While state officials are trying to digest Citizens Property Insurance Corp.’s proposed triple-digit sinkhole rate increase, other elected officials are taking their case to the public.
Senator Mike Fasano, R-New Port Richey, whose district has one of the highest sinkhole rates, is planning a public rally against the increase on August 16. He is also calling on his fellow colleagues to join him in protesting against the law allowing the rate hike.
Citizens filed for a 429 percent increase in its sinkhole rates. If approved, it could affect some 90,000 policyholders who currently carry the coverage. However, since it is not a mandatory coverage, many may just drop the coverage.
“It’s time for our governor, chief financial officer, many of my colleagues in the legislature, and the decision makers at the Office of Insurance Regulation to get the message that people can’t afford the outrageous premiums Citizens is seeking,” Fasano said.
Fasano also said Insurance Commissioner Kevin McCarty should hold public hearings around the state before making a decision on the filing.
Speaking before the Florida Cabinet, McCarty signaled his sympathy for Fasano’s position, but pointed out that under law, the OIR only has 45 days in which to review the filing. The OIR generally holds a public rate hearing in Tallahassee in cases where an insurer request a rate hike of more than 15 percent.
“We do have a very tight timeline, it’s statutory-generated and it’s not something that I have any flexibility over,” said McCarty. “Having multiple hearings would certainly be very time-consuming.”
Many state officials are calling for the Citizens to implement the proposed rate increase over several years instead of all at once. Florida’s Consumer Advocate Robin Wescott sent a letter to the insurer supporting the idea of an incremental increase. But in many ways, McCarty is hemmed-in by the law.
Technically, he doesn’t have the authority to demand that the insurer implement the rate increase over time and he can only reject the filing based on certain actuarial standards. However, many private companies have previously agreed to phase in double-digit rate increases to reduce the impact of rate hikes on policyholders.
McCarty said one thing he would look at closely is whether the insurer took into consideration the anti-fraud provisions of SB 408, which was the primary property bill enacted by lawmakers earlier this year. He told officials that Citizens seemed to rely on its past experience without taking into consideration the changes in the law, which could affect the insurer’s losses going forward.
Citizens released a statement saying it had taken into effect the anti-fraud measures when calculating its sinkhole rates. “When evaluating expected sinkhole losses into the future, we adjusted our assumptions to the lower end of the range to account for the anticipated favorable effects of SB 408,” said Citizens’ spokesperson Candace Bunker.
Including the proposed sinkhole rate request, Citizens filed for an overall statewide average 25 percent rate hike on multi-peril policies and 12 percent for wind-only policies. Out of the insurer’s 1.4 million policyholders, some 400,000 policyholders are covered by wind-only policies.
Current law states that the insurer can only raise its rates by 10 percent, but that does not include surcharges, assessments, and associated policy changes like sinkhole coverage. Renters would see their premiums increase by an average four percent and condominium unit owners by an average nine percent.
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