Rates will increase 10.8 percent on average statewide for the typical Citizens
homeowners' policy in 2013, with increases varying by policy type and region.
Most of the 90,000 Citizens customers in Sarasota and Manatee counties will see
the wind insurance portion of their bill -- typically about half the total cost
for homeowners' coverage locally -- increase by 10 percent. Those closer to the
coast will pay more.
Homeowners in other parts of the state will pay up to 40 percent more for wind
coverage from Citizens, the state's largest property insurance company with 1.4
The higher rates are part of an aggressive campaign by state lawmakers and Gov.
Rick Scott to shrink the state-run insurer, an effort that is drawing increasing
criticism from those who say it will hurt struggling homeowners and impede
Florida's economic recovery.
"The governor wants to turn the state around and get people back to work, but
people won't be living here because they can't afford the home they're living
in," said Sen. Mike Fasano, R-New Port Richey.
Citizens' board chairman Carlos Lacasa said the insurer tried to balance
homeowners' concerns about rising costs with the need to maintain a strong
"I'm sensitive to the need to keep the rates as affordable as possible," Lacasa
said, adding that the board also must "get Citizens to an adequate rate to have
enough to pay claims when a storm comes."
The rates approved Tuesday were reduced slightly from an 11.8 percent average
increase requested by Citizens' board.
Insurance Commissioner Kevin McCarty said the approved rates represent a
"Our primary goal is to ensure Citizens policyholders are treated fairly and
retain an opportunity to return back to a robust private insurance market as the
Florida Legislature intended," McCarty said.
The final rate decision came after months of often rancorous debate about
Citizens' future. The company rapidly absorbed policies discarded by insurers
such as State Farm and Allstate, which accelerated their efforts to pullout of
Florida in the wake of the record 2004-05 hurricane seasons.
State leaders say Citizens now represents a huge financial risk to average
Floridians because the company can levy taxes on insurance policies statewide if
it runs short of cash to pay claims after a major disaster.
They rarely mention that the same taxes are levied to pay claims when private
insurers fail. Some of Florida's private property insurers, including relatively
new and untested companies, may be more at risk of becoming insolvent than
Regardless, Citizens has pushing hard to shed customers. The company is
encouraging private insurers to take some of its policies; more than 200,000
Citizens customers will soon receive letters notifying them that a private
company is offering to take over their coverage.
Efforts to lift the rate cap ultimately were abandoned. The move outraged many
homeowners and some public officials.
Fasano noted that Citizens already boosted rates for many homeowners this year
through an inspection process that has revoked many policyholders' hurricane
mitigation discounts. At the same time, the company is reducing coverage and no
longer insures structures such as pool cages and car ports.
"They have already gotten their rate increases for the next three to five years
from what Citizens has done through the backdoor," Fasano said.
Englewood retiree Bruce Pomeroy recently received a letter from Citizens
indicating his pool cage will no longer be covered.
The 77-year-old pays $1,750 a year for property insurance for a home valued at
$97,000. He understands the desire to shrink Citizens but worries about the
rising cost of home insurance.
"I know some folks are paying a heck of a lot more money than I am but I'm a
retiree and we live on a fixed budget," he said.