MIAMI — Florida's largest property insurer, already under fire for everything from recent business deals to how much it pays its executives, is readying another round of rate hikes for homeowners.
The board of Citizens Property Insurance Corp. meets in Miami next week to consider a range of proposed hikes. If approved by the board, and then state regulators, rates will rise in January for about 1.26 million policyholders.
State law places a 10 percent cap on how much Citizens can raise its rates on an annual basis. But that cap doesn't apply to sinkhole coverage the insurer offers, or additional charges used to purchase backup coverage.
The overall statewide rate hike for all customers will be 6.9 to 8.8 percent. But for many Citizens customers it will be higher.
For example, tens of thousands of homeowners in such counties as Broward, Collier, Miami-Dade, Escambia and Palm Beach who use Citizens to cover only storm-related damages could face a 10.7 percent hike. That would translate to an average premium hike of as much as $300 or $400 a year. Other Citizens customers with complete homeowners coverage could see rates increase by a smaller percentage, with some in Sarasota, Santa Rosa and Walton counties experiencing increases of 5 to 6 percent.
Citizens, the insurer of last resort in Florida, covers many homes and property that traditional insurers do not cover. But because of rate caps, Citizens says, its does not charge as much as it needs to cover potential claims.
Citizens has the power to place a surcharge, also called a "hurricane tax," on its own policies and on the policies of most insurance policies if it can't cover its losses after a major storm.
Gov. Rick Scott and others have pushed to reduce the size of Citizens out of fear it could not handle the storm-related damages. But some of the deals approved by Citizens' board have come under fire.
State legislative leaders have announced they plan to hold hearings to review a recent $52 million deal to shift 60,000 policyholders to a fledgling company.
Citizens doesn't normally pay companies to absorb its policies, though the board approved a similar transaction earlier this year. Instead, Heritage Property Insurance and Casualty is being paid to assume any claims associated with policies going back to January. Because Heritage gets to pick the policies it wants, the insurer could cherry-pick policyholders who have no claims pending.
Scott has also criticized Citizens for pay raises given to top executives and reports about lavish travel spending.