Florida residents covered through the state’s largest homeowner insurer will soon pay more for coverage after the insurer ratified a number of rate hikes recently approved by regulators.
The Citizens Property Insurance Corp. board of governors voted unanimously to approve an overall average 6.2 percent increase in standard homeowners’ rates and 8.6 percent in dwelling fire rates. The board also approved controversial hikes in sinkhole rates of 32.8 percent on homeowners policies and 96.5 percent on dwelling fire policies.
The new homeowners and dwelling fire rates will take effect Jan. 1, 2012. The insurer’s wind-only policy rate changes will be implemented Feb. 1, 2012. The board decided not to phase-in the increases.
The insurer currently has over 1.4 million policyholders, representing 20 percent of the homeowners market.
Citizens President Scott Wallace told the board that the insurer is growing by some 1,000 policies a day. “We continue to see a steady flow of new applicants with no end in sight,” he said.
The board’s action comes just weeks after Insurance Commissioner Kevin McCarty signed-off on the 32.8 percent sinkhole rates after a month-long public controversy that engulfed Citizens, state officials, and homeowners.
The insurer had initially requested a sinkhole coverage increase of 429 percent, which would have cost some policyholders more than $1,000 in additional premiums per year. Citizens later lowered its requested to an average 50 percent per year while it gathered data to gauge the effect on claims of sinkhole provisions in property insurance legislation (SB408) passed this year.
In the past six months, the insurer has been averaging 400 claims monthly and is projecting it will have more than 4,600 claims by year’s end. The majority of those claims are coming from two counties in the southwest portion of the state. The average loss per claim is now reaching $60,000.