The Florida Office of Insurance Regulation has approved a slate of 2016 property insurance rates for Citizens Property Insurance Corp.
In an order signed September 8 by Florida Commissioner Kevin McCarty, FLOIR set the rates for Citizens multi-peril and coastal homeowners that reflect an overall statewide rate decrease of 1.8 percent increase for homeowners’ multiperil policyholders across the state.
The state insurance regulator made minor adjustments to Citizens 2016 rate request, which addressed continued coastal wind-risk and a spike in water claims in South Florida.
According to a statement from FLOIR, the office modified some of Citizens’ recommended rates to address key issues cited as causes for increasing homeowners’ insurance costs for policyholders in South Florida and on the coast. These included Citizens’ purchase this year of more private reinsurance (insurance for insurance companies) and pre-event financing (a short-term loan to recover claims costs payable by the Florida Hurricane Catastrophe Fund).
Citizens presented its rate proposal at a public hearing on August 25 in front of Florida insurance regulators and addressed questions FLOIR had on its rate requests. Citizens highlighted the surge in water loss trends in three South Florida counties as the main reason for rate increases. The combination of these factors drove up overall rates despite reductions to most policyholders living farther from the coast. The Office’s subsequent findings are described in more detail within the order shown below.
According to a statement from Citizens, the FLOIR-approved rates reflect a decrease for 60 percent of Citizens customers but an average overall 1.8 percent increase for homeowners’ multiperil policyholders across the state as of Feb. 1, 2016 for new and renewal business.
“Today’s decision by the Office of Insurance Regulation reflects Citizens’ success in reducing exposure and returning to its role as the state’s insurer of last resort,” said Barry Gilway, Citizens’ president, CEO and executive director. “While our footprint is shrinking, we continue to provide critical coverage to those policyholders still unable to find appropriate coverage in the private market.”
The statewide average homeowners multiperil (HO-3) premium would rise in 2016 to $2,381, up 1.8 percent from an average of $2,339 in 2015. Average homeowners multiperil rates, however, will decrease outside of Miami Dade, Broward, Miami-Dade, Monroe and Palm Beach counties.
The average premium for coastal wind-only homeowners policies will rise to $2,599, up 8.3 percent from the 2015 average of $2,400. This reflects continued progress along the statutory “glide path,” under which no policyholder can experience more than a 10 percent increase per year exclusive of coverage adjustments.
Mobile home owners will see a 6.4 percent reduction in multiperil rates while wind-only mobile home coverage, which remains well below market rates, will increase by 10.4 percent. Sinkhole rates in Hernando, Hillsborough, Pasco and Pinellas Counties will remain the same for 2016.
No rate increases were included for sinkhole coverage.
Despite a reduction of nearly 900,000 policies since late 2012, Citizens remains the largest property insurer in Florida with 601,213 personal and commercial policies in force as of September 4, 2015.
Following nine hurricane seasons with no major storms, six years of rate adjustments under the statutory glide path and historically low reinsurance costs, six in 10 Citizens personal lines policyholders are expected to see rate reductions in 2016.
“Citizens remains committed to transparency in working with the Office and complying with the statute by ensuring that rates are actuarially sound, no more and no less,” said Chris Gardner, chairman of Citizens’ Board of Governors. “A properly funded Citizens means no surprises in the form of post-storm assessments on all insurance-buying Floridians.”
The chart below provides the overall statewide average estimated rate changes established by the Office for each account individually:
|(Incl. FHCF Cash Buildup Factor Changes)|
|Account||Original Rate Requested||Estimated Rate Established*|
|Homeowners Multi-Peril (PLA)
|1.3% increase||1.8% increase|
|Homeowners Multi-Peril Wind Only (CA)
|9.0% increase||8.3% increase|
|Property/Personal Dwelling Fire (PLA)
|0.9% decrease||1.5% decrease|
|Property/Personal Dwelling Fire Wind Only (CA)
|9.5% increase||9.1% increase|
|Mobile Homeowners Multi-Peril Wind Only (CA)
|10.4% increase||10.4% increase|
|Mobile Homeowners Multi-Peril (PLA)
|5.3% decrease||6.4% decrease|
|Mobile Homeowners (Dwelling Fire) (PLA)
|4.1% decrease||6.8% decrease|
|Mobile Homeowners (Dwelling Fire) Wind Only (CA)
|9.8% increase||9.9% increase|
* This is an estimate of the rate effect on earned premiums determined using selected changes from the in-force policy distributions and the rates in the Order.
Rate filing decisions for the commercial residential and commercial non-residential accounts are still pending.
Source: Florida Office of Insurance Regulation, Citizens
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- Citizens: Water Losses the Reason for Rate Increases in South Florida
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- Citizens to Hold Off on 2016 Sinkhole Rate Increases, For Now
- Florida Governor Vetoes Changes to Citizens Depopulation Program
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