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Citizens approves seven percent rate hike

Citizens Property Insurance Corporation

Citizens Property Insurance Corporation

Citizens approves seven percent rate hike

By Jim Turner

The News Service of Florida

THE CAPITAL, TALLAHASSEE, FL — Customers of state-backed Citizens Property Insurance Corp. will see rates go up next year as the agency continues to aggressively shift policyholders into the private market.

The Citizens board on Wednesday approved an average seven percent increase for its 1.26 million customers, with the mark around 7.5 percent for those with sinkhole coverage — hikes that Citizens officials said are still not enough to cover projected costs for next year.

Board member John Rollins said the agency “needs to strike a balance” between the impact on customers and meeting actuarially sound rates.

The increase is expected to generate an additional $178 million for Citizens in the next year, while actuarial numbers estimate $505 million is needed in additional premium charges.

For single-family coverage, the average non-sinkhole rate will stand at $2,112 next year, up from $1,981 in the current year.

“We can’t ignore the political consequences of what we do, but such interest must always yield to sound business judgment, fiduciary duty and the requirements of law,” Chairman Carlos Lacasa said.

The rate hike comes with Citizens having a $6.4 billion surplus to brace for an emergency or two, and the board earlier this year approved two deals with private insurers to take out policies, with a cost to Citizens that could reach $115 million.

The rate proposal must still be approved by the Florida Office of Insurance Regulation.

The hike comes as state legislators, who imposed new rules on Citizens during the 2013 session, intend to review the decision-making practices of Citizens this fall.

The review stems from the Citizens board’s May approval of St. Petersburg-based Heritage Property & Casualty Insurance Co., receiving up to $52 million to take out 60,000 policies.

The board had earlier approved Weston Insurance to take out up to 30,000 policies in exchange for up to $63 million.

Usually takeouts occur in November and December. But because the Heritage and Wes-ton deals came closer to the June 1 start of hurricane sea-son, the financial packages were included to provide coverage for the private companies that had not been able to build re-serves through months of premiums collected on the policies.

 

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    Carma Lynn Henry Westside Gazette Newspaper 545 N.W. 7th Terrace, Fort Lauderdale, Florida 33311 Office: (954) 525-1489 Fax: (954) 525-1861

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