The Florida Office of Insurance Regulation on Friday approved 2017 rate increases for Citizens Property Insurance Corp. Citizens said in a news release that the increases address a disturbing increase in non-weather water loss claims and litigation that prompted an overall 6.4 percent increase for homeowners' multiperil policyholders across the state.
State insurance regulators made adjustments to Citizens 2017 rate request following a public hearing in August, making minor reductions to Citizens loss trends for homeowners multiperil rates while accepting Citizens' proposal regarding increases in rates for wind-only coverage, according to the Citizens news release.
"The 2017 rates reflect the growing challenge of rising water loss claims and the disturbing increased costs associated with assignment of benefits," said Barry Gilway, President, CEO and executive director of Citizens Property Insurance Corp. in the release. "Unless the legislature takes action, our policyholders can expect these increases for years to come."
The statewide average wind-only rate for homeowners would increase by 8.2 percent in 2017. Mobile-home owners will see an average 5.7 percent increase in multiperil rates while wind-only mobile-home coverage, which remains well below market rates, will increase by 10.3 percent.
The agency also requested a review by the Florida Commission on Hurricane Loss Projection Methodology on how wind rating models and stricter building standards impact rates in Monroe County.
Despite the overall rate increase, preliminary figures suggest that more than 100,000 Citizens policyholders will see rate reductions under the 2017 proposal as Citizens continues to adjust rates based upon recognized actuarial standards that require rates be based largely on local risk factors.
Following a reduction of nearly 1 million policyholders since late 2012, Citizens remains one of Florida's largest property insurers, with 492,775 personal and commercial policies in force as of Sept. 9, 2016.
On Aug. 18, the office held a rate hearing to receive public comment on Citizens' proposed rate changes. At the hearing, Citizens provided information about various components within its rate filing and identified water loss trends as a key, contributing factor for the increasing rate need statewide. Educational awareness efforts directed at policyholders and policy language changes approved by the office are proactive measures by Citizens to help curb this trend going forward.
Citizens also answered questions about pre-event funding (a short-term loan to recover claim costs payable by the Florida Hurricane Catastrophe Fund) and its hurricane loss estimates, which are projections by the Florida Public Hurricane Model and three other models. These are used as the basis for how Citizens derives its recommended rates.
The effective date for both new and renewal rates within the Personal Lines Account and Coastal Account is Feb. 1, 2017.
More information can be found on the regulator's website: www.floir.com/Sections/PandC/ProductReview/CitizensPublicRateHearing2016.aspx.