. "And also that's why there's such an effort to shrink Citizens, because the larger we are, the larger the exposure and the larger the chance that there could be an assessment on people who aren't even Citizens customers.”

Yaworsky said Citizens would have to shrink by half to get to a healthy number. It currently has about 1.3 million policies.

“We had a low watermark right at the beginning of kind of this difficult half decade we've had, of about 420,000 policies," Yaworski said. "I think that a healthy number for Citizens, we should expect it to somewhat shrink and grow as market conditions dictate. But a healthy round number for Citizens is probably between 500 and 600,000 policies.”

The insurer has shrunk recently amid a program called “depopulation,” which transfers Citizens policyholders to private insurance companies. Cerio said the effort to cut Citizens down is a recognition of the financial threat its size poses to taxpayers.

“We have our own efforts for depopulation, but it's clearly become a lot easier because I think there's a recognition in the market that some of the litigation reforms are working," Cerio said. "There's more reinsurance available because the reinsurers are seeing positive signs in the Florida market.”

Another recent development, however, has brought up more issues. A WLRN investigation in November revealed how Citizens has greatly increased the number of home inspections – which Cerio said should be called surveys – it orders. Citizens also hires field inspectors who are unlicensed in Florida.

Cerio said Citizens is following the law and the investigation doesn’t include all the facts.

“There's basically like a general property survey, which we’ve termed an inspection. And that's probably a misnomer because it suggests a level of training that frankly, it's just not accurate," Cerio said. "These surveys, they're not true home inspections under Florida law. They do not require a licensed home inspector. And frankly, it could be somebody going out with a, you know, a cell phone camera and a notepad and just making notes.”

The information is then sent to a trained underwriter who makes the determination, Cerio added.

“This person in the field is not required to have a license because they're not doing very sophisticated things. And I will tell you, that is the industry standard,” Cerio said

He also commented on whether Citizens should hire licensed inspectors for surveys.

“For what these folks are expected to do, I think it would increase costs for the company, which would increase costs for the other policyholders. And these truly are not inspections that require a license," Cerio said. "If they were, the state would come down on us because they want to protect the consumer.”

Yaworsky said his office has asked Citizens questions on the matter and are waiting for a follow-up.

“As the regulator, we have a role to make sure that what they're doing is appropriate and the consumers are getting treated, at the end of the day, in a way that is compliant with Florida law," Yaworski said. "So we're really focused on the aspects of what they're doing and as it relates to compliance to Florida law. There's some nuances within the law as it relates to who is qualified to perform a quote unquote inspection of a property.”

Cerio said Citizens has responded, clarified the nature of the surveys and indicated what constitutes a licensed home inspection under Florida law.

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Gabriella Pinos