Citizens Property Insurance Co. is downgrading a rate increase it was granted last year following recently passed legislation that addressed growing litigation stemming from water damage claims not caused by storms.
Instead of an average rate hike of 8.2 percent for homeowners policies across the state, which the state-backed insurer's board approved in December, rates would increase 2.3 percent on average for homeowners. The Florida Office of Insurance Regulation needs to sign off on the change.
“Today’s recommendation is a direct result of meaningful legislative reforms passed earlier this year to combat rising premiums that have placed an increasingly heavy burden on our policyholders,” Gary Aubuchon, interim chairman of Citizens' board of governors, said in a news release.
Tampa Bay-area counties, however, would see rate increases that are considerably more than state average. And some would actually see a greater rate increase than was approved in December because Citizens has had two additional quarters of claims on which to build a forecast for its exposure, a spokeswoman said.
Under the change, multiperil homeowners insurance would increase by an average of 8 percent (previously 8.5 percent) in Hillsborough County, 7 percent (previously 6.8 percent) in Hernando County, 7.5 percent (previously 7.1 percent) in Pasco County, and 5.2 percent (previously 6.8 percent) in Pinellas County.
The changes would go into effect in December for renewed and new policies.
Wednesday's overall decrease comes courtesy of a state bill signed into law last month that increases consumer safeguards for homeowners who hire contractors to make repairs to their home, among which is a structure to determine attorney fees.
For several years, the insurance industry has cried foul about abuse of a practice known as "assignment of benefits," in which a homeowner gives a third party, such as a contractor, the legal right to deal directly with the homeowner's insurance company for a claim. Abuse arose when an increased number contractors took insurers to court over the fair price of a repair. If the contractor, who was acting on behalf of the consumer in court, won the case, the insurer would have to pay the contractor's legal fees.
The issue was especially prevalent in south Florida, resulting in increased homeowner insurance rates because of the significant amount insurers collectively had to pay for claims that were inflated by the legal fees.
Citizens cited it as one of the reasons for past rate hikes, including the 8.2 percent hike.
Contact Malena Carollo at firstname.lastname@example.org or (727) 892-2249. Follow @malenacarollo.