Citizens’ rate hikes not met with open arms or open wallets
Executives and board members of Citizens Property Insurance Corp. may not have gotten the reception they hoped for at a recent public hearing. Florida’s state-backed insurance company told the crowd at the Miami meeting that rates will go up again next year as the company struggles to address its shaky financial position. Citizens officials will meet with state regulators next week to finalize changes to homeowners, renters, condominium and mobile home rates.
For homeowners, the company expects the hike to average 7.4 percent statewide. State law limits annual rate increases to 10 percent, but Citizens has a workaround: Existing policyholders will see the 7.4 percent hike, but new policyholders will be paying rates that are much higher. And, those rates don’t take sinkhole coverage into account; those policyholders saw a phased-in 36 percent hike last year and are likely to see another steep increase this year (though not the full 263 percent increase the company says it needs).
The objective, according to the company, is to bring Citizens’ rates into line with private insurers’ rates. The president and board told the audience that, as long as the company’s rates are so low, private insurance companies won’t enter the market. The company’s president added that the current rates aren’t just lower than they should be; they are significantly lower.
For one Fort Lauderdale property owner, the explanation does not ease the pain. For him, Citizens is the only property insurer available. He doesn’t have the luxury of shopping around for a different — much less a better — rate.
The hearing also rekindled the dispute between southern Florida and the rest of the state. Legislators from central and northern Florida contend that their constituents are subsidizing policyholders in the south. Southern Florida’s representatives say their property owners pay their fair share.
That argument is likely to surface again during the next legislative session. Lawmakers at the hearing predicted that the new business proposal would be the subject of heated debate.
None of the proposals are written in stone, though, until the regulatory meeting on July 27. Predictions of debate and geographic rivalry may be toned down until the rates and coverage changes are approved.
Source: Insurance Journal, “South Florida Not Receptive to Citizens’ Rate Hike Plans,” Michael Adams, July 18, 2012
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