Florida’s Citizens Property Insurance Corp. in Uncharted Water

Citizens Property Insurance Corp. is a state-created, state-run, nonprofit home insurance company, larger than any of Florida’s private home insurers. Citizens insures many whom private, for-profit insurers will not cover. The company operates most heavily in southern Florida and also insures business entities.

When Citizens operates in the red, for example, because of the financial hit it could take after paying homeowners’ claims for extensive damage from a hurricane, the insurer is allowed to collect assessments from all property and car insurance policyholders across the state to pay down such a deficit.

On July 27, Citizens’ board voted (three to two) to raise insurance premiums more than an average of 10 percent across Florida, despite a state law that caps Citizens’ rate increases at 10 percent annually. The proposed rate hike reportedly includes surcharges not counted toward the cap, which is apparently how the board can propose raising rates more than 10 percent.

As the insurer of last resort for many Floridians who live in areas at risk of hurricane or sinkhole activity, this rate hike could be difficult to absorb, especially for those on fixed incomes.

The rate increase reportedly will be submitted to regulators at the Florida Office of Insurance Regulation for approval, along with a lower alternative. Public comments may be submitted to the regulators.

Citizens’ has also been under fire for in essence increasing premiums by cancelling discounts it had previously given for hurricane-resistant home construction features.

The board did not vote on another controversial proposal that would have capped water damage claims at $15,000 following testimony that repairs are often much more expensive than that.

In another controversial move, the board also voted to allow increased out sourcing to private companies of more of Citizens’ internal administrative work.

Source: Sun Sentinel, “Citizens insurance approves 10 percent rate hike, kills two controversial plans,” Julie Patel, July 27, 2012