Citizens approves 2016 reinsurance spending

BY THE NEWS SERVICE OF FLORIDA

State-backed Citizens Property Insurance will spend up to $204 million, $79 million less than last year, in a risk-transfer program aimed at helping protect policyholders if Florida gets hammered by hurricanes. The Citizens Board of Governors, in a conference call Tuesday that lasted less than 15 minutes, agreed to the plan that includes buying reinsurance, which is essentially backup insurance for insurers. The one-year spending plan is expected to provide $2.46 billion in coverage. Last year, Citizens spent $283 million for $3.9 billion in coverage. Citizens is set to enter the six-month 2016 Atlantic hurricane season, which starts June 1, with 489,083 policies, down from about 590,000 last year. Citizens, which has a $7.4 billion surplus, believes it can withstand a 1-in-100-year storm and a second storm deemed a 1-in-16-year event without having to collect additional money from Florida policyholders through "assessments" to cover the difference. A 1-in-100-year storm is an event that has a 1 percent chance of occurring in any given year.