Citizen Property Insurance board defers 2019 rate recommendations

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The board of governors of Citizens Property Insurance Corporation has voted to defer action on 2019 proposed rates until December.

In a statement, Citizens said it was deferring action to give water loss policy language changes time to take effect and South Florida policyholders more time to recover from Hurricane Irma.

Proposed increase would have taken effect on Feb. 1, 2019

Acknowledging concerns raised by consumer advocates and state leaders, the board voted unanimously to defer action on a proposed 7.9% statewide increase for personal lines policyholders — homeowners, condominium unit owners, and renters — that would have taken effect on February 1, 2019.

The 2019 proposed rates called for increases in homeowners’ multiperil premiums in 60 of 67 counties. Statewide rate increases are being fueled largely by increased litigation, according to Citizens.

Related: Water claims jump in Florida, insurance regulator reports

“Our policyholders have been and always will be Citizens’ top priority,” said Citizens’ chair, Chris Gardner. “This consumer-friendly action reflects that priority, especially following the devastation brought on by Irma.”

2018 rates deferred in response to Hurricane Irma

Citizens is required by state law to submit a slate of actuarially sound rates to the Office of Insurance Regulation annually for approval. Rates for 2018 began taking effect May 1, 2018, after being deferred in response to Hurricane Irma, which made landfall in September 2017.

Florida Chief Financial Officer Jimmy Patronis sent a letter to board members urging them to defer action in an attempt to cushion Hurricane Irma victims and address nonhurricane related losses without impacting rates for Citizens policyholders.

Irma total losses expected to approach $1.2B

Citizens has so far received more than 65,000 personal lines claims from Hurricane Irma. Total losses in personal lines exceeds $875 million. Total Irma losses, including those from commercial policyholders, is expected to approach $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.”

New managed repair program starts Aug. 1

The deferral allows Citizens to review initial results of a newly established managed repair program that kicks off August 1, 2018. Citizens said that it created the program to address rising costs linked to water-loss claims, assignment of benefits, and increased litigation, the effects of which appear to be spreading from South Florida to other parts of the state.

Related: Are insurance companies forcing their way into policyholder’s homes?

Beginning August 1, 2018, Citizens will limit payment on non-weather related water losses — a broken pipe, a leaking water heater — to $10,000, including $3,000 for emergency water mitigation services on homeowners’ multiperil (HO-3) and dwelling policies (DP-3) policies. According to Citizens, most policyholders will be unaffected by this change as the costs for emergency water removal and permanent repairs on a non-weather water loss typically do not exceed $10,000.

Customers who choose to take advantage of Citizens’ managed repair program will not be subject to the $10,000 sublimit. Participants in the managed repair program can choose from a group of local contractors. Citizens said that it will work directly with the service provider to monitor performance and ensure all covered repairs are completed to the customer’s satisfaction. Upon completion, the repairs will have a three year warranty.

Hope to reduce litigation

Policy changes accompanying the program aim to ensure that policyholders who do not participate in the managed repair program have at least $7,000 available for permanent repairs after completing emergency water remediation measures, while reducing the potential for assignment of benefit-driven litigation, which Citizens said “can cause lengthy delays and is driving rate increases across the state.”

Related: Hurricane-proof homes are real. Why isn’t anyone buying them?

Steven A. Meyerowitz, Esq., (smeyerowitz@meyerowitzcommunications.com) is director of FC&S Legal, editor-in-chief of Insurance Coverage Law Report, and founder and president of Meyerowitz Communications Inc.