I covered this story before, but had not seen Senator Sheldon Whitehouse’s letter to Florida’s tax funded Insurer of last resort.
A few months ago already, Florida Governor Ron DeSantis stated in an interview on CNBC that Citizens, the state’s insurance fund, was “insolvent’ and possibly at risk of failing in the event of a major storm. All this heading into a hurricane season that forecasters are already saying could be catastrophic, with ocean temperatures already reaching July like levels in February.
Look for wealthy Florida Republicans to appeal the the rest of us to bail out their beach houses in the event of another Ian, or Andrew.
Washington, DC—Senate Budget Committee Chairman Sheldon Whitehouse (D-RI) sent a letter on Monday to Citizens Property Insurance Corporation renewing all requests for information and documents set out in the Committee’s November letter related to the company’s plans to address increased underwriting losses from climate-related extreme weather events and other disasters. The letter follows new comments from Florida Governor Ron DeSantis to CNBC that Citizens “is not solvent,” a statement that also appears at odds with claims Citizens has made to the Committee.
In November, the Committee launched an investigation into Citizens amid growing concerns about the insurer’s long-term solvency and possible requests for a federal bailout should losses exceed the company’s ability to pay. Florida is on the frontline of climate risk, and as the state-backed insurer of last resort, Citizens faces potentially catastrophic exposure to climate-related property losses.
Citizens has not adequately addressed the Committee’s questions and has ignored repeated attempts at follow up. In a non-responsive letter dated December 15, Citizens’ President/CEO and Executive Director Tim Cerio referred to a Florida law enabling the company to levy special assessments on all policyholders as a basis for its solvency. But as the Committee stated in its initial letter, because “it would be both politically and economically unfeasible for Citizens to attempt to recoup tens of billions of dollars in losses from Florida policyholders, the Committee remains concerned that Citizens and the state of Florida would turn to the federal government for a bailout.” Citizens’ December letter did not address this concern or substantively respond to the Committee’s requests for information, communications, and documents.
“Citizens has failed to cooperate with our investigation,” said Chairman Whitehouse of his follow-up letter to Citizens. “Governor DeSantis’s repeated statements that Citizens is not solvent and the company’s own public comments about their ability to shift their financial losses to Florida policyholders have done nothing to assuage the Committee’s concerns about possible future requests for a federal bailout. Floridians are grappling with already astronomical insurance rates and one future storm could make things far, far worse. I look forward to Citizens’ full compliance with our investigation.”
This probe built on two previous, still ongoing investigations into the insurance industry’s response to climate change amid the Committee’s growing concerns about the economy-wide harms from a spiraling insurance affordability and availability crisis. The Committee is currently seeking documents and information related to the insurance industry’s continued investment in and underwriting of new and expanded fossil fuel projects, as well as companies’ plans to address increased underwriting losses from climate disasters.
By the gods, I love Senator Whitehouse, a smart, responsible grown-up in a Congress that is sorely in need of them.