The U.S. Senate Budget Committee is demanding answers from Gov. Ron DeSantis about Citizens Property Insurance and its ability to handle underwriting losses, including the question as to whether the state insurer might need a federal bailout.
Chairman Sheldon Whitehouse wrote the Governor, Insurance Commissioner Michael Yaworsky, and Citizens CEO Tim Cerio with concerns about how climate risk could push Florida’s insurer of last resort into insolvency.
Whitehouse expects a response by Dec. 21.
Per Whitehouse, the committee is “increasingly concerned about Florida’s uniquely large and growing exposure to climate-related property losses, Citizens’ rapidly expanding market share, and state law allowing Citizens to levy special assessments on all policyholders in the event that losses exceed its ability to pay.”
“If Citizens were unable to cover its losses, it is entirely possible that state leaders might ask the federal government for a bailout. Given the potential magnitude of Citizens’ losses, such a request would put the federal government (and by extension, all American taxpayers) at substantial risk,” Whitehouse writes.
“In light of the state’s acknowledgement of Citizens’ potential insolvency and the likelihood that it would be both politically and economically unfeasible for Citizens to attempt to recoup tens of billions of dollars in losses from policyholders across Florida, the Committee is concerned that Citizens and the state of Florida would turn to the federal government to bail them out. Given the potential magnitude of Citizens’ losses, such a bailout request could put substantial strain on the federal budget,” continued Whitehouse, a Democrat from Rhode Island.
The Governor’s Office did not immediately respond to a request for comment Thursday afternoon, a day on which DeSantis is in Georgia preparing to debate the Governor of California, before continuing his presidential campaign Friday and Saturday in South Carolina and Iowa.
DeSantis has warned about Citizens’ bloat in the past. He noted last year Citizens was “unfortunately undercapitalized” and that the company could go “belly up” if it actually had to weather a major storm.
Questionable messaging isn’t just a thing of the past though. DeSantis, on successive days, blamed the Legislature for not implementing insurance reforms he wanted, then refused to say what those reforms were when asked directly.
The Governor also made news earlier this year when he suggested homeowners should “knock on wood” and hope the state didn’t get hit by a storm.
Whitehouse’s concerns have been echoed by Florida U.S. Senators, particularly Rick Scott. He called the state’s insurance marketplace a “disaster” earlier this year, saying the departure of Farmers Insurance was a “wake-up call” to the state. Scott said “fixing the fraud” in the market was key to the changes he made, which also included moves to “dramatically downsize” Citizens.
The insurer has grown in recent years, though the state has recruited new private companies that have taken over some of Citizens’ policies.
Even the friendly Fox News has gotten into the act, as shown by an August “Fox & Friends” segment where Ponte Vedra’s Brian Kilmeade and others described a “tragic” state where people “who used to be able to afford to live there can’t afford to live anymore,” with “insurance through the roof” and an “insurance system that collapsed.”
Insurance has been a pressing concern for Floridians, as polls have shown.
A Cygnal survey this month showed 91% of voters are “concerned” about higher rates, with just 0.5% of all respondents saying their rates have decreased in the last year.
Blame for the crisis splits along party lines.
A new poll from the University of North Florida Public Opinion Research Lab (UNF PORL) shows that Republicans are unwilling to blame the current Governor, with just 3% of the 242 GOP respondents saying the fault is with the executive branch. Meanwhile, 25% of the 287 Democrats polled primarily blame DeSantis for the problems, while 11% of independent voters share that take.
Republicans are much more likely to blame insurance companies for skyrocketing rates than their Democratic counterparts, with a staggering 38% of GOP registrants blaming the private sector, compared to just 23% who blame Democrats.