Citizens Property Insurance Corp. cutting rates, checks

Policy holders to pay less, get refunds

Article Courtesy of The 

By Kathy Bushouse
Published  March 17, 2007


Home and condominium customers with state-backed Citizens Property Insurance Corp. should expect lower rates -- or even a refund check in the mail -- thanks to cheaper reinsurance the company will buy from the Florida Hurricane Catastrophe Fund.

The state's largest home insurer on Friday requested statewide average decreases between 12 percent and 14.5 percent for its home and condo policy holders who get only their hurricane coverage from Citizens. For home and condo policy holders who have complete homeowner policies from the company, the requested statewide average cuts range from 3.2 percent to 6.7 percent.

The biggest savings will come for Citizens' coastal customers, who will see cuts as high as 16.9 percent in Broward County and 15.5 percent in Palm Beach County. Coastal condo associations insured by Citizens also will see money back, with as much as 16.2 percent in Broward County and 14.9 percent in Palm Beach County.

Homeowners living west of Interstate 95 will see decreases as high as 8.1 percent in Broward and 8 percent in Palm Beach County.

Citizens was able to get more reinsurance -- insurance for insurance companies -- from the catastrophe fund because of changes the Legislature made during January's special session on property insurance. The ability to buy more coverage from the state fund "allows us to buy cheaper reinsurance for more severe loss, and that's what caused the rate reduction," said Citizens spokesman Rocky Scott.

This will be the second round of refunds Citizens issued this year. The company announced last month it was sending out checks to customers who paid rate increases that were scheduled to go into effect this year but rolled back by the Legislature during the emergency session.

Whether you'll get a check in the mail or simply pay less on your policy depends on when you renew your policy with Citizens, Scott said. Anyone whose policy renews between Jan. 1 and April 15 will get a refund check. Customers whose policies renew after April 15 will see a decrease in their premium.

Citizens' refunds come the day after the deadline for private insurance companies to make their proposals to the state for cuts they'll pass along to their customers. The state's four largest private insurance companies -- State Farm Florida Insurance Co., Allstate Floridian Insurance Co., Nationwide Insurance Co. of Florida, and USAA -- all requested cuts far below the estimated average of 24 percent projected by the state.

Smaller companies asked for larger decreases for their customers, most likely because they benefited more from the cheaper catastrophe fund coverage, said Robert Hunter, director of insurance for the Consumer Federation of America.

"I thought the bigger the company was, the lower the number would be," said Hunter, who helped the state come up with its presumed savings for private insurance companies.

Bigger companies have more leverage than smaller companies when it comes to buying reinsurance from private firms, Hunter said, who said in his research he found smaller insurers paying 10 times what he considered a fair rate for reinsurance coverage.

"There's a lot of opportunity for savings for the smaller companies," he said.

Insurance Commissioner Kevin McCarty said Friday that he would have liked to see more insurers seeking cuts that matched his estimated savings. But he said he was surprised by Citizens' requested cuts because they were much larger than he expected.

All of the companies' requests are going to face scrutiny from his office, he said. Insurers whose rate-cut requests are rejected could find themselves forced to return more money to customers if the state finds the decreases should have been higher.

"We are going to be very thorough in reviewing any requests in the future to ensure that all the savings that were anticipated, were realized," McCarty said.