TALLAHASSEE — Rates will continue to rise for home and business owners in Florida covered by policies from the state-backed Citizens Property Insurance Corp., but not as quickly as the company had hoped.
The Office of Insurance Regulation signed off late Monday night on a statewide average of 6.2 percent for standard coverage and a hike of 32.9 percent for sinkhole policies, although Citizens' customers in some parts of the state could pay far more for sinkhole protection. It's far from what Citizens initially sought.
The new rates on homeowners' and dwelling fire policies take effect on Jan. 1 for new and renewal multiperil business, and Feb. 1 for new and renewal wind-only business.
Insurance Commissioner Kevin McCarty said Tuesday that a Citizens' policy owner of a $180,000 home in the hard-hit region encompassing Pasco and Hernando counties in west-central Florida will be looking at a premium increase of approximately $440. That's a far cry from the company's initial request to OIR that would have resulted in the cost of sinkhole coverage skyrocketing by thousands of dollars.
But McCarty said that the state's largest property insurer with some 1.4 million policies didn't have the actuarial data to support that request.
"What they did in their original filings we considered had a lot of anomalies," McCarty said. "They tried to achieve that by changing the curve and that's simply not acceptable."
Gov. Rick Scott said he had not seen McCarty's final order on Citizens' rates, but that it's important Citizens remains financially viable.
"We've got to make sure rates are as fair as we can for consumers, but they want to have a product they can rely on, a company they can rely on," Scott said. "God forbid if we have a hurricane that it can pay the claims."
McCarty, however, was sympathetic with Citizens plight.
Citizens received about $32 million in premiums for sinkhole coverage in 2010 compared to losses and loss-related expenses estimated to total $245 million.
"We see that in the sinkhole area that Citizens is really the market of only resort, not just the market of last resort," McCarty said.
The Legislature passed an omnibus bill (SB 408) in May that they hoped would drive down costs for private insurers and stabilize the state's fragile property insurance market. It eliminated a 10 percent statutory cap on sinkhole rates and also enacted fundamental changes to reduce sinkhole losses and would have also allowed Citizens to raise rates to whatever level it believed necessary to offset losses.
McCarty said regulators didn't believe Citizens adjusted for the cost savings that were provided for by the new legislation.