Florida’s Citizens Pays Off Bond, Drops Surcharge 2 Years Early

Florida’s state-backed property insurer will stop collecting a one-percent assessment that had been used to retire a bond issued following the 2004-2005 hurricane season.

The Citizens Property Insurance Corp. board of directors decided the insurer will have the necessary funds to retire the bonds as of June 15. The bonds had been scheduled to be paid off in June 2017.

Citizens Chief Financial Officer Jennifer Montero said the decision follows last year’s vote to continue the assessments.

“When we came before the board last year, we recommended continuation of the one percent for another year in anticipation in the future or even elimination of the assessment,” said Montero.

Citizens issued the bonds after the 2004-2005 hurricane season when eight major storms struck the state. Those storms left Citizens with a $1.7 billion shortfall. As a result, in 2007 the insurer levied a 1.4 percent emergency assessment paid for by all the state’s property policyholder.

That funding decision allowed Citizens to start paying down a 10-year post-event bond issuance that had a total price tax of $1.38 billion.

In 2007, Citizens reduced the assessment from 1.4 percent to one percent based on the growth in the state’s assessment based.

The one-percent surcharge on all homeowner and auto insurance policies, not just those issued by Citizens.

This is the second assessment or “hurricane Tax” being ended. State officials have already agreed to end next year a separate 1.3 percent surcharge that was used to pay off claims from Hurricane Wilma. That Florida Hurricane Catastrophe Fund surcharge will come off bills in January.