Citizens’ Rate Hike Debate Takes Familiar Tone At Hearing

Aug. 24--Factions in a long-running debate over increased litigation that's driving up costs of Citizens Property Insurance Corp. policies reprised familiar arguments in a public hearing over the company's proposed 2018 rates Wednesday in North Miami.

Citizens is proposing to increase premiums for multiperil single-family homeowners in Broward County by an average 10.4 percent. Miami-Dade customers would pay an additional 10.5 percent while Palm Beach County policyholders would pay 9.3 percent more.

This year, rates rose 8.9 percent to 10 percent in most of the region.

Citizens CEO Barry Gilway again blamed claims abuses by water damage contractors and their attorneys who use "loss consultants" to "mine" South Florida neighborhoods for potential water damage victims, then perform costly work after persuading policyholders to sign an "assignment of benefits."

Gilway said the goal is to find plaintiffs to sue Citizens so attorneys can collect legal fees. Although the number of water claims has decreased as Citizens' policy count has decreased by two thirds since 2012, the average cost per water claim in the tricounty region has increased from $10,279 in 2012 to $19,800 in 2016, Gilway said.

Policy changes approved last week by the Office of Insurance Regulation, including capping non-weather water damage payouts at $10,000 for customers who do not use Citizens' new managed repair contractor network beginning Feb. 1, are "the only way we can get our arms around these lawsuits," he said.

But several speakers pushed back at Citizens' efforts to lay the blame totally on contractors and attorneys

State Sen. Anitere Flores, chair of the Senate Committee on Banking and Insurance, said consumers are tired of paying higher rates for lower levels of coverage as insurers play "whack-a-mole" to solve the industry's latest "issue that has come up."

Last spring, Flores angered supporters of a bill that would have prevented attorneys from collecting legal fees if they sued insurers while working under a contractor working under an assignment of benefits.

Flores refused to introduce the bill -- which Gilway and Insurance Commissioner David Altmaier helped write -- for debate by her committee because it restricted consumer rights without providing any rate relief.

On Wednesday, she repeated her desire to see customers get a break on rates in exchange for surrendering coverage value and legal rights.

Perhaps more suits are occurring, she said, because "sometimes the insurance industry's plan is to deny claims on the front end, and that's why we're forced into litigation."

Mel Montagne, a Key Largo insurance agent, said if fraud is causing skyrocketing costs, Citizens should pursue criminal investigations under federal anti-racketeering laws.

But Dulce Suarez-Resnick, an insurance agent in Miami-Dade County representing the pro-reform Consumer Protection Coalition, said insurance costs are becoming unaffordable for her policyholders -- when companies are willing to write coverage there.

"South Florida cannot stand another year of [assignment of benefits] abuses," she said. "We need reform. We need it now."

State insurance regulators are expected to make final decisions on Citizens rates in early September.

rhurtibise@sun-sentinel.com, 954-356-4071, twitter: twitter.com/ronhurtibise

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