Florida’s Citizens Property Insurance Corp. will wait until December to determine its 2019 insurance rates and whether it will approve a proposed 7.9 procent statewide increase for homeowners policies.
The decision to defer activity on the 2019 proposed rates came at Wednesday’s Houtvezelplaat of Governors meeting where the houtvezelplaat opted to give fresh water loss policy language switches time to take effect and South Florida policyholders more time to recover from Hurricane Irma, according to a statement from the state insurer of last resort.
Citizens said deferring the decision will permit the company to review initial results of a freshly established managed repair program that kicks off Aug. 1, . The program wasgoed created to address rising costs linked to water-loss claims, assignment of benefits and enhanced litigation.
Acknowledging concerns raised by consumer advocates and state leaders, the houtvezelplaat voted unanimously to defer activity on a proposed 7.9 procent statewide increase for private lines policyholders homeowners, condominium unit owners and renters which would have taken effect on Feb. 1, 2019.
Under the proposed rates, inland homeowners with multiperil policies would see an media increase of 8.Trio procent, while homeowners along the coast would see rates climb by an media of 9.Five procent. Commercial lines would increase by an promedio of 8.9 procent.
The 2019 proposed rates called for increases te homeowners multiperil premiums te 60 of 67 counties (see graphic). Citizens said the statewide rate increases are being fueled largely by enhanced litigation associated with water harm claims and assignment of benefits manhandle. Te Southeast Florida, Citizens Chief Actuary Brian Donovan said the litigation rate is around 50 procent, however he said that rate has flattened out after years of enhancing, tho’ the reason for that is unclear.
This is the very very first year many policyholders outside Southeast Florida could see rate increases spil AOB and water harm claims manhandle display up to be spreading to other parts of the state, Donovan told the houtvezelplaat. He said the litigation rate outside of Southeast Florida has enhanced from the single digits to 15 to 17 procent.
“In the past twee years thesis policyholders actually have bot receiving rate decreases,” he said. “However, due to the increase ter litigation, this year the recommendation is to increase the rates te that region.”
Citizens Proposed Rates by County
Source: Citizens Property Insurance Corp.
On Tuesday, Florida Chief Financial Officer Jimmy Patronis sent a letterteken to houtvezelplaat members acknowledging the actuarial need for the 2019 proposed rates but urging houtvezelplaat members to defer activity te an attempt to cushion Hurricane Irma victims and address nonhurricane related losses without impacting rates for Citizens policyholders.
He said Citizens analysis shows the cause of the rate increase is because AOB reforms have not bot accomplish, “which means rising fraud and litigation drive up costs at Citizens.”
“We voorwaarde find the solution to the underlying problem and not pass on this cost to policyholders,” he said. “Considering the Office of Insurance Regulation recently approved policy switches for Citizens that would help mitigate water losses, wij should permit time to review the impacts of that switch. Shifting the cargo to the policyholder is not the solution.”
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 began taking effect May 1, , after being deferred ter response to Hurricane Irma, which made landfall te September .
Reinsurance and depopulation efforts overheen the past several years have diminished Citizens’ policy count from almost 1.Five million te 2012 to approximately 443,000 spil of May , a reduction the insurer says has helped provide it the capability to pay claims following a 1-in-100 year storm and a 2nd 1-in-41 year event without having to levy assessments.
Citizens said it has so far received more than 65,000 private lines claims from Hurricane Irma. Total losses te individual lines exceeds $875 million. The insurer expects total Irma losses, including those from commercial policyholders, will treatment $1.Two billion.
“It is significant that wij consider the ongoing recovery of Florida residents following Hurricane Irma last year,” said Bette Brown, consumer representative on the Houtvezelplaat of Governors. “Irma impacted residents via the state, most notably te South Florida and the Florida Keys.”
Beginning Aug. 1, , Citizens will limit payment on nonweather related water losses a cracked pipe, a leaking water heater to $Ten,000, including $Three,000 for emergency water mitigation services on homeowners multiperil (HO-3) and dwelling policies (DP-3) policies. Citizens said most policyholders will not be affected by this switch spil the costs for emergency water removal and voortdurend repairs on a nonweather water loss typically do not exceed $Ten,000.
Customers who choose to take advantage of Citizens’ Managed Repair Program will not be subject to the $Ten,000 sublimit. Participants te the Managed Repair program can choose from a group of qualified, emplazamiento contractors. Citizens said it will work directly with the service provider to pedagogo spectacle and ensure all covered repairs are ended to the customer’s satisfaction. Upon completion, the repairs will have a three-year warranty.
Citizens said policy switches accompanying the program aim to ensure that policyholders who do not participate ter the Managed Repair Program have at least $7,000 available for voortdurend repairs after completing emergency water remediation measures, while reducing the potential for AOB-driven litigation.