More than 1 million customers will pay an average of 7.5 percent more for property insurance in 2014 under a rate proposal approved Wednesday by the board of state-run insurer Citizens.
Wind-only customers near the coast could pay more, 10.7 percent. The proposal must be approved by the state’s Office of Insurance Regulation.
Not everyone thinks the boost is warranted.
“Citizens must control its costs before it can justify another rate increase,” said state Rep. Frank Artiles, R-Miami and a public adjuster.
He says the company has already raised rates beyond a 10 percent state cap for many customers by removing credits for storm protection in a re-inspection campaign, among other moves. He urged Citizens to “clean up the re-inspection process, which already circumvents the 10 percent increase law.”
Meeting in Miami, the board approved a rate request that indicates many Citizens properties are already reaching what the company considers adequate rates. The company’s overall request is lower than last year’s and falls below a 10 percent annual cap imposed by state legislators.
“The rates approved today by the board indicate that Citizens is moving in the right direction,” company president and CEO Barry Gilway said.
In Palm Beach County, rate increases average 6.3 percent in coastal areas and 6.2 percent elsewhere, according to documents prepared by the company. Statewide, the average increase was 6.6 percent for single-family homes, excluding sinkhole coverage.
For many customers, “we’re getting to a point where we’re seeing stabilization and customers shouldn’t expect rate increases,” said Robin Westcott, the state’s insurance consumer advocate.
But homeowners who use Citizens for the windstorm portion of their coverage could pay more — about 10.7 percent. That includes charges related to building up the state’s catastrophe fund that are not subject to the 10 percent cap.
Increases for sinkhole coverage, also exempted from the cap by legislators, could be 20 percent to 50 percent higher in parts of western and central Florida.
Florida Chief Financial Officer Jeff Atwater presented a letter to the Citizens board asking members to consider the “tough financial choices” many customers face. His letter also noted some customers may deserve rate decreases according to what company actuaries project.
The rate proposal approved by the board does not explicitly order any decreases, though a slight reduction is possible for individual customers in a complex rate process, company staffers told board members in a pre-vote discussion Wednesday.
The state’s largest property insurer, Citizens serves nearly 1.3 million Florida customers including about 110,000 in Palm Beach County.
With more than $6 billion in reserves available to pay claims, Citizens draws the highest rating of any Florida-based insurer for financial strength from Weiss Ratings of Jupiter.
It was the final scheduled board meeting for Chairman Carlos Lacasa of Miami, whose term is ending, and for chief financial officer Sharon Binnun, who grew up in Palm Beach County. Binnun is resigning next month after seven years with Citizens to become vice president for finance with Cypress Property and Casualty Insurance Co. in Jacksonville. “It’s been my pleasure to serve,” Binnun said.
Property insurance is often called the “third rail” of Florida politics, Lacasa noted, likening it to the electrically charged part of a subway track. He said, “I will miss working with all of you.”