Florida's state-sponsored home insurer could stick taxpayers with a huge bill when the next storm hits
When Hurricane Ike took a left on Sept. 8, heading away from Florida, locals breathed a sigh of relief. Not only are their homes on the line with each burst of violent weather but their pocketbooks are increasingly at risk, too. Over the past four years, Florida taxpayers' vulnerability to a major weather catastrophe has grown.
The quasi-governmental company that was conceived as an insurer of last resort, Citizens Property Insurance, has become Florida's top underwriter of homeowners' insurance. Citizens now has more than $433 billion of property exposure on its books, and Florida has exacerbated that risk by getting into the reinsurance business as well. "It's a disaster," says Brian P. Sullivan, editor of Property Insurance Report. "This is not something the public should be dabbling with." Read More
Source: Businessweek
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Florida's state-sponsored home insurer could stick taxpayers with a huge bill when the next storm hits. When Hurricane Ike took a left on Sept. 8, heading away from Florida, locals breathed a sigh of relief. Not only are their homes on the line with each burst of violent weather but their pocketbooks are increasingly at risk, too. Over the past four years, Florida taxpayers' vulnerability to a major weather catastrophe has grown. Insurers typically try to spread the risk of such major calamities by buying Insurance Professionals. Florida has instead taken on $28 billion worth of reinsurance risk itself, and its reinsurance pool would have to issue bonds for anything over $7.8 billion in losses. As Citizens grows, how much liability could taxpayers face? With foreclosures rising and reconstruction costs high, it seems that Florida's next big hurricane could leave a wake of financial destruction.
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