Whitehouse Launches Investigation into Citizens Property Insurance Amid Questions About Company’s Long-Term Solvency

Committee concerned about how such an insolvency would affect the Florida real estate market, the broader economy, and the federal budget

Washington, D.C.—Today, Senator Sheldon Whitehouse (D-RI), Chairman of the Senate Budget Committee, launched an investigation into Citizens Property Insurance Corporation.  The Committee seeks documents and information about 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. 

This probe builds on two previous, and ongoing, investigations into the insurance industry’s response to climate change amid the Committee’s growing concerns about the economy-wide harms from widespread uninsurability.  The Committee is currently seeking documents and information related to the insurance industry’s continued investment in and underwriting of fossil fuel expansion projects, as well as companies’ plans to address increased underwriting losses from climate disasters.

As of 2022, Citizens’ market share for homeowners multi-peril policies was approaching 20 percent and had more than doubled since 2020.  As private insurers in Florida continue to go insolvent or exit the state amid mounting threats from climate change, Citizens, the state-backed insurer of last resort, is likely to take on an even greater market share.

“The Committee is … increasingly concerned about Florida’s uniquely large and growing exposure to climate-related property losses, Citizens’ rapidly expanding market share, and state law allowing Citizens to levy special assessments on all policyholders in the event that losses exceed its ability to pay.  If Citizens were unable to cover its losses, it is entirely possible that state leaders might ask the federal government for a bailout.  Given the potential magnitude of Citizens’ losses, such a request would put the federal government (and by extension, all American taxpayers) at substantial risk,” wrote Chairman Whitehouse.

In March, Governor Ron DeSantis recognized that Citizens would likely be unable to pay out claims if Florida were hit by a large hurricane. 

“In light of the state’s acknowledgement of Citizens’ potential insolvency and the likelihood that it would be both politically and economically unfeasible for Citizens to attempt to recoup tens of billions of dollars in losses from policyholders across Florida, the Committee is concerned that Citizens and the state of Florida would turn to the federal government to bail them out.  Given the potential magnitude of Citizens’ losses, such a bailout request could put substantial strain on the federal budget,” continued Chairman Whitehouse.

Among other requests, the Committee is seeking information related to the following: 

  • What are Citizens’ current assets?  What is Citizens’ total reinsurance coverage?  What are the maximum total claims Citizens would be able to pay out without having to levy an assessment on Florida policyholders? 
  • What communications has Citizens had with Governor DeSantis, Insurance Commissioner Michael Yaworsky, their staffs, or any other state officials regarding Citizens’ current or future solvency? 
  • Has Citizens contemplated asking for a federal bailout if it were unable to cover its losses?

The Budget Committee has held a series of hearings examining the costs and economic risks associated with increasing losses to properties that face the greatest threats from climate change and in mortgage and insurance markets.  Insurance industry executives, economists, actuaries, and other experts have testified that climate change could trigger cascading failures that undermine financial and economic stability. Their testimony has made clear that:  

  • Climate-related losses have already grown substantially and are projected to continue to rise;  
  • As climate-related risks increase, insurance premiums will increase and/or insurers will pull out of at-risk markets;  
  • As insurance becomes increasingly expensive and/or unavailable, property values in affected markets will decline;  
  • Insurance unavailability will cause affected properties to become unmortgageable; and  
  • A widescale decline in coastal and wildland-urban interface community property values would present a systemic risk to the U.S. economy, similar to what occurred in the 2007-2008 mortgage meltdown.  

The Committee has requested documents and information by December 21, 2023.

The full letter is available here.