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Press Release

Office Announces Decision on Citizens Property Insurance Corporation’s Rate Filing
Tuesday, September 20, 2011
Contact Info:

Jack McDermott                                  Brittany Perez
850-413-2515                                    850-413-2515
Jack.McDermott@floir.com                 Brittany.Perez@floir.com

TALLAHASSEE, Fla. – The Florida Office of Insurance Regulation (Office) today issued an Order establishing homeowners’ and dwelling fire rates for Citizens Property Insurance Corporation (Citizens).  The effective dates for the new rates for both the homeowners’ and dwelling fire policies are January 1, 2012 for new and renewal multi-peril business, and February 1, 2012 for new and renewal wind-only business.
 
The overall rate changes established by the Office are:
 
Homeowners # 11-12402 & 12403
     Original Rate Requested    21.2%
     Board Proposal
     Rate Established                6.2%
 
Dwelling Fire #11-12716 & 12717
     Original Rate Requested     18.1%
     Board Proposal
     Rate Established                 8.6%
 
[Sinkhole Portion]
 
Homeowners # 11-12403
     Original Rate Requested     447.0%
     Board Proposal                        41.8%
     Rate Established                      32.8%

Dwelling Fire #11-12716
     Original Rate Requested     631.5%
     Board Proposal                        N/A
     Rate Established                      96.5%
 
For the sinkhole rate changes, the Office grouped territories into four regions reflective of claims experience and losses, to compensate for the limitations in the territorial data.  In Senate Bill 408, the Legislature eliminated the 10% statutory cap on sinkhole rates, but at the same time it enacted fundamental changes to reduce sinkhole losses.  The rates established by this order contemplate cost-savings of Senate Bill 408, but do not fully quantify the cost-saving effects due to the lack of data at this time.
 
"The Office's decision is intended to reflect the Legislature's intention to give Citizens actuarially supportable rates for the sinkhole portion of the premium," remarked Insurance Commissioner Kevin McCarty. "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."
 
Although the frequency and severity of sinkhole claims has increased dramatically, Citizens was not able to provide a study or credible evidence in their rate filing that supported the sinkhole rate changes.  The Office found that additional data on the impact of provisions of Senate Bill 408 on sinkhole claims is necessary to evaluate prospective trends accurately for future rate filings.
 
The Florida Legislature passed Senate Bill 408 to address cost-drivers affecting all property insurers operating in Florida.  In the Order, the Office has instructed Citizens to contract with an independent firm to conduct an analysis of the impact of Senate Bill 408.
 
The Office reached its decision following a 45-day deliberative process, including a public hearing conducted on September 13 in Tampa, Florida. This hearing allowed Citizens to present additional information, and featured feedback from the Office of the Insurance Consumer Advocate, and from Citizens’ policyholders, and the public. 
 
Who:
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Contact Info:

Jack McDermott                                  Brittany Perez
850-413-2515                                    850-413-2515
Jack.McDermott@floir.com                 Brittany.Perez@floir.com

About the Florida Office of Insurance Regulation
The Florida Office of Insurance Regulation (Office) has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. For more information about the Office, please visit www.floir.com.

 

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