Homeowners in Florida oftentimes worry about difficulties in getting insurance coverage particularly they who live in a not really disaster-secure region. In the past, Florida homeowners went through hard time claiming house insuranve especially for ones related to windstorm or tornado. Owners’ specific needs are hardly accorded by insurance companies. The Citizen Property Insurance Corp was created to overcome those problems.
The Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA) and the Florida Windstorm Underwriting Association (FWUA) are merged to form Citizens Insurance Corp. In 2002, The Florida legislature issued a law to legalize it. The aim of Citizens Property Insurance Corp is to provide Florida homeowners an insurance coverage which is easier to apply because at that time there were so many citizens who couldn’t get insurance coverage from the private insurance market.
The reason why many private insurance companies are reluctant to cover homeowners’s damage in Florida is because of the catastrophe. In July 2004, several homes were hit and devastated by four hurricanes. The estimation was made on July 28, 2004 that Citizens Property Insurance Corp had to cover around 78,257 insurance claims.
As a state-run insurance company, Citizens Property Insurance Corp provides up to $350,000 to cover the damages, repairing and rebuilding. Citizens Property Insurance Corp also covers for the reconstruction of the structure, such as fences, swimming pools, and so on. Beside the main buildings and the structures, it also covers the replacement of lost or damaged items and liability costs.
Citizens Property Insurance Corp needs to spend $1.77 billion as the total net loss after the catastrophe of hurricanes Charley, Frances, Ivan and Jeanne hapened in Florida. Moreover, there are around 92,000 homeowners who are applying to get insurance claims from Citizens Property Insurance Corp. This data is taken from Risk Management Solutions, a separate entity which works in reviewing damages for insurance coverage. This number is greater than Citizens Property Insurance Corp assumed earlier, around 13,743 higher and it is possible to get higher within several months later.
Risk Management Solutions reported the damages which must be covered by Citizens Property Insurance Corp. These is the report for Hurricane Jeanne. It takes:
- $252 million from High-Risk Accounts (HRA)
- $53 million from Personal Lines Account (PLA)
- $27 million from Commercial Lines Account
While for Hurricane Ivan, it takes $232 million as the total for all three accounts including the wind-only, residential multi-peril and commercial residential policies. This is the detail:
- $225 million for wind-only policies
- $65 million for Personal and Commercial Lines Account
The biggest coverage spent is from Hurricane Charley which is estimated around $925 million cost as the total for all three accounts. The detail is:
- $850 million for High-Risk Accounts
- $75 millon for other accounts
The premium for windstorm policy of Citizens Property Insurance Corp has been raised in order to provide all of the claims. This increasing reaches up to 67%. However, Citizens Property Insurance Corp actually is recorder to increase their yields to 11.9% for their others policies.