Citizens Chasing Big Rate Increase

July 14--TALLAHASSEE -- Diane Jenkins remembers when her homeowners insurance premiums were as low as $600 a year, and she laughs.

Those days are long gone.

Jenkins and her family live in a two-story Tampa house built in 1919 and valued at $350,000. She has paid as much as $5,500 yearly in premiums to Citizens Property Insurance Corp., the state's insurer of last resort. She is now with another insurer and still pays a hefty $4,300, she says.

"We've never had a claim," Jenkins says. "We've done the tie-downs for the roof, we got the hurricane shingles. It's an insurance company's dream.

"We've done all the right things," she adds.

As Jenkins and thousands of homeowners have learned, doing the right thing hasn't helped in the face of a looming insurance apocalypse in Florida, mainly thanks to increasingly damaging storms in the past decade.

Now, Citizens homeowners policyholders in the Tampa Bay area may be paying as much as $200 more yearly as the insurer seeks approval from the state to raise rates.

The increases have to be approved by the Florida Office of Insurance Regulation, which is expected to address them this fall.

Citizens was formed in 2002 to insure "homes, businesses and condominiums whose owners otherwise might not be able to find coverage in the private market," according to its website.

"From a company standpoint, it will help them get into a better fiscal position," says Bob Childress, CEO of Solace Insurance in Largo. "For the mid- to lower-income folks that are paycheck to paycheck, this is going to be devastating to them."

Insurance problems have vexed the state since long before Citizens was created. Robin Smith Westcott, Florida's insurance consumer advocate, last week announced formation of a panel to figure out better ways to handle homeowner insurance claims.

Westcott cited "long and frustrating processes that impede families' ability to recover."

Citizens covers many homes and other properties that other insurers don't -- or won't.

But the company, a not-for-profit government corporation, says it can't charge as much as it needs to because of a 10 percent cap on rate increases. That's leaving it in the hole to pay for future claims.

"Citizens is committed to providing a top-quality service to our policyholders and strives to be transparent and open about our rate-setting process," spokeswoman Lori Poole said.

"Where Citizens has decreased or increased coverage, we have adjusted our rates and premiums accordingly."

The Citizens board last month approved a request to raise rates by an average of 7 percent statewide next year, costing its more than 1 million policyholders a total of an extra $178 million.

Prices are going up for traditional homeowners insurance and sinkhole insurance. The cap on homeowner rates doesn't apply to sinkhole coverage, however.

Sinkhole premiums are being raised in phases in Hernando, Hillsborough and Pasco counties. The Tampa Bay area has the highest sinkhole rates in Florida.

Legislators, concerned that Citizens wouldn't have enough money to pay out claims after a big storm, this year passed a law creating a clearinghouse to pass homeowners off to more private insurers.

Over the next several years, the law also will gradually limit the value of homes that Citizens can insure, bringing it down from $1 million to $700,000 by 2017.

The Citizens board also approved a deal potentially worth more than $50 million to transfer up to 60,000 policies to Heritage Property Insurance and Casualty. That company, which went into business last year, donated $110,000 to a political committee that Gov. Rick Scott controls.

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Jenkins, the Tampa homeowner, tried moving to another company. She says her premium soon went up from $5,500 to $6,600 yearly, her deductible increased and she got less coverage.

"We called and said, 'Hold on,' and ran through all our bells and whistles," she says. "The guy says, 'Well, maybe you should have stayed with Citizens."

But Citizens was always underpriced for the marketplace, Childress says.

So instead of a last resort, "they became the go-to." That left the insurer historically underfunded, he says, though it now has a $6 billion surplus, according to reports.

Rep. Mike Fasano, a New Port Richey Republican, has been one of Citizens' most fervent critics.

"I laugh -- but I shouldn't laugh -- when I read their board saying they're holding strong and not raising rates too much, but they're going way above the 10 percent cap by doing it though the back door," he says.

He cites these examples of changes Citizens is making:

Decreasing "mitigation credits," or discounts for items such as replacement windows and wind-resistant roofing and siding,

Eliminating coverage for porches, pool enclosures and carports, which are most likely to be wrecked in strong storms.

Reducing coverage for liabilities, such as lawsuits against homeowners, from $300,000 to $100,000.

Poole, however, says policyholders whose mitigation credits were removed or reduced couldn't confirm the presence of mitigation features on their homes.

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The company also offers an appeals process for policyholders who want to challenge those reductions.

And she says the elimination of coverage for attached structures and the reduction in liability coverage "were made to bring Citizens more in line with its role as a 'residual market insurer,' which traditionally offers lower levels of coverage.

"In both cases, Citizens decreased premiums as a result of the coverage reductions," Poole says. "Any policyholder who had reduced coverage also paid a reduced premium in 2013 as a result."

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