Florida's homeowners' insurance writers face a 6.8 percent premium assessment to make up for the deficit run by the state's homeowners' insurer of last resort.
Citizens Property Insurance Corp. ran a $515.5 million deficit in 2004, primarily as a result of the record four storms that struck the state last year, said spokesman Justin Glover.
This is the first time the entity has run a deficit since its creation in 2002.
Citizens estimates its total losses from Hurricanes Charley, Frances, Ivan and Jeanne at $2.4 billion, with $1.8 billion coming from high-risk accounts.
Mr. Glover said the carriers have a right to pass on the assessment to customers in the form of surcharges on their bills.
The action comes as a number of carriers in the state are seeking to curb their exposure in the aftermath of the storms. The insurers have complained that regulators have kept them from charging rates that reflect the risk of new storms.
Yesterday, Florida's chief insurance regulator, Tom Gallagher, called for an independent review on a rate increase sought by State Farm, the nation's largest insurer. The review, the third since June 1, will be carried out by the Consumer's Advocate Office, under Mr. Gallagher's supervision.
"What is troubling is that State Farm's request comes on the heels of a study showing the company earned record profits–billions of dollars–in 2004, despite four hurricanes," Mr. Gallagher said.
With companies lessening their coverage, Citizens is receiving an estimated 20,000 to 30,000 applications a month for new policies.
Mr. Gallagher has already called for independent review of three requests–Allstate Floridian, Cincinnati Indemnity/Insurance Companies and now State Farm.
Cincinnati's request for 36.7 percent rate hike is the only one that has been denied. While State Farm's current request is for 6.8 percent, Mr. Gallagher said in many areas of the state it could reach 40 percent.
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