November 10, 2009

Statement By: Barney Bishop, President and CEO of Associated Industries of Florida
~Regarding Office of Insurance Regulation Hearing on Citizens’ High-Risk Accounts Rate Increase~

“As the remnants of Tropical Storm Ida continue to bring rain and wind to Florida and other Gulf states, we are reminded how vulnerable our coastal communities are to the strength of Mother Nature.

Despite the incredible potential for billions in property damage bills in these high-risk coastal areas, Citizens’ has filed for a nominal 7.7 percent rate increase on high-risk accounts. Their own actuaries have stated that Citizens would need to increase these rates up to 34.7 percent just to become actuarially sound. A Category 2 storm hitting one of Florida’s high-risk coastal areas – which is basically most of the state – would amount to billions of dollars in damages which the state is unable to cover.

Unfortunately, taxes levied on businesses in the form of hurricane assessments are being used to fill the gap. Associated Industries of Florida and the state’s business community are calling on the Office of Insurance Regulation to take the responsible course of action by implementing a 10-percent rate increase for all Citizens’ high-risk accounts.

The state has to better position itself to cover its losses in the event of a major storm, or series of storms. We simply don’t have the cash on hand to pay claims and no amount of borrowing, bonding or taxing of the business community will reduce our exposure. It’s time to take our medicine and implement long overdue rate increases on Citizens, just as the Legislature directed this past year.”