State insurance regulators on Tuesday announced they have approved a 10.8 percent average rate hike for Citizens Property Insurance Corp. homeowners policies and even higher increases on sinkhole coverage.
Following more than a month of review and multiple hearings by Citizens board members and the agency, the Office of Insurance Regulation approved new rates that will affect most of the company's 1.4 million customers on policies renewed after Jan. 1.
"The final rates indicate a more reasonable approach toward moving a significant portion of Florida’s demographic to actuarially-supported rates," Florida Insurance Commissioner Kevin McCarty said in a statement.
"Our primary goal is to ensure Citizens policyholders are treated fairly and retain an opportunity to return back to a robust private insurance market as the Florida Legislature intended,” he said.
State lawmakers and OIR officials have been trying to boost Citizens rates in recent years to make them more comparable to rates that would be charged by the private market in some of the riskiest areas of the state.
Lawmakers, however, limited annual increases to 10 percent, a cap that critics say has hindered efforts to depopulate the state-run pool that has become the largest property insurer in the state. The cap, however does not include higher costs for hurricane catastrophe insurance, resulting in rates climbing higher than 10 percent.
Critics, however, said many policyholders are effectively seeing rates go much higher because of changes related to how Citizens awards discounts to policyholders for hurricane proofing measures. The insurer has been revisiting homes to re-evaluate credits given for such home improvements as part of a larger program to reduce Citizens' exposure.
"This isn't just a rate hike of more than 10 percent, it's a rate hike of more than 10 percent after Citizens changed the rules — taking away mitigation discounts, reducing coverage, and changing replacement values," said Sean Shaw, a former Florida insurance consumer advocate. "Citizens is getting away with charging more for less and policyholders and our economy are worse off because of it."
The first round of rate approvals includes a 10.8 percent increase in multi-peril policies for residential homeowners. Citizens officials had sought an 11.8 percent average increase.
The agency also approved rates for owners of residential rental property. Those rates will be allowed to increase by 8.8 percent on average.
Rates for mobile homes and commercial lines are expected later this month.
Lawmakers last year removed the 10 percent cap on sinkhole coverage, following a meteoric rise in claims in certain portions of the state, but especially in the Tampa Bay area.
Also Tuesday, OIR approved homeowners sinkhole insurance increases averaging 21.4 percent, down from the requested 29.6 percent increase. McCarty said Tuesday the sinkhole rates would have been even higher if lawmakers had not passed sinkhole-coverage changes in 2011.