Florida Insurance Commissioner Kevin McCarty has approved a statewide average homeowners insurance rate increase of 10.3 percent for policies written by the state-backed Citizens Property Insurance Corp.
Citizens had filed for a 9.7 average increase but in his official order McCarty determined a slightly higher rate was needed to comply with state rating law. He also approved slightly higher rates than Citizens requested in other lines.
Citizens has cited the rising cost of sinkhole claims as a major reason for the increases. Citizens took in $19.6 million for sinkhole coverage in 2009 but paid out $97 million in claims costs.
Rates for sinkhole coverage will rise from 10 percent to 30 percent. OIR is also requiring Citizens to inspect all homes where sinkhole coverage is requested and if the properties do not pass inspection, exclude sinkhole coverage from the policies.
McCarty approved an average increase of 9.2 percent for mobile homes. Citizens, which insures more than 1 million properties in the state, had filed for a 7.4 percent hike.
For mobile homes physical damage coverage, the approved increase is an average 9.2 percent, compared to 6.1 percent requested by Citizens.
The homeowners and mobile home rates are for personal lines as well as high risk accounts. The effective date for personal lines account is Jan. 1, 2011; the effective date for high risk accounts is Feb. 1, 2011.
The rate increases vary by territory. Homeowners in some territories will see double-digit jumps while others will see rates go down.
Actuarial indications are that rates should go up by more than 50 percent for Citizens to be soundly funded. However, state law caps increases for Citizens to an average of 10 percent a year, plus costs to build up cash in the Florida Hurricane Catastrophe Fund, which nudged the final rate above the 10 percent cap.
The Office of Insurance Regulation said it is still reviewing increases for dwelling fire and commercial property policies.
Citizens made its request in July. A public rate hearing was held in Tallahassee on Sept. 7, 2010.