|Date:||September 16, 2016|
South Florida customers of Citizens Property Insurance Corp will pay up to 10 percent more in premiums starting Feb. 1, following approval by state insurance regulators of nearly all of the company's requested rate hikes.
The state-run company — which serves as the "insurer of last resort" for Floridians who cannot find insurance through any other provider — blamed the increases on rising water loss claims not related to storms.
House and condo owners in all but a few sections of Broward, Palm Beach and Miami-Dade counties will see premiums on multi-peril policies increase between 8.9 percent and 10 percent in 2017.
For months, Citizens has been warning that it will have to request rate increases for the foreseeable future, regardless of whether a hurricane hits, unless new laws are created to prevent contractors from coercing policyholders into signing over benefits of their policies before repairing damage from broken pipes, failed water heaters and other in-home emergencies.
Contractors use the "assignment of benefits" to submit inflated repair bills to insurers, then file suit if the insurer fails to pay the full claim, Citizens contends. Contractors and attorneys have countered that insurers use the "assignment of benefits" controversy as an excuse to save money by denying claims.
Citizens President and CEO Barry Gilway again warned about claims abuses in a statement released Friday. "The 2017 rates reflect the growing challenge of rising water loss claims and the disturbing increased costs associated with assignment of benefits. Unless the legislature takes action, our policyholders can expect these increases for years to come."
The problem originated in South Florida in recent years but has started spreading to other areas of the state, insurers say. This year, numerous insurers have cited increased water-loss claims in their requests for approval to charge higher rates.
In the order released Friday, the state Office of Insurance Regulation said it approved a 6.4 percent average statewide rate increase for multi-peril residential policies covering houses and condos, which was a half percentage point less than the 6.9 percent increase requested by Citizens. The order said regulators calculated lower projected water losses than Citizens originally projected.
All other rate increases requested by Citizens, including an average 8.2 percent increase for wind-only coverage for coastal residents and 5.7 percent increase for multi-peril coverage of mobile homes, were approved.
Citizens is only a third as large as it was in 2012, thanks to the state's effort to shrink the company by encouraging private companies to "take out" Citizens policies. But Citizens remains the tricounty region's largest insurer with 231,633 personal residential policies at the end of March.