There has been a very lively debate surrounding a proposed program from the state-run Citizens Property Insurance Corporation.

The program is called the Surplus Note Depopulation. If you strip away the very bureaucratic sounding title, the program is simply an attempt to reduce the 1.5 million policies with which Citizens is bursting at the seams.  The largest five homeowners insurance companies in Florida combined do not have that many policies.

State leaders have taken a hard look at the program and asked tough questions.  Citizens responded appropriately by ordering an immediate outside review by an international financial firm to assure that the program’s financial calculations are sound, and it is available for the upcoming hurricane season.

A large storm or series of storms could trigger hurricane taxes that could put recession-weary Floridians over the edge.  Nine in 10 Floridians do not even realize they are taxed when Citizens can’t pay its claims, and Florida law says Citizens policyholders have to pay first when Citizens runs out of money  -- potentially 45 percent of their premium.

If those taxes are not enough to refill Citizens depleted coffers, then all Floridians who aren’t in Citizens get taxed.  It is estimated that a major storm or a series of smaller storms hitting densely populated Florida areas would require hurricane taxes to be applied to home, auto, and other insurance policies that could put the average Floridian at risk for $1,500 in the first year alone. And additional hurricane taxes would have to be charged for many years after that.  Note that a small business owner could be hit with additional taxes on business property and vehicles.

And not only are Citizens policyholders going to be the first to be taxed if they have not taken advantage of the new program, they also have less coverage.  For example, Citizens has reduced its liability coverage for policyholders to $100,000 from the more common $300,000 limit, and separate structures such as sheds, fences and pool screening are no longer covered.  I would bet that Citizens will continue to do so to reduce its risks.

Customers who avail themselves of the new program are given the same rates they had with Citizens, and they must mirror the limits on Citizens rate changes for three years. After that period, the Insurance Commissioner must approve new rates.  These are solid consumer protections.

Companies taking part have to meet heightened financial requirements, and, in the rare instance a company runs into trouble, there is a state-run guarantee fund that seamlessly picks up claims.  Policyholders will have the right to opt out of Citizens and may opt back into Citizens at their request or obtain a policy with another private insurer.

While virtually everyone agrees that Citizens is too large, there has been less agreement on how to shrink it.  The Surplus Note Depopulation Program shows great promise and needs to be thoroughly and quickly vetted.  Hurricane season will be here before we know it.

Walter Dartland is the Executive Director
 of the Consumer Federation of the Southeast.