Citizens Property Insurance Corporation has 1.3 million active policies statewide and is the largest insurer in Florida and possibly the nation. Bob Hartwig, president and senior economist for the Insurance Information Institute, said “This is scary. Citizens is the most overexposed insurer in the world.” And he warned that to pay claims, Citizens will either have to borrow or float bond debt.

The St. Petersburg Times has reported that more than half of the approximately $1 trillion in insurable residential property in Florida is expected to be under Citizens coverage by the end of this year.

That’s not a problem, in the view of J. Robert Hunter of the Consumer Federation of America. He said there is a benefit in having a state as an insurance backer because if there is a repeat of the 2004 or 2005 hurricane seasons, the state will be able to pay for the claims. He said large insurers can go under, but the state can’t. Hunter predicted Florida isn’t going to see another 2004 or 2005 this year and that Citizens can cope because of billions in reserves and the ability to float bonds. “Florida isn’t going to see another 2004 or 2005, this year,” Hunter said. “Citizens already has billions in reserves and if something really catastrophic happens, they can cope with it by doing a bond.” The perennial insurance industry critic was hired by Florida’s Office of Insurance Regulation to determine rate reductions that are required to be adopted under legislation signed in January by Gov. Charlie Crist (R).

Citizens spokesman Rocky Scott says the state-sponsored insurer is hiring more claims adjusters and has grown from 250 employees two years ago to 900 now and is expected to grow to a projected 1,200 workers by the end of the year.

What It Means to Agents:  At what point did insurance industry critic and gadfly J. Robert Hunter become a meteorologist? The man Florida inexplicably hired to help set insurance rates under the state’s ill-advised property insurance “reforms” says don’t worry, be happy, all will be well because 2007 will not be a bad hurricane season. For the record: Forecasters at the The National Hurricane Center have predicted an active storm season for 2007, with 13 to 17 named storms, seven to 10 hurricanes and three to five major hurricanes of Category 3 or above.

Citizens Becomes Giant in Industry (Stuart FL News 6/27/07)
 
Florida Hires J. Robert Hunter to Help Set Insurance Rates (PIANET 2/21/07)
 
PIA National Admonishes J. Robert Hunter for Senate Testimony (11/18/04)

National Underwriter: Bob Hunter Should Just Shut Up (National Underwriter 8/8/05)

July 3, 2007