Citizens gets 5.4 percent Fla. insurance rate hike

State-backed Citizens Property Insurance Corp. has won approval to raise rates by an average of 5.4 percent for homeowner coverage that includes hurricane damage, except in high-risk coastal areas where premiums will be revised later.

Florida Insurance Commissioner Kevin McCarty announced new rates Friday for 719,000 policies of various types including 350,000 homeowners. They will go into effect Jan. 1.

McCarty also approved average statewide increases of 8.8 percent for residential rental properties, 1.7 percent for mobile homeowners, 2.1 percent for commercial mobile home physical damage and 10.2 percent for residential condominium associations.

Citizens, the state's largest property insurer, separately is seeking higher rates for 330,000 policies in high-risk areas along Florida's coastlines. A public hearing on that proposal, which includes a 7.7 percent average increase for 256,000 homeowners, is set for Nov. 10.

Both increases together would total $140 million a year in new revenue.

Increases will be even greater than average in some areas based on local risk assessments while many homeowners - largely but not entirely those in inland areas - will see their premiums drop.

The biggest increase among the lower risk homeowner policies is 10.6 percent for non-coastal parts of Collier County in southwest Florida. The largest decrease will be 9.8 percent in 15 mostly rural inland counties and non-coastal parts of two others.

McCarty approved the rates as proposed by Citizens with one exception. He increased the condo association rate by 0.1 percentage point more than requested.

"We're satisfied," said Citizens spokesman John Kuczwanski. "We look forward to getting the system updated."

A new state law lifted a three-year freeze on Citizens rates but also prohibits increases of more than 10 percent a year on any individual policy.

The 10 percent cap does not include a special assessment to rapidly build up cash in the state's Hurricane Catastrophe Fund, which provides backup coverage for Citizens and other insurance companies. As a result, increases in some areas will slightly exceed 10 percent.

McCarty rejected a request by Associated Industries of Florida, a business trade organization, to raise Citizens rates by 10 percent across the board.

Associated Industries president Barney Bishop argued at an Oct. 20 hearing that Citizens is underfunded and would have to assess other insurance consumers, including businesses, to help pay off losses from a major storm.

The state can impose assessments on policies of nearly all types, including auto, that are sold by any company doing business in Florida to help cover Citizens' losses.

A 10 percent across-the-board increase would have meant higher rates even for policyholders now in line for reduction because they already are subsidizing those in riskier areas, said Deputy Insurance Commissioner Belinda Miller.

That, however, would have violated another section of law requiring actuarially sound rates based on risk assessments in each rating territory, Miller said.

Citizens is expected to seek similar rate increases during the next several years because it would take an average 35 percent increase to meet the actuarially sound requirement in the lower risk areas and 100 percent in the high-risk areas based on current risk assessments, Miller said.