TALLAHASSEE (CBSMiami/NSF) — Citizens Property Insurance is scaling back a proposed rate hike after lawmakers and Gov. Ron DeSantis approved an overhaul that the state-backed insurer has long pursued.
Members of Citizens’ Actuarial and Underwriting Committee advanced a plan Tuesday to the full Board of Governors to lower a proposed average residential premium increase from 8.2 percent to 4.7 percent. The board will take up the issue Wednesday.READ MORE: COVID Pandemic Takes Toll On Caregivers
The 8.2 percent increase was approved in December but has not taken effect.
The reduction in the overall hike is possible, according to Citizens officials, following passage of a new law (HB 7065) that overhauled the controversial practice known as assignment of benefits, which involves policyholders signing over insurance claims to contractors.
The initial rate hike was approved with members blaming water-damage claims and related litigation, particularly in Miami-Dade, Broward and Palm Beach counties, for driving up costs in the broader property-insurance market.
In assignment of benefits, commonly known in the industry as AOB, property owners in need of repairs sign over benefits to contractors, who ultimately pursue payments from insurance companies. While insurers contend the practice has become riddled with fraud and litigation, plaintiffs’ attorneys and other groups say AOB helps make sure claims are properly paid. They accuse insurers of often trying to low-ball amounts paid for work.
Passage of the bill was a victory for the insurance industry, with the changes including placing limits on attorney fees in AOB lawsuits. Also, the bill would let insurers offer policies that do not allow or restrict assignment of benefits.
Citizens Board of Governors member William Kastroll warned Tuesday during the committee meeting in Maitland that the changes will result in an increase in Citizens policy counts, “as other insurance companies out there are taking larger rate increases than this.”READ MORE: Rapper Pooh Shiesty, Now Facing Federal Charges, To Remain Locked Up
However, Citizens President and CEO Barry Gilway disagreed, while acknowledging most private insurers will wait to see the impact of the legislation, which fully takes effect July 1, before adjusting their rates.
“The private market is in a very different position. They without question will wait and determine what impact AOB legislation is having on the litigation rates, and they will subsequently file increases that reflect the actual experience,” Gilway said. “Citizens is actually estimating their experience upfront, whereas the private market will most likely delay an increase until they can show real progress relative to the reduced litigation.”
The new law will also require insurers to start providing annual data on claims and settlement timeframes starting in 2022, so the state can see how the bill is working.
Citizens’ planned rate increase still needs approval from the state Office of Insurance Regulation. If approved, the hikes would begin in September and fully take effect over the following year as policies renew. Citizens has about 420,000 policies.
The average hike would hit “personal lines” policyholders, including owners of single-family homes, owners of condominiums and renters — though increases would vary across the state depending on factors such as location.
Some 67,000 residential policy holders, just over 15 percent of the overall policies, won’t see increases. Commercial policies face an average 8.9 percent increase, unchanged from December.MORE NEWS: Monroe Co. Has New Re-Entry Stickers In Case Of Checkpoints
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