Office Orders Citizens Rate Rollback, Sinkhole Discounts
Tallahassee (January 31, 2007) - Florida Insurance Commissioner Kevin McCarty has issued an order rescinding Citizens Property Insurance Corporation's approved rates that would have become effective January 1, 2007, and further ordered Citizens to rollback rates to December 31, 2006 levels. The rate rollbacks are due to the recent insurance reforms passed by the Florida Legislature and signed by Gov. Crist on January 25, 2007 following the January special session.
"The Governor and Legislature recognized that Floridians needed immediate rate relief by passing the 2007 statutory reforms," announced Commissioner Kevin McCarty, "the Office has taken immediate steps to implement these lower rates."
In addition to the rate rollbacks, the recent order requires Citizens to further lower rates pertaining to sinkhole coverage. During the 2006 Legislative Session, the Legislature ordered an independent study that developed a "presumed factor" of 14.4% average savings for the sinkhole portion of the premium. In addition to this presumed savings, the special session legislation mandated discounts for consumers who elect to exclude sinkhole coverage, and discounts for policyholders who elect a 10% deductible for sinkhole damage.
"Policyholders were already due some savings for sinkhole coverage," commented Commissioner McCarty, "the Legislature has expanded the potential savings by allowing consumers the choice of foregoing sinkhole coverage, or choosing coverage with a 10% deductible." Although sinkhole coverage can be excluded, the legislative reforms ensured that catastrophic ground cover collapse is mandatory coverage for all residential policies issued in Florida.
Sinkhole savings will be most notable in Pasco and Hernando Counties. For a hypothetical risk paying $5,000 in premium in Pasco County, the total overall savings would be 8.4% or $420. If a policyholder elected the 10% deductible this would increase to 13.6% savings or $680. If a policyholder elected the sinkhole exclusion, the savings would be 60.4% or $3,120. For Hernando County, the total overall standard savings would be 6.9% or $345. For the 10% deductible, the savings would be 12.0% or $602. If a policyholder elects a sinkhole exclusion in Hernando County they would save 58.3% or $2,919.
to view a copy of the order.