Citizens To Raise Rates 6% Next Year

TALLAHASSEE (CBS4) – Home owners who have Citizens Property Insurance will see their rates increase 6.2 percent next year.

Florida Insurance Commissioner Kevin McCarty approved the increase, but dramatically reduced the amount that the state-backed company wanted to charge home and business owners for sinkhole coverage. McCarty ruled Citizens failed to provide evidence to support its bid to raise rates on an average of more than 440 percent on sinkhole coverage. He instead set the maximum at 32.8 percent.

"Although more credible data and study is required, these established rates will start Citizens on the path of having a sound rate for their sinkhole risk," McCarty said.

The effective dates for the new rates on homeowners' and dwelling fire policies are January 1, 2012 for new and renewal multi-peril business, and Feb. 1, 2012 for new and renewal wind-only business.

The board that oversees Citizens held an emergency conference call last week and voted to cap rate hikes for sinkhole coverage at 50 percent in 2012 and then phase in future hikes over the next several years.

The new chairman of the Citizens board, Carlos Lacasa, said the decision to phase in the rate hikes was an effort to highlight the severity of the sinkhole claims crisis while allowing time for provisions of a new state law to moderate future rate need.

The Legislature passed a broad property insurance bill (SB 408) earlier this year that they said would help drive down costs for private insurers and stabilize the state's fragile market. That measure eliminated a 10% statutory cap on sinkhole rates and also enacted fundamental changes to reduce sinkhole losses. The new law would have also allowed Citizens to raise rates to whatever level it believed necessary to offset losses. The company has more than 1.4 million policyholders across the state.

"The Office's decision is intended to reflect the Legislature's intention to give Citizens actuarially supportable rates for the sinkhole portion of the premium," McCarty said.

Citizens received about $32 million in premiums for sinkhole coverage in 2010 compared to losses and loss-related expenses estimated to total $245 million.

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