Homeowners Insurance POL 215 Political Science

The citizens of the state of Florida will not soon forget eight very haunting names; Charley, Francis, Ivan, Jeanne (all 2004), Dennis, Katrina, Rita, Wilma (all 2005). These are not names of people, but storms, hurricanes to be exact, eight devastating hurricanes in two years. These natural disasters, that our state is prone to, wreaked havoc not only physically, but more so financially, leaving Floridians to be dependent on Citizens Property Insurance Corporation to insure their homes.

Citizens Property Insurance Corporation was formed in 2002 by the Florida State Legislature as a state-run insurance company. It's no surprise that the annual threat of a cataclysmic loss makes insurance companies hesitant, unwilling, or unable to provide property coverage. Citizens Property Insurance Corporation was created for Floridians to “facilitate the remediation, reconstruction, and replacement of damaged or destroyed property in order to reduce or avoid the negative effects otherwise resulting to the public health, safety, and welfare”(Citizens Home Insurance, 2006).

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Citizens was created by Senate Bill 1418, when Florida Windstorm Underwriting Association and The Florida Residential Property and Casualty Joint Underwriting Association were merged. The primary benefit of creating Citizens was to achieve federal tax exempt status and increase efficiency by having one residual market mechanism rather than two separate entities (Property and Casualty reform Committee, 2006).

Some of Citizens Property Insurance Corporations typical financial resources include (property and casualty reform committee, 2006); insurance premiums, investment income, operating surplus from prior years, Florida Hurricane Catastrophe Fund reimbursements, and private reinsurances; other unique financial resources include Non-Homestead and Citizen policy holder surcharges, regular assessments, emergency assessments, and funds derived from Citizens federal tax exempt status.

Being struck by eight hurricanes in just two years has resulted in over 39 billion dollars in damages. Spending has increased tremendously and since most major insurance...