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Rate Hearing Provides Forum for Discussion of Citizens Rates

Rate Hearing Provides Forum for Discussion of Citizens Rates

The Florida Office of Insurance Regulation held a public hearing today in Miami to seek additional information about Citizens Property Insurance Corporation’s recommended rate filings and to allow interested parties to comment.  Florida law specifies that Citizens will submit actuarially sound rates, provided that no policyholders’ rates will go up by more than 10% (with some exceptions, including the rates for sinkhole coverage).  Citizens submits recommended rates to the Office of Insurance Regulation, which then has the statutory authority to set Citizens’ final rates.

After introductory remarks, Citizens presented the basis fot its recommendations.  In many territories Citizens’ rates are below the actuarially indicated amounts due to the statutory cap on rate increases.  With mounting non-catastrophe losses in recent years, Citizens has lost money even without a storm.  Ultimately, Citizens’ shortfalls become a burden on all Floridians because they will be asked to pay assessments (taxes) to cover any shortfalls.

The Office of Insurance Regulation asked a series of actuarially-related questions before opening the floor to the public.  The OIR directed particular attention to the various assumptions that can result in the indicated rates being higher or lower.  Belinda Miller summarized the discussion by pointing out that when parties discuss an “indicated” rate, they are discussing an estimate of the rate need and not a concrete, universally agreed upon number.

Insurance consumer advocate Robin Westcott made several points in opposition to certain aspects of the filing.  She questioned the magnitude of the rate increases attributable to sinkholes because she believes Citizens is not giving proper credit to the 2011 law changes (SB 408).  She also commented that the glide path for rate increases is working and should be resulting in rates going down in some areas as well as going up in others.

Senator Mike Fasano voiced similar concerns about the sinkhole portion of the rates.  He then addressed broader problems he perceives with Citizens’ raising rates when it has been increasing premiums through reinspections and reducing coverages, and as it has come under fire for travel expenses.  According to Senator Fasano, Citizens should “get its own house in order” before it asks consumers to pay more.

Representative Frank Artiles is a Citizens policyholder and represents the Miami area.  He shares similar concerns as Senator Fasano.  He cited the reinspections, travel expenses and lack of public input on the proposed surplus note program as reasons Citizens should not move forward with a rate increase at this time.

Additional speakers expressed frustration with rising insurance rates and with a lack of options in the private market.  Interested parties were encouraged to follow up with any additional thoughts to the Office of Insurance Regulation.  The OIR will take these comments and its own analysis into account when determining Citizens’ final rate levels.