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Sha'Ron James

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State lawmaker calls Citizens rate hike 'slap in face'; 9% in PBC OK'd


Date: September 19, 2016
Source: Palm Beach Post
Author:  Charles Elmore


A state senator has blasted as a “slap in the face” rate hikes that regulators approved for state-run Citizens Property Insurance Corp.

Increases approved by the state’s Office of Insurance Regulation average more than 6 percent statewide, and are higher in South Florida, including about 9 percent for Palm Beach County homeowners. At least two of the state’s top five private insurance companies have dropped or reduced requested rate hikes after facing questions about whether they were really justified.

“My words are harsh but I meant them,” state Sen. Anitere Flores, R-Miami, told The Palm Beach Post on Monday. “All over South Florida, in Palm Beach, Miami-Dade and Broward, people can’t make heads or tails of why Citizens is raising rates again.”

Once the excuse was hurricanes, then sinkholes, now assertions that non-storm claims such as water damage from broken pipes have spun out of control, she said.

The increase “is a slap in the face of consumers and legislators,” Flores said in a statement after regulators announced approved rates late Friday. “Not only are law-abiding policyholders being punished for those abusing the system, they are being forced to comply with an increase that is not even across the board throughout the state.”

She called upon the Office of Insurance Regulation to freeze rates and investigate further — or legislation might have to be filed to address it in the next session, she said.

Regulators said they conducted an “extensive” review.

“We are sensitive to the impact of these increased costs on consumers and will continue to work with the Florida Legislature and other stakeholders to find solutions to temper rising property insurance costs statewide,” said OIR spokeswoman Amy Bogner.

Citizens defended the increase in a statement.

“The 2017 rates reflect the growing challenge of rising water-loss claims and the disturbing increased costs associated with assignment of benefits,” Citizens president Barry Gilway said. “Unless the legislature takes action, our policyholders can expect these increases for years to come.”

Regulators approved the request with a few tweaks. Citizens had asked for a 6.9 percent statewide increase for “multi-peril” home policies — covering fire and other risks, not just wind — and the Office of Insurance Regulation approved 6.4 percent.

Regulators said in an order they “utilized slightly lower water loss trends” adjusted for the company’s shrinking size, now less than 493,000 customers. About one in 10 Citizens customers is in Palm Beach County.

Company officials argued inflated water-damage claims in South Florida have been a major driver of rate increases, though Citizens’ risk exposure has been dropping and it has more than $7 billion in surplus to pay claims.

In Palm Beach County, the average annual premium for a standard homeowner policy known as an HO3 would jump 9 percent to $2,668 from $2,448, Citizens calculated in its rate request.

But as insurers have joined in a general hue and cry against South Florida water claims, not all proposed rate increases this year have stood up to scrutiny.

The state’s largest insurer, Universal Property & Casualty Insurance Co. of Fort Lauderdale, withdrew a proposed blanket rate increase of 8.1 percent for homeowners across South Florida including Palm Beach County. The company does not plan to refile, a spokesman said.

Regulators questioned what a Universal consultant argued was a special need to raise rates in South Florida. In a memo, he cited “increasing trends in the Tri-County region” that create “additional uncertainty” that is “not captured through techniques traditionally followed to develop individual territory indications.”

Another company, Heritage Property & Casualty Insurance Co., withdrew a request for a 14.9 percent increase statewide and 25 percent in Palm Beach County. It has refiled for a 9.9 percent average increase statewide with a proposed 15 percent jump for homeowners in Palm Beach County.

Heritage officials did not respond to requests for comment Monday.

As The Palm Beach Post reported, Heritage sought a rate hike that advocates questioned as “greedy” as CEO Bruce Lucas nearly quadrupled his compensation in a single year to $27.3 million.

That is more than 50 times what the CEO gets paid at larger, state-run Citizens, where Heritage got most of its customers in state-assisted transfers on its way to becoming one of the state’s five largest property carriers.

“People are living paycheck to paycheck and this guy is making $27 million,” said Ken Schurr, a Coral Gables attorney who represents policyholders against insurance companies. “It’s not right.”