Insurance rate-hike ‘freeze’ order won’t delay Citizens vote

Oct. 17--Perhaps it depends on what the meaning of the word "freeze" is.

Or the word "efforts."

For a second straight year, Gov. Rick Scott issued a post-hurricane order to Insurance Commissioner David Altmaier to "freeze any and all efforts to increase rates on policyholders for 90 days." But the resulting emergency order by Altmaier doesn't include that exact language and leaves room for state-run Citizens Property Insurance Corp. to proceed with its rate setting process.

Citizens, the so-called insurer of last resort, does not plan to delay a scheduled Dec. 12 vote by the company's Board of Governors on 2019 insurance rates that -- before being postponed in June -- included a 7.9 percent average statewide increase, including hikes for most of Citizens' customers in counties affected by the storm.

The new rates would take effect next Aug. 1 for new and renewing policyholders, Citizens spokesman Michael Peltier said by email on Tuesday. He said he did not know whether the rates would be revised from those presented to the board in June.

As of June 30, Citizens had 438,802 policies statewide, 227,909 in the tricounty region, and 6,846 in the 16 Panhandle counties in which Scott declared a state of emergency on Oct. 7, according to state data.

In addition to ordering the rate-hike "freeze" for the counties impacted by Hurricane Michael, Scott's directive also extends by 90 days the amount of time policyholders have to submit damage information to their insurers, and prohibits insurers from canceling or non-renewing policies covering residential properties damaged by the hurricane for at least 90 days.

The emergency period runs from Oct. 7 to Jan. 7, the order states.

Citizens has opened catastrophe response centers for its Panhandle customers in Panama City, Port St. Joe, Apalachicola and Tallahassee and received 1,625 claims, Peltier said.

Jon Moore, spokesman for the Office of Insurance Regulation, said her agency will comply with Scott's order by not approving "any rate increase for persons, property or risks located in the included counties for the 90-day period."

As interpreted by Citizens, Altmaier's emergency order is aimed primarily at prohibiting insurers from invoking a little-used, rate-setting strategy called "use and file" that allows proposed rate hikes to take immediate effect without pre-approval by the Office of Insurance Regulation.

"We do not do that," Peltier said. "Our legal team is confident that we are in compliance with the emergency order."

Similar emergency orders by Scott and Altmaier last year, after Hurricane Irma struck a wide swath of the state, raised questions when regulators proceeded to approve rate-hike proposals filed by insurers before the order was established and scheduled to take effect during the emergency period. And they did not prevent rate hikes approved for five companies before the emergency order from taking effect during the emergency period.

Asked about those at the time, Altmaier then clarified that he had "no intention of approving any new rate increase" that would take effect during the emergency period.

Irma's timing also started a cascading effect that pushed back the effective date of next year's Citizens rate increases six months from the normal Feb. 1 to Aug. 1.

Last year's emergency order came after Citizens' Board of Governors approved rate increases averaging about 10 percent in Broward, Palm Beach and Miami-Dade counties, but before the Office of Insurance Regulation completed its certification of the rates, as required under state law.

Citizens and the Office of Insurance Regulation interpreted the emergency order as requiring suspension of the state's review of its rate proposal until after the 90 days expired on Dec. 4 and, as a result, delayed the effective date of the new rates from Feb. 1 to May 1. Existing customers whose policies were set to be renewed between Feb. 1 and April 30 were renewed under their previous rates, allowing them to avoid any rate hike that year.

Then on June 20, a day before Citizens' Board of Governors had planned to vote on a set of 2019 rate hikes averaging 7.9 percent statewide, around 10 percent in Broward and Miami-Dade counties and 7.7 percent in Palm Beach County, Chief Financial Officer Jimmy Patronis asked the board to delay its vote until newly adopted cost-saving measures were given a chance to work.

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