The federal government has launched an investigation into Florida’s largest home insurance company.

Citizens Insurance, the governor, and other state leaders received a letter informing them that a Senate budget committee is looking into the state-run company.

Here’s why a Senate budget committee is looking into the company.

Citizens insure $586 billion worth of property, and they have just over $15 billion in their reserves to pay out on claims. If a major hurricane hit the state, they could be short over $571 billion, leaving everyone in the state on the hook to pay the shortfall.

The letter from the Senate committee investigating the state-backed company expresses concern it may be unable to cover its losses. A claim the governor confirmed while visiting Fort Myers last year.

“If you did have a major hurricane hit with a lot of Citizens property holders it would not have enough to pay out,” DeSantis stated.

The feds are concerned Florida may require a federal bailout in order to pay all of its claims.

Mark Friedlander with the Insurance Information Institute said a private insurer would not be allowed to operate in the State of Florida with those financial dynamics.

Seven private companies went insolvent in the last year and a half in Florida.

“Citizens, unlike a private insurer, could never go insolvent,” Friedlander noted.

That’s because the state could initiate a hurricane tax to cover its costs which would require everyone who owns property or a car to pay a hurricane tax.

“If you have an auto insurance policy in Florida, you could get a surcharge for multiple years to help replenish the funds of Citizens,” Friedlander said.

As they work to depopulate, Citizens has more than 1.3 million of the riskiest policies statewide.

Their CEO recently stated he would like to see the company shed more than half of its policies.

“450,000 to 600,000 may be the sweet spot to where Citizens should be,” said CEO Tim Cerio.

The feds have asked Citizens for all communications with the governor about solvency and a list of their current assets. They want all of it by Dec. 21.