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Insurance Consumer Advocate

Sha'Ron James

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Mailing: 200 East Gaines St.
Tallahassee, FL 32399-0308

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Commissioner Wants Ratepayer Feedback



A hearing conducted by Florida Insurance Commissioner Kevin McCarty last week may impact proposed rate hikes approved by the Citizens Property Insurance Corp. board.

Citizens, a state-backed insurer of last resort, wants to increase rates across-the-board by 11.1 percent in coastal areas and 12 percent in non-coastal counties.

But Florida Insurance Consumer Advocate Robin Smith Wescott testified at the public hearing in Miami that any premium increases should be denied, adding that the company has over estimated its potential losses and is on a "glide path" toward rate adequacy.

"Policies in some territories already have actuarially sound rates and many more will reach soundness within a year," she said.

State Sen. Mike Fasano (R-New Port Richey) told the hearing the rate hike - coming on the heels of revelations about lavish spending by Citizens executives - "is the epitome of arrogance."

Fasano, who has been critical of Citizens operations and rate-making in the past, said the company has already raised rates without approval by the state using two different approaches.

One, the company has inflated the replacement value of homes being insured, Fasano said, which has the net effect of increasing rates. The other tactic he cited: Citizens re-inspection program that has revoked discounts for customers who had installed wind-mitigation improvements in the past.

Some of those include shutters to cover windows and doors, tie-downs in the attic that secure the roof beams to the house itself and the foundation, and reinforced gables and hardened patio door systems.

Critics point out that the re-inspections have taken away credits from three-fourths of the homes inspected, netting Citizens $100 million in higher premiums once the discounts are removed.

In the Florida Keys, where Citizens holds roughly 25,700 policies, the re-inspections have targeted wooden shutters that were purchased under previous hurricane building code guidelines as well as add-ons like screened enclosures.

Citizens president and CEO Barry Gilway said company officials were simply complying with state law by proposing increases, which he said are designed to shrink the number of policies - and thus, shrink the risk to Citizens in any future hurricane disaster.

"We're not the enemy," he said. "We're hired by and work for taxpayers and it's our obligation to do our very, very best to keep rates as affordable as possible."

Citizens now hold about 1.4 million policies in Florida. And Gilway said it is adding customers at a rate of 300,000 per year.

McCarty said his office of Insurance Regulation will accept written comments on Citizens proposed rate hikes for another week. Submit comments via email to: RateHearings@floir.com