You don’t need to tell Florida consumers about the challenges facing Florida’s property insurance market.
Rising premiums, cancellations and nonrenewals are becoming an unfortunate fact of life for too many Florida homeowners who are bearing the brunt of poor market conditions.
Given such challenges, a provision of the Joe Biden administration’s proposed “Made in America” tax plan that raises tax rates on global reinsurers could not come at a worse time.
As Florida’s insurer of last resort, Citizens is seeing its policy count skyrocket by more than 5,000 policies a week as private companies raise premiums and stop writing policies. By the end of 2022, Citizens will insure more than 1 million policies and again be the largest property insurer in Florida.
That’s a big deal for all Florida insurance consumers, who are on the hook if Citizens exhausts its reserves and can’t pay claims after a catastrophic storm. In 2011, for example, Citizens would have been forced to pass on assessments of $11.6 billion in the event of a 1-in-a-100-year storm.
A major factor contributing to rising rates in the private market is the cost of reinsurance. Often referred to as “insurance for insurance companies,” reinsurance is an essential component of the Florida private property insurance market.
As proposed, the “Made in America” tax plan contains a provision that would significantly increase taxes on global reinsurers. The bottom line is that those costs will almost certainly be passed on to policyholders already hit with hefty premium increases over the past few years.
Private property insurance is the backbone of residential and commercial development, two major economic drivers in Florida. Here at Citizens, we are doing everything we can to promote a healthy private insurance market and protect our policyholders and Florida insurance consumers from the risk of assessments.
Now is not the time to place additional burdens on Florida’s private insurers by raising tax rates on reinsurance.
Barry Gilway is president, CEO and executive director of the Citizens Property Insurance Corporation.