At its October 12 meeting, the board of governors of Citizens Property InsuranceCorp. ratified rate increases recently approved by the Florida Office of Insurance Regulation.The rates will increase a statewide average of 6.2 percent and havea sinkhole cap of 32.8 percent. The new rates on homeowners' anddwelling fire policies take effect on Jan. 1, 2012, for new andrenewal multi-peril business, and Feb. 1, 2012, for new and renewalwind-only business.

In addition to ratifying the rates, the board also votedunanimously not to pursue a phase-in schedule for sinkhole ratesthat it approved at a September 12 meeting. The board reversed itsposition on the phase-in because the rates ultimately approved bythe OIR were substantially lower than what the board sought.

This summer, amid its 13 other filings, Citizens' sinkhole rateincrease requests ranged from zero to 2,688 percent, for an overallaverage rate increase of 447 percent. On September 12, the boardvoted to cap rate hikes for sinkhole coverage at 50 percent in 2012and then phase in future increases over the next several years. Italso approved a proviso that allowed it to review thatimplementation schedule if the OIR approved significantly differentrates.

Good thinking.

On September 19, Florida Insurance Commissioner Kevin McCartyaxed Citizens' request to an overall statewide and territorialpremium increase for sinkhole coverage of 32.8 percent forhomeowners, and a 96.5 percent increase for dwelling firepolicies.

Growth Continues, Especially in Older Homes

In his report to the board at the October meeting, Citizens'President Scott Wallace said that Citizens is consistently insuringolder, less expensive homes; 97 percent of all insured personallines accounts and 82 percent of coastal account policies arewritten for values of $400,000 or less. He further noted that 78percent of those homes are 20 years or older in both the coastaland personal lines accounts. Mobile homes track the sameway, with 75 percent of the policies issued for homes that are 20years or older.

Despite attempts over the past several years to scale backCitizens's growth overall, it continues to reign as the largestproperty insurer in Florida. On Jan. 1, 2010, the in-force policycount for all lines of business was slightly over 1 million . As ofJan. 1, 2011, it was just under 1.3 million policies. By Sept. 30,2011, the in-force policy count had reached 1.46 million—a 42percent increase in 21 months.

Not all the news was disheartening. Citizens' CFO Sharon Binnun,reporting data from the June 30, 2011, financial statements, notedthat:

• In the last three years, surplus has grown from 3.1 billion to5.1 billion as of June 30, 2011.
• Citizens has nearly $4 billion in additional claims-payingability available through its pre-event liquidity program.
• Citizens purchased $575 million of private reinsurance for thishurricane season.
• It has more than 43 reinsurers participating in the reinsuranceprogram

In other action, the board selected Rob Wallace to serve as vicechairman.