October 1, 2012
CONTACT: Jose Gonzalez
Statement by: Tom Feeney President & CEO, Associated Industries of Florida
Re: In response to letter by Robin Westcott, Florida’s Insurance Consumer Advocate about Citizens Property Insurance Corporation’s Depopulation Plan
TALLAHASSEE –“Citizens Property Insurance Corporation (Citizens) is a ticking time bomb that must be defused now; with more than 1.4 million policy holders, it has gone from being the insurer of last resort to being the largest insurer in Florida. Time is of the essence and this plan should not be delayed.
“The financial black cloud that hangs over every Floridian and all of our businesses is dark and getting darker. We are one big hurricane away from financial catastrophe due to the massive hurricane taxes that will be foisted on virtually every insurance policyholder in the state. Imagine while trying to rebuild our property and our businesses we learn we are going to be hit with a huge hurricane tax bill – possibly for years!
“A crucial consideration of the depopulation program is the timing of its launch and that is based on some very precise math. If we were to wait until next year the plan simply would fall apart.
Under Citizens depopulation plan, the loan amounts will guarantee that affected policyholders will see no rate increases and will allow Citizens to transfer almost 400 thousand policies to Florida based insurers. The amount of money that Citizens is loaning the participating insurers will have to be increased exponentially if the plan is delayed. The loan amounts are based on certain amounts of unearned premium being transferred with the policies, and those amounts decline every day and alter the calculations on which the plan was developed.
“Further, the participating companies need sufficient time to build adequate reinsurance programs for the coming hurricane season which will then have to be negotiated and placed in the spring for a June 1st start date. There simply would not be enough time to accomplish this if we delay any further.
“This plan was originally unveiled in April 2012, has been meticulously vetted by Citizens’ staff, and is still under review by its Board. The process has not been rushed; rather it has been comprehensive and methodical. To delay implementation any further would be tantamount to financial malfeasance.”