Citizens Proposes Small Personal Residential Rate Decrease
Over the last few years, we have grown accustomed to talking about Citizens Property Insurance Corporation’s rates being inadequate and serving as an impediment to policies finding coverage in the admitted market. However, as the rate glide path in 2010 has continued to take effect each year, an increasing number of insurers have been assuming policies from Citizens each year and reducing its policy count. Now, as further evidence of the effectiveness of the glide path and improved market conditions, the Citizens Board of Governors recently recommended a statewide average decrease of 2.9% for its personal residential programs in 2015. By law, Citizens files recommended rates with the Office of Insurance Regulation. The OIR reviews the recommended rates and has final rate-setting authority.
The statutorily-mandated glide path continues to suppress rate increases in Citizens, although to a lesser degree than in prior years. Citizens’ indicated rates without the glide path would produce a 1.6% increase as compared to the 2.9% decrease. Under the recommended rates, about 70% of Citizens’ policyholders will see rate decreases, while about 30% will have increases. Citizens points out that while many areas of the state have reached or approached rate adequacy, some areas or product lines continue to show rate needs such as those in the coastal areas and older homes.
The commercial program continues to play catch-up on rates, with the indicated rates without a glide path being a 27.8% increase but with the glide path reducing the recommended increase to 6.3%.
Citizens points to the several years of implementing the glide path along with several catastrophe-free years and competitive reinsurance market conditions as significant factors in producing the favorable indications on the personal residential program.