Rhode Island senator says Citizens Insurance leaders not cooperating with investigation

In a news release on Tuesday, Whitehouse said he sent a letter to Citizens president Tim Cerio “renewing” requests for documents and information made in November related to Citizens’ plans to “address increased underwriting losses from climate-related extreme weather events and other disasters.”

The letter, the release said, “follows new comments from Florida Gov. Ron DeSantis to CNBC that Citizens ‘is not solvent,’ a statement that also appears at odds with claims Citizens has made to the (Senate Budget) Committee,” which Whitehouse chairs.

Citizens did not respond to a request for comment about Whitehouse’s newest demands. Spokesman Michael Peltier said that leaders were “traveling” and he had reached out to them.

Citizens has tripled in size as Florida has experienced an insurance crisis. Numerous companies have become insolvent due to more frequent claims costs, rising rates of litigation and ballooning costs of reinsurance, which is insurance that insurers pay to guarantee they can cover claims after a catastrophe.

Prohibitively high costs of insurance or the inability to find a policy makes homeowners eligible for Citizens, which has increased its policy count from 420,000 in 2019 to nearly two million today.

Whitehouse’s request in November — in a letter addressed to DeSantis, Insurance Commissioner Michael Yaworksy, and Cerio — caught Cerio and Citizens’ top brass by surprise. Cerio told the company’s Board of Governors the following month that they were made aware of the request when a CNN reporter asked for a comment about it.

Cerio then said that Citizens would not need a federal bailout. Florida law requires special assessments and surcharges — potentially against nearly all insurance customers in Florida — to cover any shortfall the company might experience paying for losses after severe weather events, Cerio said.

Cerio told Whitehouse essentially the same thing in a letter dated Dec. 15, that “Florida law provides a framework to ensure that Citizens remains solvent,” as Whitehouse stated in a letter he sent to Cerio on Monday.

Whitehouse, in his letter, called that response “deficient” and reiterated his request for “information and documents concerning Citizens’ plans to address increased underwriting losses from climate-related extreme weather events and other disasters such as tropical cyclones, intense precipitation events, droughts, heatwaves, sea level rise, and wildfires.”

Cerio’s letter, Whitehouse said, “simply explained what I already understood to be true.” But it did not address “my concerns that, should a major storm hit Florida and require exorbitant levies, Florida residents might be unwilling or unable to pay them, leading to further financial risks both to Florida and, possibly, the federal government.”

To prove his concerns are “grounded in history,” Whitehouse brought up bills introduced in the Florida Senate and in Congress after the 2004-05 hurricanes that aimed to create a national catastrophe insurance program.

Bringing “further urgency to my concerns,” Whitehouse wrote, were news stories about Citizens’ efforts to reduce its size by “offloading hundreds of thousands of policies — often its least risky policies — to private insurers.”

Whitehouse’s letter accused Citizens of failing to address four of seven questions outlined in his November request, or provide “documents or communications in response to any question.”

Emails sent to Citizens by Whitehouse’s staff on Dec. 19 and Jan. 5 “to request a briefing with relevant Citizens employees to discuss the company’s response and additional steps” were ignored, Whitehouse’s letter stated.

The letter reminded Cerio that Citizens is subject to Florida’s Sunshine Law, which states that “all state, county and municipal records are open for personal inspection and copying by any person.”

Whitehouse again set a deadline for compliance. This time, he requested “full and complete responses” to questions in his November letter “no later than March 28” —10 calendar days after the email was sent to Cerio.

Whitehouse’s newest letter comes six days after Broward County Commissioner Steve Geller held a news conference to draw attention to a bill that U.S. Rep. Jared Moskowitz filed last May.

Geller said the bill would save Floridians 25% off of their property insurance bills by requiring the U.S. to issue Treasury notes — repayable over a decade — to cover costs of repairing damage from any storm beyond what would be generated by a 1-in-50-year storm. Policyholders would save money because insurers would no longer be required to purchase reinsurance to cover a 1-in-130-year storm, Geller said.

Issuing Treasury notes, Geller said, would not cost the federal government anything because they would be backed by the full faith and credit of Florida residents.

DeSantis has repeated his claim that Citizens insolvent several times over the past year, and most recently during an appearance on CNBC on Feb. 27.

But economists have pointed out to Politifact that Citizens is not “insolvent” as the word is commonly understood. It has about $5 billion in reserves and enough reinsurance to cover $16.7 billion in damage before having to impose assessments and surcharges.

Spokespersons for DeSantis and U.S. Sen. Marco Rubio did not respond to requests for comment about Whitehouse’s newest letter.

McKinley Lewis, spokesman for U.S. Sen. Rick Scott, also did not respond directly to Whitehouse’s demands.

Instead, he issued a statement saying that Scott “has been clear that every option should be on the table until the property insurance market is fixed and all families can afford their premiums.”

He added, “When he was governor, Sen. Scott worked to grow Florida’s private property insurance market and depopulate Citizens, which lowered costs for homeowners and increased the stability of the market so that claims could be paid in the event of a hurricane. This is a major crisis for Florida homeowners and as long as there’s still work to do, the state’s job isn’t done.”

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].

©2024 South Florida Sun-Sentinel. Visit sun-sentinel.com. Distributed by Tribune Content Agency, LLC.