Florida's Citizens Insurance, is one of the most financially troubled insurance companies in one of the highest risk states. Even with $4.5 billion in reserves, according to the Insurance Information Institute, an insurance research group funded by insurers, Citizens is still wanting to raise rates.
In 2007, the state got some relief when the legislature voted to freeze Citizens' rates and later cap the yearly increases to only 10 percent a year in 2009. Even after several years of no hurricanes, Citizens says they need more money for a bigger cash reserve in case of catastrophic hurricane damages.
Citizens Property Insurance Chairman Jim Malone wants to privatize part of the company to save money. He would like to shift 1,160 employees to a private insurer. More and more Florida customers are switching to Citizens because they are being dropped by their insurer. The number of policies Citizens' carries has nearly doubled to 1.4 million since first opening in 2002. Gov. Rick Scott told reporters, “If looking at things like privatizing Citizens is something that would help drive down the cost of insurance in our state, then I want to look at it very closely.”
Private insurers in Florida complain that they can't compete with Citizens because the company doesn't charge enough to cover the true cost of the risk. The private companies say Citizens charges less because any short fall will be covered by taxes paid by every citizen. There was a bill this year to allow Citizens to raise premiums more than 10 percent, but it did not pass. Chairman Jim Malone wants the legislature to act so rates can be increased more than 10 percent.
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