MIAMI — Florida's largest property insurer has approved another round of rate hikes that could affect more than a million policyholders.
The board for Citizens Property Insurance Corp. voted Wednesday to raise rates by a statewide average of 7 percent next year, adding $178 million in new insurance costs for policyholders.
Many customers face higher increases because they use Citizens to cover only storm-related damages. For example, tens of thousands of homeowners in coastal counties such as Broward, Collier, Miami-Dade, Escambia and Palm Beach could face a 10.7 percent hike. That would translate to an average premium increase of as much as $300 or $400 a year.
Other Citizens' customers who have complete homeowners coverage could see their rates go up by a smaller percentage, if state regulators approve the hikes. Some homeowners in Sarasota, Santa Rosa and Walton counties may only see their rates increase by 5 percent to 6 percent.
The overall statewide rate hike does not reflect increases the board approved for sinkhole coverage, which is not subject to the state's annual 10 percent cap. Citizens' staff had recommended a 27.3 percent hike for sinkhole policyholders but the board approved a slightly lower increase, voting to phase in rates in the three hardest-hit counties to cushion the impact. Policyholders in Pasco and Hernando counties will pay 20 percent of the increase while homeowners in Hillsborough County will pay half the rate hike.
Citizens is the insurer of last resort in the state and it covers many homes and property that traditional insurers do not cover. But because of rate caps, Citizens says it does not charge as much as it actually needs to cover potential claims.
On Wednesday, some lawmakers joined with Florida's chief financial officer, Jeff Atwater, and its insurance consumer advocate, Robin Smith Westcott, in asking the Citizens board to consider the financial hardship the rate hikes would impose on many homeowners. State Rep. Frank Artiles, R-Miami, asked the board to limit increases, especially in South Florida.
"We are really hurting in Miami-Dade County," he said. "We feel it more than anybody else."
Board members acknowledged the potential hardships but repeatedly referred to their legislative mandate to stabilize the state-run insurer. The increases, they said, are part of a strategy to put customers on a "glide path" to actuarially sound premiums.
Gov. Rick Scott and others have pushed to reduce the size of Citizens out of fears that it could not handle its losses following a major storm. But some moves to reduce the state's risk have come under fire.
The Citizens board recently approved a $52 million deal to shift 60,000 policyholders to a fledgling company that contributed $110,000 to a political committee controlled by Scott. Heritage Property Insurance and Casualty is being paid to assume any claims associated with policies going back to January. But since the company gets to choose the policies it wants, the insurer could cherry-pick policyholders who have no claims pending.
Still, Citizens officials said Wednesday that such deals, known as "take-outs," were helping to reduce the state's liability and making rates in the private market more competitive for consumers.
The company has built up a $6 billion surplus.