Citizens Property Insurance Corporation, the Florida state-run insurer, is seeking approval from its Board to cap its average premium rate increases at 4.7% following recent legislation designed to curtail assignment of benefits (AOB) abuse.
If approved, the revised rate increases would be limited to nearly half the original 8.2% hikes that Citizens proposed back in December 2018.
Citizens explained that the implementation of the AOB reforms, which are due come into effect from July 1, 2019, will provide it with savings due to the legislation’s focus bolstering consumer protections and reducing litigation costs.
The insurer is required by law to recommend rates that are actuarially sound, while complying with legislative glide path that caps rate increases at 10 percent, excluding coverage changes and surcharges.
Citizens added that the reforms also caused its average uncapped statewide rate need for all personal lines business to change from 25.9% to 14.2%, and for homeowners multiperil policies from 25.2% to 7.2%.
This compares with earlier predictions from Citizens in April, when the company estimated that the AOB reforms could reduce the statewide average rate need for homeowners policies by more than 15%.
In total, about 67,000 policyholders are expected to receive rate decreases due to proposed cap, Citizens said.
However, the extent of these decreases will vary considerably by geography, with more significant revisions expected in areas with more widespread AOB abuse and litigation, such as South Florida.