Citizens Property Insurance rates to rise
By Nirvi Shah
nshah@miamiherald.com
Insurance premiums for homeowners covered by Citizens will rise an average of 10.3 percent statewide next year, the Florida Office of Insurance Regulation said Thursday, giving the state-run insurer a slightly larger increase than it had requested in August.
The new rate schedule, however, means some Broward, Miami-Dade and Monroe homeowners will actually see their premiums drop. Policyholders will be notified by mail.
Citizens Property Insurance wanted an overall 9.7 percent average increase in homeowners rates. The insurer is limited to requesting rate hikes of 10 percent each year, but the increase approved by Insurance Commissioner Kevin McCarty also includes additional premium increases that will be used to infuse cash into the Florida Hurricane Catastrophe Fund. That fund provides back-up coverage for private insurers as well as Citizens. Citizens' mobile home policies will rise by an average of 9.2 percent statewide.
At a hearing earlier this month, Citizens' staff said they need to raise rates even higher based on their risk exposure.
New rates for homeowners with wind-only policies go into effect in February. For those with multiperil policies, the new rates take effect in January.
This is the second increase in two years for Citizens customers following a three-year rate freeze that ended in 2009. Citizens is the state's largest property insurer, with about 1.2 million policies.
One of the factors that contributed to Citizens' request for a rate increase was a dramatic rise in sinkhole claims. The insurer paid about $97 million in claims in 2009 but collected $19.7 million in premiums.
In his order, McCarty said in the next three months Citizens must file for a change in the way it provides sinkhole coverage for new and existing policyholders. Homeowners who want coverage would need to have their properties inspected. If inspections are unacceptable, sinkhole coverage for anything but a catastrophic loss will not be provided.
At the rate hearing this month, Paul Palumbo, Citizens' senior vice president of underwriting, said no sinkhole claims in the insurer's history have been for a catastrophic loss.