March 26, 2007
The Insurance Journal
Associated Industries of Florida is urging the state's insurance officials and budget leaders to proceed with caution as they work toward the overhauling of Citizens Property Insurance Corp.
Citizens plans to expand the types of coverage it can provide. Before expanding coverage's, AIF recommends Citizens first determine the liability Florida will face, and if the state can cover future losses under existing coverages.
"Citizens has a responsibility to perform due diligence when they are asking to step into such risky territory as expanding coverage to 'all perils' in high risk territories and commercial properties," said Barney Bishop, president and CEO of AIF. "When Mother Nature's wrath strikes Florida again, Citizens may not have enough revenue to cover losses and our property owners will take an enormous hit in their pocketbooks through additional taxes on their insurance policies."
Associated Industries encourages Citizens to further research its current financial stability, the fiscal impact of expanding its coverage lines and to demonstrate that the company has the reasonable ability to pay potential losses, without relying on debt.
AIF commissioned a study which was conducted by Towers Perrin of recent legislative changes to Florida's property insurance market.
The key findings include:
"If Citizens is expanded too quickly and without thorough examination, our state could be building a financial house of cards that could easily collapse," Bishop said. "Such a collapse would likely result in enormous state debt and further taxes on our insurance policies."