David Royse of the News Service of Florida reports that the Office of Insurance Regulation will hold a public hearing next month in Tampa on proposed increases in homeowners and sinkhole insurance rates for the state’s largest insurer that have stunned some customers with their magnitude.
The sinkhole coverage increases proposed by state-backed Citizens Property Insurance Corp. range from no increase in some areas of the state to a proposed average increase of 2,226 percent in the Orlando area. Statewide, the proposed sinkhole premium increase is nearly 450 percent.
A few lawmakers have suggested that the Senate also hold public hearings before OIR decides on the company’s request, though so far no official legislative hearings have been scheduled.
The proposed increases are for Citizens’ coastal accounts and personal lines accounts, including homeowners policies. But it’s the enormous sinkhole increases that have drawn the most attention.
Citizens officials have said repeatedly that sinkhole claims are threatening the company, its policyholders, and maybe the state’s taxpayers. Last year, the company collected $32 million in sinkhole premium, but paid out nearly $250 million in claims.
A change in state law earlier this year allowed the company to apply for the dramatically higher rates. Backers of the change said the company – which is backed by Florida taxpayers – must get its premium up to match its risk to avoid having the state’s residents put on the hook for some huge loss the company can’t pay for.
OIR set the public hearing for Sept. 13 at the Tampa Convention Center. The head of OIR, Insurance Commissioner Kevin McCarty, said recently that Citizens might want to consider trying to phase in proposed increases over a longer time.
In Citizens’ coastal account, the company’s requested statewide average increase in premium is 12.1 percent. Those policies cover wind damage.
The statewide average homeowners premium increase for sinkhole coverage, which technically is optional but is required by some mortgage lenders, is 447 percent.
State insurance regulators had said all along that the office would conduct a public hearing on the rates because of their potential impact.