When Jonathon Rice received notice from Citizens Insurance about an offer from a private insurer to take his business, he did not expect to be reading about a “hurricane tax.”
“It’s insane,” Rice said.
The pamphlet explained how Citizens might have to turn to the tax or assessment to help restore funding should the state insurer of last resort run out of money, perhaps after claims from a bad storm.
The assessment for Citizens policyholders could run as high as 45% of premiums.
“It doesn’t make sense. I’m already paying over $5,000, so it would be 45% more if anywhere in the state of Florida a storm hits, and they can’t manage their own budget,” Rice said.
Citizens has been taking on policies at a record rate, now nearing 1.4 million, and its exposure to large claims has many worried.
“Citizens has been very clear in 2023 that they are getting closer and close to a situation where they would need to implement the hurricane tax,” Mark Friedlander of the Insurance Information Institute said. “This is clearly an incentive for Citizens customers chosen for depopulation to strongly consider take-out offers.”
Those take-out offers are going out to try and lower Citizens policies by moving them to private insurers, but in many cases the offers are expensive, and Citizens customers can reject them if the offer is more than 20% of their current premium.
In extreme financial situations, the assessment program also calls for surcharges on all private insurance policies in the state, including renters, auto and boat insurance.
“We must do everything we can to minimize the risk to Floridians of being hit with an emergency assessment,” Citizens CEO Tim Cerio told the insurer’s Board of Governors this week. “That’s simply good stewardship on our part.”