Regulators challenge Citizens’ request to raise rates for wind-only policies
By John Frank, Times/Herald Tallahassee bureau
In Print: Wednesday, November 11, 2009
TALLAHASSEE — The state’s insurance regulators sharply questioned Citizens Property Insurance officials Tuesday, challenging the size of a proposed rate hike for high-risk policyholders with wind protection.
The state-run insurer of last resort requested statewide average increases of 7.5 percent for homeowners and 9.9 percent for businesses with that cover only wind damage. Wind-only policies account for about a third of Citizens’ nearly 1 million policies.
At the public hearing, analysts for the Florida Office of Insurance Regulation took issue with a 15 percent surcharge that has been added to each Citizens high-risk policy for years.
The analysts suggested Citizens incorporate the surcharge into the base rate. Doing that would lessen the effect of the premium increases for the 300,000 policyholders with wind-only coverage.
Under this calculation, homeowners with a windstorm policy would see an average increase of only 4.4 percent and businesses an average increase of 9.3 percent.
“We want to make sure the rates — whatever it is — is accurate,” said Belinda Miller, the deputy insurance commissioner.
The company is seeking rate hikes no greater than 10 percent for all plans after the Legislature lifted a three-year freeze and ordered Citizens to build its reserves enough to cover claims from a major hurricane.
If the insurer doesn’t have enough money to cover claims, it can levy fees on all insurance policies in the state, including those offered by private companies.
Paul Palumbo, a vice president with Citizens, said the surcharge generates about $100 million and helps cover financing costs associated with hurricane claims.
“(The rate increases) are appropriate, they are fair and they should be approved as filed,” Palumbo said.
A decision from the state’s insurance regulators is expected Nov. 20.
John Frank can be reached at email@example.com or (850) 224-7263.