Citizens Defers Action on Rates
Citizens Property Insurance Corporation is delaying action on a proposed 2019 rate filing while it continues to look for ways to address concerns with assignments of benefits. Citizens’ board recently decided to defer a proposed 7.9% statewide average increase for its personal residential programs. The indicated rate need is much higher in some areas, but increases in Citizens’rates are capped at 10% annually. The proposed rates were to take effect February 1, 2019.
Chief Financial Officer Jimmy Patronis indicated to Citizens’board members that he acknowledges the actuarial need for the rate increase but believes the additional time will assist those recovering from Hurricane Irma and will allow more time to consider solutions to issues such as assignments of benefits and water losses.
By deferring action on the rates, Citizens may be able to get an early look at its managed repair program that begins August 1, 2018. The program is intended to address problems Citizens has seen with water loss issues and the related AOB crisis. The program will limit water loss payments when policyholders do not use the managed repair program. Of course, the experience under this program will develop slowly over months and even years so deferring action on rates will provide only a small look at any early results.
While benefitting policyholders, deferring a rate need also creates the potential of compounding existing concerns with rates adequacy in key areas of the state that are most affected by the AOB issue. Without a solution to this issue and with Citizens’ potential for annual rate changes being capped, inadequacy in the rates reduces the resources Citizens has available to meet the claims associated with this ongoing problem.