U.S. Sen. Sheldon Whitehouse, D-RI, told WPTV that concerns about Citizens Insurance’s ability to pay claims after a major storm extend beyond Florida.
He quoted the government-backed mortgage agency Freddie Mac as saying the potentially risky position of both Citizens and private insurers of coastal property foreshadowed a crisis.
“This predicted crash in property values that Freddie Mac has written about is beginning to take hold first in Florida, and that risk is cascading into a worst-case crisis first in Florida and out of Florida in coastal property value losses up and down our coasts, even to my home state of Rhode Island,” said Whitehouse, who is chairman of the Senate Budget Committee.
He said the rising cost of property insurance was a major budget issue. Insurers of coastal properties are charging more than ever. They base their prices on the risk associated with hurricanes that seem to be more frequent and more powerful, floods that seem to be more common, and coastlines that are disappearing because of rising sea levels.
“There is a core reason for the insurance problems that Florida is experiencing right now and for the risks it faces,” Whitehouse said. “And that is the continuing failure to deal with the problem of climate change.”
Whitehouse is concerned that Citizens may not be able to pay claims resulting from a major hurricane hitting Tampa Bay or South Florida.
Citizens Insurance spokesman Michael Peltier responded to the Senate investigation by email:
“Citizens is preparing its response to the Senate Budget Committee, but it is important for Citizens policyholders and all Floridians to know that Citizens is structured under Florida law to always be able to protect its customers and pay claims.”
Meanwhile, Whitehouse said Florida is just the tip of the spear in a growing nationwide insurance crisis.
Wildfires in California have also upended that state’s insurance market.
