As the start of hurricane season nears, regulators this week approved lines of credit totaling $1.25 billion for the state-backed Citizens Property Insurance Corp. Florida Insurance Commissioner Michael Yaworsky signed an order Tuesday approving a Citizens plan for a $750 million line of credit with Bank of America and a $500 million line of credit with Wells Fargo.
Citizens could tap into the money if needed to help pay claims and expenses for what is known as its personal lines account, which includes homeowners’ policies.
“The purpose of the lines of credit is to provide the personal lines account with needed liquidity in preparation for the 2023 hurricane season,” Yaworsky’s order said. “Citizens has determined that the lines of credit will enable it to efficiently meet its financial obligations and are consistent with the Citizens Act (a state law).”
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The lines of credit would provide a way to have quick access to money as Citizens waits for revenue from such things as policyholder premiums and reinsurance reimbursements.
Citizens also has the authority to collect additional charges — known as assessments — from policyholders. Assessments can be pledged to repay borrowed money, according to the order.
With the six-month hurricane season starting June 1, Citizens has seen explosive growth in its number of policies because of financial problems in the private insurance market.
Citizens, which was created as an insurer of last resort, totaled more than 1.29 million policies as of last week.
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