Most Tampa Bay area homeowners covered by Citizens Property Insurance will see their rates fall for the first time in years under a proposal disclosed Monday by the state-run insurer.
Citizens plans to cut rates in 2015 for nearly seven out of 10 policyholders statewide with the rates falling by an average of 3.2 percent. Mobile home owners would see average rates drop by 3.9 percent.
Among bay area counties, Citizens is proposing average rate cuts for most homeowners policies of 8 percent in Hillsborough; 8.9 percent in Pinellas; 6 percent in Pasco; and 9.5 percent in Citrus. Hernando County policyholders face an average increase of 0.4 percent.
Since 2010, state legislators have allowed Citizens to raise its rates up to an average 10 percent a year. For most property owners, Citizen now says, rates have caught up to become "actuarially sound." In other words, the higher rates now reflect the risk of insuring those properties.
"Pockets of inadequacy persist, mostly near the coast and for older homes, condos and mobile homes," Citizens said in its rate request. "But the majority of Citizens' policyholders will see an actuarially sound rate that is similar to last year's indications or even a bit lower."
Among the triggers for lower rates:
• Florida has enjoyed a string of eight hurricane-free years.
• Citizens is paying less for sinkhole claims after state legislators in 2011 changed the rules, largely limiting payouts in standard policies to cases of catastrophic ground collapse.
• The insurer is paying much less this year for reinsurance, an added layer of coverage that insurers buy to help pay catastrophe claims. Those savings are passed on through lower rates.
"Citizens has always been committed to charging only what is needed to establish actuarially sound rates and our proposed 2015 rates reflect that continued commitment," said Chris Gardner, the company's chairman of the board. "We've done nothing more than rely upon the same data we use every year to determine rates, and this year that data indicates a decrease is in order for most of our policyholders."
Citizens isn't alone. In a January report, Florida Insurance Commissioner Kevin McCarty said a half dozen of the state's 30 major property insurers had asked to cut rates by 2.4 percent to 9.2 percent.
McCarty's office has not updated that report. However, a summary of filings so far this year shows companies are split between seeking rate hikes and rate cuts. Among insurers cutting rates this year are Florida Peninsula, Safe Harbor and Southern Oak.
Consumer advocates welcome the reprieve. Florida homeowners, they are quick to point out, pay more for property insurance than residents of any other state.
"It's good news," said Bill Newton, executive director of the Florida Consumer Action Network. "We hope this would mean more of the private companies will reduce their rates as well."
Citizens, the state's largest insurer of homes, has actively tried to move many of its policyholders to private companies over the past few years. As of May 31, Citizens had fewer than 930,000 policies, down from about 1.5 million two years ago.
Many of the small, Florida-based companies that are taking on a bigger chunk of policies statewide in the past 10 years have not faced hurricane claims. Still, a dozen of them have failed during those hurricane-free years, even though state regulators assured they were sound. The latest example: regulators declared Jacksonville-based Sunshine State Insurance Co. insolvent this month, pushing its 37,000 policyholders to another carrier.
Before Citizens policyholders rejoice too much over Monday's news, they should recognize there's a caveat. As Citizens points out, even if a policyholder's base rate declines, their annual premium may still rise next year.
That's because the rates only refer to how much a homeowner must pay per $1,000 of insured value. A rise in property values and reconstruction costs can drive an annual policy premium higher, regardless of a falling insurance rate.
Citizens' Board of Governors will consider the recommended rate changes on Wednesday. The board, in turn, must submit its proposal to the Florida Office of Insurance Regulation for approval.
Jeff Harrington can be reached at [email protected] or (813) 226-3434.