TALLAHASSEE — Responding to pressure from homeowners, lawmakers and some high ranking state officials, Citizens Property Insurance Corp. board members on Monday voted to cap proposed sinkhole rate hikes at 50 percent for the coming year as they try to make the state-backed program financially sound.
In attempt to sweeten what it concedes is bitter medicine, the board voted 4-0, with two abstentions, to back off from a decision it had made in July to raise rates in some cases by up to 2,000 percent and more than $5,000 a year. The proposed rate increase was brought about by passage earlier this year of SB 408, which among a slate of changes required Citizens to charge rates that are actuarially adequate.
Monday's action would allow the board to maintain its earlier rate hike approval, but give the insurer more time to do it.
"As we do our work, members, we have to balance two competing interests," Citizens' Chairman Carlos Lacasa said before the vote. While lawmakers are the ones pushing the company to raise its rates, some of them are also part of the push for the company to blunt the impact in the face of complaints from their constituents.
But even with the cap in place, Citizens policyholders seeking the voluntary coverage in some sinkhole prone regions of the state will still see annual increases of more than $700 for sinkhole coverage alone, a rate one prominent Senate critic says is still "economically unacceptable."
"Fifty percent is still too high, way too high," said Sen. Mike Fasano, R-New Port Richey. "In some cases, we're talking about rates going up close to $1,000 for folks who are barely getting by."
Sinkhole insurance rates have been in legislative crosshairs for the past several years.
Legislation passed following the 2004-05 hurricane seasons has resulted, Citizens says, in an avalanche of claims and an exodus of private insurers from the sinkhole market.
With 1.4 million policies in force, Citizens has become a major provider of the optional sinkhole coverage. Last year, the company collected $32 million in sinkhole premiums, but paid out nearly $250 million in claims.
State insurance regulators are scheduled to convene in Tampa Tuesday to approve Citizens' rates that would kick in Jan. 1. Non-sinkhole premium increases are capped at 10 percent a year.
Monday's emergency meeting was called to mitigate some of the opposition expected when Florida insurance officials travel to Tampa. Before Monday's vote, sinkhole rates for Citizens customers in the Tampa were slated to rise 2,392 percent.
Under the new proposal, Citizens will ask state insurance regulators to approve the original rate hikes the company applied for, but allow the insurer to ratchet up rates annually over a period of time. The board would review rate consideration every year to determine how much to increase rates to more closely mirror the risk.