Residents in Florida who have a homeowners' policy with the state's residual insurer can expect to pay an average 10.8 percent more for insurance at the start of the year.
The rate increase, coupled with an average 8.8 percent hike on dwelling fire policies, signals a "more reasonable approach toward moving a significant portion of Florida's demographic to actuarially-supported rates," says Insurance Commissioner Kevin McCarty, in a statement.
Citizens Property Insurance Corp, Florida's last-resort insurer, had asked McCarty's office for an average 11.8 percent rate increase on for homeowners' policies and a 12 percent increase for dwelling fire.
In an emailed statement, Citizens says it is "pleased that Insurance Commissioner McCarty has approved its measured approach to achieving sound rates and reducing the potential financial burden of assessments for all Floridians. We are committed to working further with Commissioner McCarty and OIR as we move toward actuarially sound rates and seek to identify additional opportunities for our customers to find quality coverage in the private insurance market."
By law, Citizens can only increase rates 10 percent, except for sinkhole coverage, on any single policy per year. The OIR says it has imposed a maximum territorial rate increase of 10 percent to adhere to the law.
The sinkhole portion of either a homeowners' or dwelling fire policy are going up 21.4 percent and 44.8 percent, respectively, according to the OIR approval.
Citizens had asked for a 29.6 percent rate increase to the sinkhole portion for homeowners and a 43.7 percent increase for dwelling fire.
In its order, the OIR acknowledged testimony from the state consumer advocate, who said 2011's SB 408 dramatically reduced the number of sinkhole claims in 2012. But the presentation did not include claims in 2012 for damage incurred in 2011. The OIR was "unable to quantify how much SB 408 will reduce the frequency and severity of sinkhole claims," but the OIR did cap rate increases in Pasco and Hernando counties to 25 percent. Hillsborough County is capped at 50 percent increases for sinkhole coverage.
"Our primary goal is to ensure Citizens policyholders are treated fairly and retain an opportunity to return back to a robust private insurance market as the Florida Legislature intended," McCarty says.
The OIR will release its decision on Citizens' mobile home rate request on Oct. 8 and for commercial lines on Oct. 19.
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