State insurance regulators late Monday rejected the basis for Citizens' sinkhole rate hike, slashing an increase that would have seen some Florida homeowners facing premium increases that topped $5,500.
The Florida Office of Insurance Regulation declared the rate hike was not supported by credible evidence from Citizens Property Insurance Corp. to meet Florida statutes meriting such a large increase.
Rather than the requested 447 percent average increase statewide, the insurance regulators approved an average 32.8 percent increase for sinkhole coverage.
Citizens' officials had argued the rate increases were needed because current premiums dont cover payouts for sinkhole claims.
The regulatory office declared that while the severity of sinkhole claims has increased, Citizens failed to provide enough date to support the claim justifying the full increase.
The offices decision is intended to reflect the Legislatures intention to give Citizens actuarially supportable rates for the sinkhole portion of the premium, Insurance Commissioner Kevin McCarty stated in a news release. Although more credible data and study is required, these established rates will start Citizens on the path of having a sound rate for their sinkhole risk.
Representatives for Citizens were not immediately available late Monday.
The state office instructed Citizens to contract with an independent firm to conduct an analysis of Senate Bill 408 from the 2011 legislative session, which lifted a 10 percent cap on the maximum rate sinkhole premiums could be increased if certain conditions could be met.
Officials with the state agency bypassed their own deadline, even postponing a scheduled Monday afternoon conference call, as a spokeswoman said the final totals had yet to be completed on the rate request.
State insurance regulators were greeted Sept. 13 in Tampa by a crowd of angry residents and state lawmakers protesting the rate request and announced they would make a decision by Monday on the requested spike by the state-backed property insurer that had a high of 2,226.1 percent in Orange County.
The night before the Tampa meeting, Citizens board members tried to temper some of the growing opposition by agreeing to cap the proposed hike at 50 percent in the coming year and seek the additional increase in following years.
John Rollins, an expert witness for Citizens before the insurance regulators, backed the numbers from the insurance provider, established as the insurance company of last resort in 2002.
In 2010, sinkhole coverage brought in $32 million to Citizens, while sinkhole claims required nearly $250 million in payouts.
Some of the largest sinkhole premium increases are proposed for the Tampa Bay area, which has the largest percentages of Citizens coverage in relation to other insurance providers.
Sen. Mike Fasano, R-New Port Richey, gave an impassioned plea for senior citizens and young families. He said many in the Tampa area face upside-down mortgages and that the increase would be a devastating hit if approved, even if phased in over a number of years.
Shame on Citizens, Fasano said at the Tampa meeting. A 50 percent (rate hike) in Pasco County means a $1,000 increase. A 50 percent (rate hike) in Hernando County means a $1,200 increase. That is absolutely unaffordable to people in the Tampa Bay area.
He said the housing market in the Tampa Bay region will be further damaged as many residents drop sinkhole coverage.
Fasano opposed the approval of SB 408.
Potential rate increases for all other Citizens policies remain capped at 10 percent this year.
Contact Jim Turner at email@example.com or at (850) 727-0859.