NU Online News Service

Florida Insurance Commissioner Kevin McCarty announced he hadsigned an order increasing rates for the state-created insurer oflast resort's high risk accounts to make them financiallyadequate.

His move followed action last month when he signed an orderbeefing up rates for less risky properties covered by CitizensProperty Insurance Corp.

The change increases high-risk statewide average home ownersrates more than 5 percent and trailer homes more than 10 percent.The changes begin a slow "glide path" to "eventually achieveactuarially sound rates," McCarty announced.

According to the Insurance Information Institute FloridaCitizens' exposure to loss as of June stood near $400 billion.

The commissioner noted that before Citizens' rates were boostedthey were reviewed to determine whether or not they wereactuarially sound as required by recent action of the statelegislature.

Under that measure, Citizens on July 15 were required to makerate filings for each personal and commercial line of business tobe effective no earlier than Jan. 1, 2010.

McCarty noted that under the legislation Citizens' rateadjustments are limited to a 10 percent increase for anypolicyholder per year.

A public rate hearing was held in Tallahassee on Nov. 10. Thefinal rates are similar to the requested rates, although the OIRdid make adjustments.

"Recent legislation requires this office to establish the ratesfor Citizens' policyholders, and our actuaries did that in theirusual deliberative and disciplined manner," said CommissionerMcCarty.

Although the Florida Legislature capped Citizens' annual rateincreases at 10 percent, the mobile homes line of business, was setat 11 percent because the law allows companies to pass on a cashbuild-up factor paid to the Florida Hurricane Catastrophe Fund topolicyholders, which is not subject to the 10 percent limit,McCarty's announcement explained.

The order also included technical guidelines to be followed whenthe next rate filings are made in 2010, and requires Citizens torespond to concerns raised regarding Monroe County rates.

Members of the grass-roots organization, Fair Insurance Rates inMonroe (FIRM) at the public rate hearing expressing concern thatthe computer model Citizens uses to calculate rates does not takeinto account several factors specific to Monroe County.

The group argued that the model did not properly consider damagein that area that would be caused by storm surge rather than wind,and also did not account properly for the tougher building codes inMonroe County.

FIRM representatives at the hearing noted that the stricterbuilding codes mean that structures are more expensive to build andto repair, and they said insurance rates should at least reflectthe improved quality of the structures.

The high-risk rates that were approved were:

Homeowners, 5.2 percent; dwelling fire, 4 percent; mobilehomeowners, 11 percent; commercial property - nonresidential, 9.3percent; commercial property residential - excluding condoassociations, 9.4 percent and commercial property residential -condo associations: 9.4 percent.