Whitehouse Presses Citizens Property Insurance for Answers about Company’s Solvency

Renewed call for information comes after Gov. DeSantis’s statement that Citizens Property Insurance Corporation “is not solvent”

Washington, DC—Senate Budget Committee Chairman Sheldon Whitehouse (D-RI) sent a letter on Monday to Citizens Property Insurance Corporation renewing all requests for information and documents set out in the Committee’s November letter related to the company’s plans to address increased underwriting losses from climate-related extreme weather events and other disasters.  The letter follows new comments from Florida Governor Ron DeSantis to CNBC that Citizens “is not solvent,” a statement that also appears at odds with claims Citizens has made to the Committee.  

In November, the Committee launched an investigation into Citizens amid growing concerns about the insurer’s long-term solvency and possible requests for a federal bailout should losses exceed the company’s ability to pay.  Florida is on the frontline of climate risk, and as the state-backed insurer of last resort, Citizens faces potentially catastrophic exposure to climate-related property losses.

Citizens has not adequately addressed the Committee’s questions and has ignored repeated attempts at follow up.  In a non-responsive letter dated December 15, Citizens’ President/CEO and Executive Director Tim Cerio referred to a Florida law enabling the company to levy special assessments on all policyholders as a basis for its solvency.  But as the Committee stated in its initial letter, because “it would be both politically and economically unfeasible for Citizens to attempt to recoup tens of billions of dollars in losses from Florida policyholders, the Committee remains concerned that Citizens and the state of Florida would turn to the federal government for a bailout.”  Citizens’ December letter did not address this concern or substantively respond to the Committee’s requests for information, communications, and documents.

“Citizens has failed to cooperate with our investigation,” said Chairman Whitehouse of his follow-up letter to Citizens.  “Governor DeSantis’s repeated statements that Citizens is not solvent and the company’s own public comments about their ability to shift their financial losses to Florida policyholders have done nothing to assuage the Committee’s concerns about possible future requests for a federal bailout.  Floridians are grappling with already astronomical insurance rates and one future storm could make things far, far worse.  I look forward to Citizens’ full compliance with our investigation.”

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

The text of the letter is below, and a full version (with footnotes) is available here.

Mr. Timothy M. Cerio

President/CEO and Executive Director Citizens Property Insurance Corporation

P.O. Box 17219

Jacksonville, FL 32245-7219

Dear Mr. Cerio:

As you are certainly aware, Florida Governor Ron DeSantis told CNBC at the end of last month that Citizens Property Insurance Corporation “is not solvent.” This is, of course, difficult to reconcile with your assurance to me in December 2023 that “Florida law provides a framework to ensure that Citizens remains solvent.” Given Governor DeSantis’s statement and your deficient response to my prior letter, my concerns about Citizens’ solvency remain. Accordingly, I ask that you adequately address them, and I renew all requests for information and documents set out in my prior letter.

On November 20, 2023, I sent you a letter requesting 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. The letter specifically set out my concerns 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. I noted that, if Citizens were unable to cover its losses, it is entirely possible that state leaders might ask the federal government for a bailout. Accordingly, I requested information and documents responsive to seven specific questions about Citizens’ storm exposure, risk modeling, possible need for a federal bailout, and discussions with relevant state leaders about those subjects. I also requested communications and documents sufficient to back up your responses to those questions.

Your December 15, 2023, letter did little to address my questions and concerns. In noting that “Florida law provides a framework to ensure that Citizens remains solvent,” you simply explained what I already understood to be true: “if Citizens were to pay out all reserves and reinsurance following a major storm or series of disasters and there is a deficit, . . . Citizens would be required by Florida law to levy surcharges on its policyholders and assessments on other Florida insurance consumers until the deficit is eliminated.” But you said nothing to 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 be sure, my concerns that Florida might seek assistance from the federal government are grounded in history. In 2008, a few years after the devastating 2004-2005 hurricane season in Florida, state senators introduced legislation encouraging the U.S. Congress to assume responsibility, at least in part, for increasing insurance risks in disaster-prone areas. Florida Senate bill SM 2452, for example, urged the U.S. Congress to create a National Catastrophe Insurance Program; among other things, such a program would have established a “national catastrophe financing mechanism that would provide risk management and financing for mega- catastrophes.” Some U.S. legislators also introduced similar bills. Read in that context, Governor DeSantis’s recent confirmation that Citizens “is not solvent” and comment that “we can’t have millions of people on [Citizens], because if a storm hits, it’s going to cause problems for the state” only bring further urgency to these concerns. Several news stories since my November 30 letter indicating that Citizens has begun offloading hundreds of thousands of policies—often its least risky policies—to private insurers do the same.

The bottom line is that, according to Florida’s own governor, Citizens faces a major solvency crisis and would be unable to pay out all claims and expenses should a major storm hit Florida. This would, in turn, create the risk that Florida could seek a bailout from the U.S. government, further tapping into federal resources.

In your response to my November 30 letter, you also did not address in any way questions four through seven, and you did not provide documents or communications in response to any question. Consistent with Committee practice, my staff followed up with your staff twice—once on December 19, 2023, and again on January 5, 2024—to request a briefing with relevant Citizens employees to discuss the company’s response and additional steps. Citizens ignored both emails. I renew my request for cooperation.

Finally, I note that, as a public entity in Florida, Citizens is generally subject to the Florida Sunshine Law, which broadly states that “all state, county, and municipal records are open for personal inspection and copying by any person” and that “[p]roviding access to public records is a duty of each agency.” Citizens’ own website makes clear that it was “created by the Florida Legislature in August 2002 as a not-for-profit, tax-exempt, government entity.” The statute governing Citizens equally makes clear that Citizens is subject to the record retention provisions of the Sunshine Law, with limited exceptions.

For all these reasons, I hereby renew all the requests for information and documents set out in my November 30 letter. Please provide full and complete responses to the questions set out in my letter dated November 30, 2023, by no later than March 28, 2024. Please also schedule a briefing with the Majority Staff to take place no later than March 22, 2024, by calling (202) 224-0642. Thank you for your attention to this important issue.


Sheldon Whitehouse Chairman

Senate Committee on the Budget