Citizens Property Insurance Corporation’s Board of Governors has approved a revised 2019 rate proposal that the company said reflects recent legislative changes that targets the ongoing abuse of assignment of benefit agreements and will reduce unnecessary litigation responsible for driving up rates for the past several years.
By unanimous vote on Wednesday, the board approved a statewide average capped increase of 2.3 percent for homeowners multiperil policyholders, compared to the 8.2 percent increase which was the recommended capped rate increase approved in December 2018 that did not take into account the passage of the recent legislation.
Citizens said taking the changes into account, nearly 44,000 additional homeowners, condo unit owners, dwelling and mobile homeowners policyholders will see rate decreases with a total of more than 67,000 seeing decreases for 2019. Many others will see less significant rate increases.
The new law required that Citizens could not implement rate changes in 2019 for DP-3 and HO-3 policies unless the rate filing reflects projected rate savings from the reforms. Citizens said though it was not required to revisit any additional lines of business, the reforms in the bill also allowed for savings in its HO-6 and MHO-3 policies. The updated rate filing gives additional policyholder rate decreases for homeowners, condo, dwelling and mobile homes lines.
“[The] recommendation is a direct result of meaningful legislative reforms passed earlier this year to combat rising premiums that have placed an increasingly heavy burden on our policyholders,” said Gary Aubuchon, interim chairman of Citizens Board of Governors.
Because certain areas of the state were more impacted by AOB abuse than others, Citizens said some geographic areas will see a more significant impact on rate indications following the passage of the law.
For example, some residents in the Tri-County region of South Florida where the abuse was most rampant will actually get a rate decrease instead of an increase on multiperil policies. Miami-Dade policyholders will see a rate reduction of 3.5% instead of the 9.4% increase that was projected when rates were filed last December. Broward and Palm Beach Counties will still face rate increases of 9.6% and 4%, respectively, but those hikes are less than the respective 9.9% and 7% increases originally filed by Citizens last year.
Citizens is required by state law to submit a slate of actuarially sound rates to the Office of Insurance Regulation annually for approval. If approved, the 2019 rates will take effect Dec. 1, 2019, for new and renewal policies.
The passage of HB 7065 caps a multi-year effort to address runaway litigation and AOB abuse, especially surrounding nonweather related water loss claims, which after decades of stability skyrocketed in recent years.
The new law provides additional safeguards for policyholders who change their minds or are unsatisfied with the work after signing an AOB, and more clearly defines the responsibility of vendors and insurers when assignments are in place. Finally, the law provides incentives for all parties to make reasonable settlement offers following a loss.
- What to Expect from Florida’s AOB Reform Law Taking Effect July 1
- Update: Florida Legislature Passes Industry-Backed AOB Reform Bill
- Florida Governor to Sign AOB Reform Bill; Citizens Plans Rate Review
- Citizens to Request 8.2% Rate Increase from Florida Regulators
- Commentary: How Florida AOB Crisis Is Impacting State’s Independent Agents
- Regulators, Industry Seek to Keep Florida AOB Abuse In Check After Michael
- How the Florida Insurance Industry Hopes to Rein In AOB Crisis
- Report Shows Florida AOB Abuse Worsening as Lawmakers Consider Reforms
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