Citizens is ordered to rethink and revamp their
proposed rates |
Article Courtesy of The News Service of Florida
By Jim Saunders
Published
August 31, 2023
Florida's insurance commissioner is taking issue with
parts of a Citizens proposal that would increase rates by 12% for
homeowners with the most-common type of policies.
Regulators have ordered the state-backed
Citizens Property Insurance Corp. to revamp — and trim —
proposed rate increases.
Florida Insurance Commissioner Michael Yaworsky signed an
order that took issue with parts of a Citizens rate proposal
that included increasing rates by 12% for homeowners with
the most-common type of policies.
The order, posted on the state Office of Insurance
Regulation website, directed Citizens to “calculate new,
reduced, overall average statewide rate increases for the
rate filings” covered by the order.
“We are reviewing the final order and will submit a revised
set of recommendations, as requested, based upon OIR’s
findings and directives,” Michael Peltier, a Citizens
spokesman, said in an email Monday.
Amid explosive growth in its number of
policies, Citizens this year asked the Office of Insurance
Regulation for approval of an overall 13.3% rate increase,
with 12% hikes for “multi-peril” policies on primary
residences.
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Men walk past destroyed homes and debris as they
survey damage to other properties, two days after the passage of
Hurricane Ian, in Fort Myers Beach, Fla., on Sept. 30, 2022.
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A 12% increase would be the maximum allowed this year for those policies
under a state law that limits how much Citizens can raise premiums.
Citizens officials contend rate increases are needed, in part, because
Citizens broadly charges lower rates than private insurers. They say
Citizens’ lower rates undercut long-running state efforts to push
policies into the private market. Also, they argue higher rates are
needed to make Citizens more actuarially sound.
Friday’s order said the Citizens rate proposal emphasized “overall
actuarial soundness, instead of individual actuarial soundness.”
The order pointed to questions about whether the proposed increases
might not be justified in some areas of the state, saying that the
Office of Insurance Regulation “finds that due to the inadequate support
as it relates to Citizens being non-competitive (with private insurers)
… rates should be subject to a modified policyholder capping
methodology.”
That methodology could lead to a range of increases up to 12% for
multi-peril policies on primary residences — or, possibly for some
policyholders, no increases, according to the order. Under a law that
passed last year, rates could increase up to 50% for homes that are not
primary residences.
Citizens originally proposed rate increases to take effect Nov. 1 but
later changed the date to Dec. 9. The Office of Insurance Regulation
agreed with the change. Friday’s order gave Citizens 30 days to revamp
the rate proposal.
In a separate order Friday, the Office of Insurance Regulation approved
a series of rate proposals for commercial policies, including
condominium-association policies. As an example, a proposed average
statewide increase of 9.2% was approved for condominium-association
multi-peril policies. That will take effect Oct. 1.
Citizens has seen massive growth during the past three years as private
insurers have dropped policies and carried out large rate hikes because
of financial problems.
Citizens had 1,363,606 policies as of Aug. 11, according to information
posted on its website. As an illustration of the growth, Citizens had
486,773 policies on July 31, 2020; 661,150 policies on July 31, 2021;
and 994,456 policies on July 31, 2022.
State leaders have long sought to shift policies out of Citizens into
the private market, at least in part because of financial risks if the
state gets hit by a major hurricane or multiple hurricanes.
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