Citizens maintains surplus for claims
Letters to the Editor

I write this letter in reference to the recent opinion entitled "Citizens Flaunts A $1.1 billion Surplus," published by The Gulf Breeze News on August 16, 2007, and written by Victoria Papajohn.

Ms. Papajohn incorrectly suggests that Citizens Property Insurance Corporation has "amassed" a billion dollar surplus so it can hoard the money for itself. To the contrary, Citizens a government entity and must maintain an adequate surplus to pay future claims. The size of Citizens' surplus is a reflection of its potential claims exposure as the largest property insurer in the state; Citizens needs more surplus than it currently has, not less. This fact is particularly relevant as we see the devastation in Mexico wrought by the first major Atlantic storm of the 2007 season, Hurricane Dean.

Citizens has paid hundreds of millions of dollars to compensate thousands of Panhandle insureds for the tragic losses they suffered in the 2004 and 2005 storm seasons. What Citizens has not done is deplete its assets by paying non-covered flood claims. Citizens was created by the state legislature to provide insurance coverage for wind losses. It specifically prohibited by the legislature from paying for flood damage. When a hurricane causes damage by wind and flood, complicated legal issues arise; thus, the careful and deliberate involvement of the Florida Supreme Court in Cox v. Florida Farm Bureau and similar cases involving Citizens. Citizens has a duty to all of its insureds, whether they have suffered a loss or just suffer the burden of high insurance premiums. If the Supreme Court resolves the pending cases in favor of insureds, Citizens will quickly move forward to pay claims in accordance with the Court's rulings. Should the Supreme Court uphold the tradition of the last fifty years that flood damage is not covered by a homeowner wind policy and is specifically not covered by Citizens, then Citizens will have prudently conserved its assets for the benefit of all Florida insureds in the form of reduced likelihood of assessments.

It should also be noted that Ms. Papajohn is a party in a lawsuit against Citizens involving two properties damaged in Hurricane Ivan. As such, she has a direct financial interest in how the legal issues referenced in her opinion are resolved.

Curtis Hutchens Assistant General Counsel-

Claims Citizens Property Insurance

Corporation

Submitted by Rocky Scott, Public Information Manager,

Citizens Property Insurance