Florida’s Citizens Plans 19% Rate Hike on High-Value Coastal Condos

By | November 16, 2011

Florida residents living in high-value condominium buildings insured by the state’s government-run homeowners’ insurer could see their rates increase by 19 percent on average.

Citizens Property Insurance Corp., the state’s largest homeowners market with 1.5 million homeowners, is permitted by law to designate some commercial properties whose insurance needs fall outside a standard policy to be categorized as an individually rated risk. Specifically, the risk needs more than $10 million in coverage and is typically located along the state’s coast line. The risks are divided into two categories, one that includes commercial residential multi-peril policies and another that makes up commercial residential wind-only coverage.

Rates for all of the commercial residential multi-peril risks will increase by 19 percent on average. But policies in parts of Broward, Miami-Dade, Palm Beach, Indiana River and Saint Lucie counties that account for $71 million in in-force premium and will actually see an average rate change of 20.6 percent.

Citizens is not making any rate changes on its individually-rated commercial residential wind-only policies.

The new rates will take effect in March on new policies and April for renewal policies.

Citizens last raised the rates, by 20 percent, on all individually rated risks in November 2009.

As of June 30, 2011, Citizens said it had 925 individually rated risks with a total exposure of $28.6 billion, representing $141 million in premiums. Ninety-one percent of those individual rated risks are in the insurer’s commercial coastal account and 56 percent of the risks fall under commercial residential wind-only policies.

Regulators are not required to sign-off on rates on individually rated risks, which are also exempt from the statewide average 10 percent annual cap on rate increases.

To arrive at the 19 percent figure, Citizens said it modeled potential catastrophe losses using the AIR 12 computer model. Also factored in was the cost of private reinsurance for a one-in-100 year storm, which accounted for a 24.7 percent increase in reinsurance costs since the last filing was made November 1, 2009 on new business and January 1, 2010 for renewal business.

The filing also contains an insurance industry load expense of 26.4 percent and a residual market contingency provision of 10 percent.

Topics Florida Pricing Trends

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