Citizens rates to rise up to 10 percent in South
Article Courtesy of The Sun Sentinel
September 22, 2016
South Florida customers of Citizens Property
Insurance Corp will pay up to 10 percent more in premiums starting Feb.
1, following approval by state insurance regulators of nearly all of the
company's requested rate hikes.
The state-run company — which serves as the "insurer of last resort" for
Floridians who cannot find insurance through any other provider — blamed
the increases on rising water loss claims not related to storms.
House and condo owners in all but a few sections of Broward, Palm Beach
and Miami-Dade counties will see premiums on multi-peril policies
increase between 8.9 percent and 10 percent in 2017.
For months, Citizens has been warning that it will have to request rate
increases for the foreseeable future, regardless of whether a hurricane
hits, unless new laws are created to prevent contractors from coercing
policyholders into signing over benefits of their policies before
repairing damage from broken pipes, failed water heaters and other
Contractors use the "assignment of benefits" to submit inflated repair
bills to insurers, then file suit if the insurer fails to pay the full
claim, Citizens contends. Contractors and attorneys have countered that
insurers use the "assignment of benefits" controversy as an excuse to
save money by denying claims.
Citizens President and CEO Barry Gilway again warned about claims abuses
in a statement released Friday. "The 2017 rates reflect the growing
challenge of rising water loss claims and the disturbing increased costs
associated with assignment of benefits. Unless the legislature takes
action, our policyholders can expect these increases for years to come."
The problem originated in South Florida in recent years but has started
spreading to other areas of the state, insurers say. This year, numerous
insurers have cited increased water-loss claims in their requests for
approval to charge higher rates.
In the order released Friday, the state Office of Insurance Regulation
said it approved a 6.4 percent average statewide rate increase for
multi-peril residential policies covering houses and condos, which was a
half percentage point less than the 6.9 percent increase requested by
Citizens. The order said regulators calculated lower projected water
losses than Citizens originally projected.
All other rate increases requested by Citizens, including an average 8.2
percent increase for wind-only coverage for coastal residents and 5.7
percent increase for multi-peril coverage of mobile homes, were
Citizens is only a third as large as it was in 2012, thanks to the
state's effort to shrink the company by encouraging private companies to
"take out" Citizens policies. But Citizens remains the tricounty
region's largest insurer with 231,633 personal residential policies at
the end of March.