Facing fallout over potentially significant rate hikes, members of a Citizens Property Insurance Corp. committee said Thursday they need to do a better job working with lawmakers, the media and the public as they formulate 2013 premiums for the state-backed insurer, reports Michael Peltier of the News Service of Florida.
Members of Citizens’ actuarial and underwriting committee said state insurance regulators have a number of options to depopulate the company, which now covers more than 1.4 million policies, and satisfy the Legislature’s wish to increase rates to make them actuarially sound and more in line with private insurers.
Documents released prior to the meeting show some rates on new coastal business would have to more than double to reach levels necessary to adequately cover potential losses. Overall, new coastal policy premiums would rise by 41.7 percent on average. Non-coastal policyholders would see rates rise an average of 24 percent from premiums in force at the end of 2010.
First released last year, the data again this week set off a flurry of concern from coastal residents and at least two lawmakers who said the rate increase, if fully implemented, would cripple the state’s building industry, especially along the coast. Rates in some areas of Miami-Dade County, for example, would have to double.
Current Citizens policyholder rates cannot increase by more than 10 percent a year. But new policies, Citizens’ leaders argue, aren’t subject to the 10 percent cap. That stance differs from that of key state officials, including Chief Financial Officer Jeff Atwater, who say the Legislature intended the 10-percent cap to apply to all Citizens’ policies.
Committee members said Thursday the board would likely pursue a course of charging rates on new policies above the 10 percent cap, but look at options , including a phase-in period, to cushion the blow. Even if the Citizens Board approves a course of action in July, it still must be reviewed by the Office of Insurance Regulation.
“There is a long process that occurs between where we are now and where we started and the endgame or outcome of something that might impact the pocketbook of a consumer,” said committee member John Rollins.
Though final action on any 2013 rate is still months away, members voiced frustration that merely discussing the potential for rate hikes unleashes a backlash from policyholders and lawmakers, all playing out in the media.
“We have a fiduciary responsibility to continue to review the data,” Rollins said. “To me it is not news at all and shouldn’t be news to anyone who has followed Citizens over the last few years, that the data indicate a pretty significant gap (between premiums and potential losses.)”
Last year, the Citizens board approved sinkhole rates, which, though actuarially sound, sent lawmakers through the roof, said Board Chairman Carlos Lacasa. The same will happen with future rates unless legislators and their staff are brought into the process much earlier.
“We are not going to get to actuarially sound rates, we are not going to get a healthier insurance market without total buy-in from every stakeholder in the state,” Lacasa said. “To do it piecemeal will not work.”