OIR Approves Citizens’ High Risk Account Rates
The Office of Insurance Regulation has issued an order approving rates for the Citizens Property Insurance Corporation High Risk Account (HRA). The HRA consists of Citizens’ most coastal exposures and includes personal residential, commercial residential, and traditional commercial exposures.
By law, Citizens submits rate filings to the Office of Insurance Regulation, but unlike for typical insurers the Office of Insurance Regulation actually sets Citizens’ rates rather than simply approving or disapproving the proposed filings. The OIR reviewed Citizens’ rates for actuarial soundless, as limited by the “glide path” legislation adopted by the Florida Legislature earlier this year specifying that no policyholders’ rates may increase by more than 10% in any year.
The Office of Insurance Regulation held a public hearing on the proposed rates on November 11. The OIR raised a number of comments at the hearing, and a group advocating for Monroe County residents made a presentation about several concerns, including how the public model treats exposures in Monroe County.
For homeowners insurance, the OIR ultimately approved an increase of 5.2% after Citizens initially requested 7.5%. Dwelling fire rates will increase 4.0% as compared to Citizens’ initial request of 5.9%. Mobile home owners’ rates will increase by 11% instead of the 11.8% initially requested. (The rate increase is greater than 10% because Citizens is allowed to pass along the rapid cash build up factor of the Florida Hurricane Catastrophe Fund in addition to the 10% capped rate increase).
Commercial nonresidential rates are scheduled to increase by 9.3% instread of the 9.9% requested by Citizens. Commercial residential rates, both for condominium associations and other commercial residential structures, will increase by 9.4%. Citizens had proposed a 9.6% rate increase.
The Office of Insurance Regulation’s order requires Citizens to provide certain additional support and to address concerns raised by the Monroe County residents in connection with its next rate filing.
Some policymakers have expressed disappointment that Citizens’ rates have not been increasing by the full amount of the 10% cap they approved earlier this year. However, the Office of Insurance Regulation has responded that the law as drafted does not provide for an across-the-board increase to Citizens’ rates, but instead calls for a combination of increases and decreases by Citizens’ various territories as Citizens moves to actuarial soundness. The intent behind the 10% rate cap might be a topic of further discussion as the 2010 legislative session approaches.