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Citizens to assess
condo risks and rates on approaching Florida Hurricane Season
TAMPA, Fla. -- May 26, 2006 -- Residents living in condominium complexes
or apartment buildings valued at more than $10-million and insured by Citizens Property
Insurance Corp. could see an increase in their premiums or rents if their buildings can't
withstand major hurricane damage.
The Citizens Board of Governors agreed Thursday to rate condominiums and apartments with
an insured value of at least $10-million on a case-by-case basis. Citizens had been
lumping them together, much like single-family homes.
That could mean premium increases for condo owners, or rent increases for tenants.
"It will depend on the features of the property,'' said Citizens spokesman Justin
Glover. "Some condos could benefit from hurricane-resistant features, and for others,
it will be a truer assessment of the risk.''
Citizens insures about 17,000 condos and apartment complexes in Florida, including about
1,300 in the Tampa Bay area.
Among other issues addressed by the board:
Homeowners got a slightly better picture of what Citizens' statewide assessment will be
after the board approved its final deficit numbers.
Earlier this month, the Florida Legislature earmarked $715-million to help pay down
Citizens' $1.7-billion deficit from the 2005 hurricane season. That money will reduce the
storm assessments on all Florida homeowners from an estimated 11 percent to about 2.5
percent, a savings of about $85 on every $1,000 of premiums.
The assessments will come in two phases, about 2.5 percent this year, plus an emergency
assessment of 1 percent a year for the next 10 years.
Board members agreed not to buy reinsurance for the 2006 season, citing a doubling of the
cost, and the fact that even if the state had had the proposed form of reinsurance during
the 2004 and 2005 hurricanes seasons, it would have gotten no benefit from it.
Citizens spent $150-million for reinsurance last year, but at a lower level that is not
available this year. Citizens gets about 90 percent of its reinsurance from the Florida
CAT Fund.
The board authorized the sale of 3.1-billion in bonds to have cash on hand so it can
immediately pay claims.
Bond money would be used in place of an assessment to help bridge the gap between when a
claim is filed and when it is paid.
While Citizens could have close to 1.5-million policyholders by year's end, including
about 320,000 from Poe Financial Group, Douglas said the insurer of last resort is on
solid financial footing.
"We're looking at $4.5-billion in liquidity going into the hurricane season,'' he
said. "We've never been in that position. We are as prepared as any corporation can
be.''
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