Citizens Rate Hike Result of Increased Water Losses, AOB Claims

Florida’s state-created property insurer is going to raise its rates again.

The board that oversees Citizens Property Insurance voted this week on a proposal to raise homeowner rates an average 5.3 percent and commercial accounts by an 8.4 percent average. By unanimous vote, board members recommended a 5.3 percent statewide increase for personal lines policyholders – homeowners, condominium unit owners and renters – with most increases concentrated in three South Florida counties where water losses, assignment of benefits abuse and litigation are disproportionately severe.

State regulators must approve the hike before it can take effect in February 2018.

Citizens has more than 451,000 customers, many of them living near the coast or in south Florida.

Florida has been spared from major hurricanes in recent years, but Citizens officials contend rate hikes are needed to deal with claims associated with water losses not associated with storms. They say the increased rates reflect rising non-weather water losses, assignment of benefits abuse and out-of-control litigation that, left unchecked, will force rate hikes for years to come.

The proposed hikes vary by the type of policy purchased and location.

The 2018 rate proposal continues a recent trend in Miami-Dade, Broward and Palm Beach counties. Homeowners with multiperil coverage in Miami Dade County, for example, will see an average increase of 10.5 percent, or $359, from 2017 premiums. Broward and Palm Beach county homeowners will see rates increase by 10.4 percent and 9.3 percent respectively.

Outside of the Tricounty area, many policyholders will see rates decrease or remain flat. Citizens’ homeowners policyholders in 56 of 67 counties will see average rates decrease under the set of proposed rates.

Among the major policy changes is a $10,000 cap on water loss repairs for customers who decide not to participate in the Citizens Managed Repair Program, which links customers with a network of vetted contractors. The voluntary managed repair program, coupled with a free emergency water removal service, will become available to new Citizens policyholders after July 1, 2017, and for existing customers when their policies renew.

Other policy changes include expanding obligations to third parties that accept an assignment of benefits. Currently, contractors who accept an assignment are not bound by the same obligations, including allowing Citizens adjusters to inspect a claim in a timely manner or providing proof that a loss has occurred.

“These proposed rate increases and product changes are critical for Citizens’ efforts to bring some relief to a market that is being made increasingly expensive by unnecessary litigation and out-of-control water loss claims,” said Chris Gardner, chairman of the Citizens Board of Governors. “Unfortunately, we are making it more expensive for many of our customers to own a home.”