Regulators OKs Citizens’ increases for homeowners

TALLAHASSEE — Florida business and homeowners’ doing business with the state-backed Citizens Property Insurance Corp. will see double-digit premium increases in most cases early next year.

The state’s insurance regulators announced Tuesday they have approved the increases that are scheduled to take effect as early as Jan. 1.

The Office of Insurance Regulation said Tuesday it approved a 10.8 percent increase on multi-peril homeowners’ policies and an 8.8 percent increase on dwelling fire rates. Homeowners with sinkhole coverage will see an increase of 21.4 percent on their bills and those with dwelling fire policies wanting sinkhole coverage will be increased by 44.8 percent. Most take effect Jan. 1. Rates for wind-only policies take effect on Feb. 1.

"Our primary goal is to ensure Citizens policyholders are treated fairly and retain an opportunity to return back to a robust private insurance market," Florida Insurance Commissioner Kevin McCarty said.

Sen. Mike Fasano, R-New Port Richey, condemned the increases.

"They just don’t get it in Tallahassee," Fasano said Tuesday. "We’d all like to see Citizens get depopulated, but not at the cost to a homeowner having to give up their home."

McCarty defended the newest rate hikes as a reasonable approach toward moving Citizens’ customers closer to actuarially-supported rates. OIR is scheduled to announce its decision on rate increases on mobile home and commercial lines policies later this month.

Citizens’ spokeswoman Christine Ashburn said Tuesday that the company is working with the state to develop more sound rates to help customers find private insurance coverage.

Citizens’ has been boosting its rates in recent years to reach parity with private commercial carriers in hopes of shedding hundreds of thousands of policies. Originally designed as the "insurer of last resort," it has instead become the largest policy carrier for homes and businesses in Florida with roughly 1.4 million customers. However, its maximum exposure far exceeds its financial ability to pay claims in a timely fashion without further charging policyholders.

The insurer has also made other coverage changes to reduce its overall exposure.

"Citizens changed the rules — taking away mitigation discounts, reducing coverage, and changing replacement values," said Sean Shaw, a consumer advocate and founder of the Policyholders of Florida. "Citizens is getting away with charging more for less and policyholders and our economy are worse off because of it."

Florida residents with auto, residential or commercial property insurance policies already pay a 1 percent assessment to shore up the Hurricane Catastrophe Fund tagged with huge losses after the 2004 and 2005 storm seasons.

Florida insurance regulators last month approved another 60,000 policies for removal from the state-backed insurer. OIR had earlier approved 150,000 policies to be acquired by four Florida domestic companies beginning in November. Citizens’ policyholders were to be notified of the take-out request Oct. 1, and will have 30 days to accept or reject the offer. If policyholders do not respond, they’ll be "assumed" by a private sector company.

Citizens’ was created by the Legislature in 2002 to provide insurance to homeowners in high-risk areas and those who cannot find coverage in the private market. It was largely an offshoot of an underwriting association formed by the state in the aftermath of Hurricane Andrew in August 1992.

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