Citizens’ Property Insurance Corporation new Board of Governors today approved a $515 million assessment to cover a deficit from the 2004 hurricane season.

The Office of Insurance Regulation has 30 days to approve the amount of the assessment and then citizens will issue assessment notices to individual carriers based on their market share and so called participating ratio. Carriers will have 30 days to pay Citizens and then must recoup from their policy holders through worksheet filings with OIR.

Approximately 15% of the assessment will go directly to surplus lines policy holders and Citizens will not get this portion of its money for 12-18 months.

The assessment is necessary because of a $515 million deficit in Citizens' High Risk Account, the old Florida Windstorm Underwriting Association. Total hurricane losses from the account are estimated at $1.8 billion.

There was no deficit in the other Citizens accounts, the personal lines account and the commercial accounts.

Jessica Buss, Citizens’ Chief Financial Officer, said the assessment will average 6.8% on policyholders. It will be assessed on all property policies, including homeowners, multi-perils and commercial multi-perils.

Ms. Buss said the 6.83% assessment can be broken down as follows:
$51.22 on a $750 Citizen’s premium;
$68.29 on a $1000 premium;
$88.79 on a $1300 premium, which she said is the average premium in the High Risk Account.

It has been clear for months Citizens would be required to levy this significant assessment, but the program held up because of a reorganization of its Board. The 2005 hurricane legislation required a new board, with Chief Financial Officer Tom Gallagher no longer appointing all of the members, but sharing with the Governor, Senate President and House Speaker. The old board held up on the assessment until the new board could do it and this occurred today at the new group’s first meeting.