Tallahassee, Fla. –Florida Insurance Commissioner Kevin McCarty today entered an order approving Citizens Property Insurance Corporation's top 20 filing and actuarial filing with an exception for Monroe County.
After experiencing eight major hurricanes during the last two years, Citizens accumulated a $1.7 billion deficit. As required by statute, Citizens assesses insurance companies that may "recoup" or pass that assessment on to policyholders through a surcharge. However the 2006 Legislature appropriated $715 million to pay down the deficit, which is expected to reduce what was expected to be a 20 percent assessment down to an estimated 3.5 percent levy.
"I am very pleased that the Legislature allocated a portion of the sales tax revenue surplus to provide rate relief to all Florida policyholders," said McCarty. "However, we still need to take strong measures to ensure that Citizens' rates are actuarially sound to minimize future assessments."
Citizens Corporation made its top 20 filing in December to guarantee that its rates were non-competitive and higher than the top 20 carriers in the private market and filed its actuarial filing in January to make certain that Citizens' rates were actuarially sound. These filings are statutorily required under Section 627.351(6)(d), Florida Statutes. Citizens made the December filing under Florida's "use and file" provision and implemented the rate adjustments as of April 15th. The most recent rate adjustments based on the actuarial filing will be implemented for personal lines policies during August and September of 2006.
"Our actuarial staff has rigorously examined these rates, and I am confident the approved adjustments achieve adequate rates given the risks involved. Citizens did not receive approval for all rate adjustments requested," McCarty added.
The order signed by Commissioner McCarty requires Citizens' to follow specific rate-making methodology in addition to approving rate adjustments. It requires Citizens to use a wind-only ratemaking methodology in this and future actuarial rate filings that combines the rating calculations for the personal lines accounts (PLA) with the high risk accounts (HRA).
The order approved combined average rate increases for homeowner's policies of 16.1% on a statewide basis, 6.7% for mobile home policies, no increase (0%) for condominium unit policies, and 21.5% for dwelling fire policies. While accepting Citizens' request for homeowners rate increases, the Office ordered a lower rate for mobile homeowners, and condo unit owners. The Office increased the rate request for dwelling fire policies to ensure that these rates were actuarially sound.
In addition to the normal rate review procedures, the Office's staff utilized the public hurricane model. The rate adjustments based on the actuarial filing were not available by county at the time of the press release.
The Office ordered these rate adjustments, and told Citizens to submit another top 20 rate filing in 90 days to verify that rates are non-competitive. Previously the Office requested that Citizens file a separate filing for Monroe County, as this county will not be utilizing rates based on the top 20 insurers.