Tampa Bay has dodged the latest homeowners insurance bullet.
Many counties will see double-digit rate hikes in their Citizens policies. But bay area policyholders with the most common type of Citizens homeowners coverage will see premiums fall 3.4 percent on average, as will dozens of other pockets around the state.
In sharp contrast, rates in Hendry and Dade counties will soar 18 percent on average for similar policies. Rates will jump nearly 15 percent in Sumter County and 13 percent in Okeechobee.
Florida Insurance Commissioner Kevin McCarty approved late Thursday the 10.3 percent average rate hike for Citizens' homeowners statewide, a tad higher than the 9.7 percent average hike that Citizens sought. But, like most issues involving Florida's turbulent property insurance market, the reality is more complicated.
Citizens was originally intended to be the state's insurer of last resort, but it continues to add thousands of policies from private insurers who have cut back on hurricane exposure in Florida.
Currently, Citizens has 1.2 million policies statewide, including more than 800,000 homeowners policies. In Tampa Bay, the company has nearly 300,000 policies, the majority of them covering homeowners.
Here's a closer look at the latest attempt to shore up the finances of Florida's largest property insurer:
Who is affected by Thursday's decision?
Primarily homeowners and mobile home owners covered by Citizens.
In addition to signing off on a rate increase for homeowners, McCarty approved a 9.2 percent average increase for mobile home owners in Citizens' personal lines and high-risk accounts, and a 9.1 percent increase for mobile home physical damage.
What's the bottom line for Citizens policyholders in the Tampa Bay area?
That depends on the type of policy and where you live.
For the most common type of homeowners policy, the average rate will go down 3.4 percent in Hillsborough, Pinellas, Hernando, Pasco and Citrus counties.
For mobile home owners, it's more complicated. Average rates will:
• Decrease 4.6 percent in Tampa and 12.1 percent in the rest of Hillsborough.
• Decrease 5.9 percent to 13 percent in the three regions in Pinellas.
• Decrease 2.1 percent for coastal Pasco and 3.5 percent for inland Pasco.
• Decrease 0.9 percent for coastal Hernando, but increase 4.1 percent for inland Hernando.
• Decrease 2.9 percent for inland Citrus and 4.9 percent for coastal Citrus.
Why the big discrepancy in rate increases and decreases between counties?
A Citizens spokeswoman said staffers were meeting Friday to analyze McCarty's order and were unable to answer this question with any specifics. However, the insurer has previously said that some discrepancies are tied to changes in the way it calculates rates.
For years, Citizens compared the top 20 insurance providers in every county and set its rates higher than those insurers to encourage homeowners to shop around in the private market. Last year it began gradually adjusting rates to better reflect what it should be charging based on its expenses and risk models.
Why are the average statewide increases higher than what Citizens requested?
Regulators found that Citizens deserved higher premiums in large part to offset an increase in sinkhole claims. The company paid about $97 million for sinkhole claims last year but collected only $19.7 million in premiums to cover it.
Is that sinkhole surge unique to Citizens?
No. In fact, the state is investigating an increase in claims statewide far from the "sinkhole alley" area in central Florida. Insurers blame fraudulent claims and cases spurred by public adjusters, who are paid to represent homeowners. Public adjusters say insurers are trying to reject valid claims.
Wasn't there a 10 percent cap on Citizens' average annual rate increases?
There still is. After a three-year freeze on Citizens' rates, legislators allowed Citizens to gradually hike premiums up to an average 10 percent a year until they become what's considered "actuarially sound."
But the rate approval this week does not violate the cap the way state insurance regulators see it. Part of the premium increase will go toward increasing Citizens' cash contribution to the Florida Hurricane Catastrophe Fund. The fund, which all property insurers pay into, is used to help insurance companies pay for catastrophic losses after a major hurricane. Payments to the Cat Fund are not factored into the 10 percent cap.
Are state leaders endorsing the decision?
Gov. Charlie Crist has backed McCarty's order, though he said he only learned of it late Thursday from the media and as of Friday morning had not been briefed on any details.
"It's disappointing, especially during this economy," Crist said Friday. "It's unfortunate that it would go higher … than what was even anticipated. It's a problem for the consumer. It's a problem for the people."
Florida Senate Banking & Insurance Commissioner Garrett Richter, R-Naples, said the rate increase does not violate the intent of legislation that established the 10 percent cap. One of the goals, he said, was to rapidly increase reserves in the Cat Fund.
Are more Citizens rate requests pending?
Yes. McCarty's office is still within a 45-day window for reviewing requests, including its commercial property lines.
Times staff writers Aaron Sharockman and Michael C. Bender contributed to this report.