NU Online News Service, Nov. 20, 3:32 p.m. EST
Florida Insurance Commissioner Kevin McCarty announced he had signed an order increasing rates for the state-created insurer of last resort's high risk accounts to make them financially adequate.
His move followed action last month when he signed an order beefing up rates for less risky properties covered by Citizens Property Insurance Corp.
The change increases high-risk statewide average home owners rates more than 5 percent and trailer homes more than 10 percent. The changes begin a slow "glide path" to "eventually achieve actuarially sound rates," Mr. McCarty announced.
According to the Insurance Information Institute Florida Citizens' exposure to loss as of June stood near $400 billion.
The commissioner noted that before Citizens' rates were boosted they were reviewed to determine whether or not they were actuarially sound as required by recent action of the state legislature.
Under that measure, Citizens on July 15 were required to make rate filings for each personal and commercial line of business to be effective no earlier than Jan. 1, 2010.
Mr. McCarty noted that under the legislation Citizens' rate adjustments are limited to a 10 percent increase for any policyholder per year.
A public rate hearing was held in Tallahassee on Nov. 10. The final rates are similar to the requested rates, although the OIR did make adjustments.
"Recent legislation requires this office to establish the rates for Citizens' policyholders, and our actuaries did that in their usual deliberative and disciplined manner," said Commissioner McCarty.
Although the Florida Legislature capped Citizens' annual rate increases at 10 percent, the mobile homes line of business, was set at 11 percent because the law allows companies to pass on a cash build-up factor paid to the Florida Hurricane Catastrophe Fund to policyholders, which is not subject to the 10 percent limit, Mr. McCarty's announcement explained.
The order also included technical guidelines to be followed when the next rate filings are made in 2010, and requires Citizens to respond to concerns raised regarding Monroe County rates.
Members of the grass-roots organization, Fair Insurance Rates in Monroe (FIRM) at the public rate hearing expressing concern that the computer model Citizens uses to calculate rates does not take into account several factors specific to Monroe County.
The group argued that the model did not properly consider damage in that area that would be caused by storm surge rather than wind, and also did not account properly for the tougher building codes in Monroe County.
FIRM representatives at the hearing noted that the stricter building codes mean that structures are more expensive to build and to repair, and they said insurance rates should at least reflect the improved quality of the structures.
The high-risk rates that were approved were:
Homeowners, 5.2 percent; dwelling fire, 4 percent; mobile homeowners, 11 percent; commercial property – nonresidential, 9.3 percent; commercial property residential – excluding condo associations, 9.4 percent and commercial property residential – condo associations: 9.4 percent.
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