Citizens execs make pitch in Tampa for insurance rate hikes

Published Aug. 21, 2013

TAMPA — Tampa Bay area homeowners would be among the hardest hit by proposed rate increases from state-run Citizens Property Insurance for new policies or renewals in 2014.

But few of them showed up for a hearing Tuesday evening in downtown Tampa.

The hearing was requested by former state Sen. Mike Fasano in advance of the Florida Office of Insurance Regulation deciding in the coming weeks whether to approve the rate increases.

Fasano said the low turnout is probably because Citizens has lost the public's faith by jacking up premiums through back-door rate increases beyond those currently under consideration, and farming out policies to unproven startup companies.

"I believe that the ratepayer just does not trust Citizens anymore," said Fasano, who was recently appointed as the new Pasco County tax collector.

Perhaps three dozen people were in the meeting hall at the Tampa Convention Center, though many were clearly employees of Citizens or of the insurance regulation office. Four spoke, two of them from Monroe County — home of the Florida Keys — which has been particularly hard hit by rate increases.

Overall, Citizens is proposing an average rate increase for homeowners of 6.6 percent statewide, excluding coverage for sinkhole damage, which is going up dramatically. Rates vary widely and would go up an average of 7.5 percent for all properties.

Coastal Pinellas and Pasco counties and unincorporated Hillsborough County would see home policy rates climb 10 percent, the maximum increase allowed by the Legislature. Increases for sinkhole coverage, not capped by the Legislature, would climb by as much as 20 percent in Hernando and Pasco counties and by as much as 50 percent Hillsborough.

The three counties account for 82 percent of all sinkhole claims statewide, said Paul Kutter, actuarial research manager for Citizens.

Citizens president Barry Gilray said repeatedly Tuesday that the insurer of last resort for property owners who can't get coverage in the private market is seeking to strike a balance of having enough money to cover damage from a major storm with sensitivity to ratepayers.

In the case of sinkhole coverage, for instance, actuaries estimate Citizens would have to raise rates by 222 percent to cover the exposure to claims.

"We are here today to undertake a difficult and delicate exercise: Moving Citizens Property Insurance Corporation toward actuarially sound rates while recognizing that these rate recommendations affect real people," Gilray said.

The speakers from Monroe County said residents there are seeing premium increases in the thousands of dollars in some instances. Property insurance is pricing out service workers who live in apartments whose owners are passing on the hikes through increased rents.

Fasano countered the Citizens pitch by accusing the insurer of increasingly upping replacement values on homes well beyond what they are worth, driving up premiums. It's cutting coverage for detached buildings and not giving people the credit they deserve for investing in home improvements that reduce the risk of wind damage, he said.

Gilray said replacement values for homes often are indeed higher than market value. And he said Citizens has doubled the value of mitigation credits for policyholders at the same time it's shedding customers to a growing market of private insurers.