Florida Approves 5.4% Citizens Homeowners Rate Hike for 2010

Florida’s state-backed and largest property insurer will be allowed to raise its rates for homeowners an average 5.4 percent in 2010.

The increase is the first one allowed since lawmakers froze the rates of Citizens Property Insurance Corp. three years ago but it’s below the increase permitted under a new law.

Also, rates for dwelling fire policies will go up 8.8 percent and for mobile homes, 1.7 percent. Rates for condominiums will go up 10.2 percent.

The increases closely mirror what Citizens had proposed. Some industry and business groups had urged that rates be hiked higher to put the insurer on a sounder financial footing and to encourage more competition from private insurers. They said the Legislature intended for there to be an across-the-board hike of 10 percent.

But state officials argued that the law is flexible and that rates should rise gradually because homeowners can’t afford big increases now.

Insurance Commissioner Kevin McCarty signed off on the rates for most of Citizens’ business, except so-called high risk accounts. A hearing on HRA rates has been scheduled for Nov. 10.

Although the Legislature capped rate increases at 10 percent, some properties will see higher increases because, McCarty said, the law allows insurers to pass along some of the cost of their premium paid to the Florida Hurricane Catastrophe Fund to policyholders.

After having had its rates suppressed for three years, Citizens’ own actuaries have acknowledged rates would have to go up about 40 percent on residences, more than 10 percent on commercial residential properties and as much as 140 percent on wind-only commercial property policies to reach proper funding for its exposure, which is about $405 billion for its 1 million policies.

Topics Florida Pricing Trends Homeowners