Citizens Property Insurance Corp. recently announced its proposed rate increases for 2014. Homeowners covered by Florida’s state-backed insurer can expect an average 6.6 percent increase, but homeowners purchasing sinkhole coverage will not fare as well: The company is asking for a steep 24.8 percent hike (statewide average) over current rates.
While state law caps homeowners insurance rate increases at 10 percent, the law does not cap sinkhole rates. According to Citizens’ president, though, the company is imposing its own cap on increases in the most sinkhole-prone areas of the state. Policyholders in Pasco and Hernando counties will not see rates go up more than 20 percent of the statewide average; similarly, Hillsborough County insureds will not see rates climb more than 50 percent of the statewide average.
The question, of course, is 20 percent of what? In Pasco County, the sinkhole coverage costs, on average, $1,829. Add 20 percent, and the premium jumps to $2,195. In areas of the state with lower sinkhole risks, the average increase will fall in the $0 to $76 range, with the average being about $7.
Citizens’ financial situation has long been a topic of debate, but company officials said the insurer is doing well, with a good surplus in hand and a plan to move policyholders to private insurance companies underway. The ongoing concern for lawmakers has been the risk of catastrophic losses depleting Citizens’ reserves, forcing the insurer to assess all of Florida’s policyholders to cover the deficit.
In the past, the cry has been that the insurer is one major storm away from a sizeable assessment. Now, the president says, the company is in a stronger financial position than it has been in years, but one bad hurricane season could undo it all.
Source: Insurance Journal, “Florida’s Citizens Makes Case for Homeowners, Sinkhole Rate Increases,” Aug. 21, 2013Share