Citizens Property Insurance Corporation, the state-run not-for-profit insurer, has announced that its Board of Governors has voted to defer action on a proposed 2019 rate package that includes a statewide average increase of 7.9% for personal lines policyholders.
The company says the proposed rate increases reflect the impact of escalating nonweather related water loss claims in South Florida, a worrying trend that it fears may spread to other areas of the state.
However, the Board voted unanimously to defer its verdict on the proposals until December, in order to give water loss policy language changes time to take effect and to afford South Florida policyholders more time to recover from Hurricane Irma.
“Our policyholders have been and always will be Citizens’ top priority,” said Citizens Chairman Chris Gardner. “This consumer-friendly action reflects that priority, especially following the devastation brought on by Irma.”
Citizens has received more than 65,000 personal lines claims from Hurricane Irma, with personal lines losses exceeding $875 million and total losses approaching $1.2 billion.
“It is important that we consider the ongoing recovery of Florida residents following Hurricane Irma last year,“ said Bette Brown, consumer representative on the Board of Governors, appointed by Governor Rick Scott. “As you know, Irma impacted residents throughout the state, most notably in South Florida and the Florida Keys.”
The deferral will allow Citizens to review the initial results of its new managed repair program, due to begin in August 2018, which is designed to address the rising costs linked to water-loss claims, assignment of benefits, and increased litigation.
The proposed 2019 rate package would see rates for inland homeowners with multiperil policies increase by an average of 8.3%, while homeowners along the coast would experience average rate increases of 9.5%.
Citizens has reduced its policy count from 1.5 million to approximately 443,000 over the last six years thanks to a focus on affordable reinsurance and depopulation efforts.
This reduction enabled the company to pay claims following a 1-in-100 year storm and a second 1-in-41 year event last year without having to levy assessments.
Citizens is required by law to recommend rates that are actuarially sound while complying with a legislative glide path that caps rate increases at 10%. It will submit its 2019 recommended rates to the Florida Office of Insurance Regulation in July.
