State law limits annual premium rate increases under Citizens Property Insurance Corp to 10 percent, and this year, it looks like rates will once again increase by close to the max for roughly 1.26 million policyholders in Florida’s insurer of last resort.
This week the Citizens Board of Governors will consider rate hikes that are expected to be between an average of 6.9 percent and 8.8 percent — which would translate into $178 million or $226 million more in premiums, respectively. And that doesn’t count charges for backup coverage such as for sinkholes.
These increases are intended to cover Citizens’ projected losses and expenses. Due to rate caps, Citizens has not historically charged as much as it needs to cover potential claims, leaving state coffers vulnerable, particularly following a major storm.
Various measures have been considered to reduce the size of Citizens, including one by Gov. Rick Scott that has come under fire for “depopulating” or transferring 60,000 policyholders to another smaller, brand new insurer. This transaction was approved by the board — including a provision permitting Heritage Property Insurance and Casualty to pick the policies it wants (i.e. those with no pending claims) — but eyebrows were raised due to hefty political contributions made by Heritage and its affiliates last year. Scott has his own beef with Citizens, and has criticized the insurer for raises made to top execs and reports of lavish travel spending.
Committee meetings will be held Tuesday in Miami, with the Board meeting on Wednesday.