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Citizens surprise: 3rd hike planned

Thought your insurance couldn't get any higher? If only. The state-run insurer of last resort wants a third rate increase.

By TOM ZUCCO
Published April 22, 2006

This is the last news the nearly 830,000 Florida homeowners covered by Citizens Property Insurance need to hear.

Just as Citizens is starting to collect an average 16.9 percent rate increase, the state-run insurer of last resort revealed plans to ask for a third rate hike this year for its homeowner policies.

The latest hike - the amount is not yet determined - would be in addition to not only the 16.9 percent increase but also a separate 45 percent increase Citizens requested that has been delayed.

The plan for the triple whammy came to light Thursday at a meeting in Tallahassee of Citizen's actuarial and underwriting committee.

Insurance Commissioner Kevin McCarty said the new rate hike is necessary because in some parts of the state, the rates of several private insurers, including Allstate, have climbed above Citizens'.

Citizens is required by law to have the highest rates in the state in order to discourage private insurers from limiting coverage or leaving the market, something dozens of companies have already done.

Citizens officials said they did not know how much the latest rate increase would be, or when it would be formally requested.

Even before that third increase, a Citizens policyholder paying $1,000 in premiums now could be paying as much as $1,700 if the first two hikes are approved.

Also at Thursday's meeting, an actuary for Citizens said that the 45 percent rate increase Citizens requested has been delayed by the Florida Office of Insurance Regulation. It was expected to take effect March 1, but has been postponed until Sept. 1.

The delay grew out of concerns raised by Steve Burgess, the state's insurance consumer advocate. Burgess contends the Legislature, not Citizens, should decide the size of a rate increase.

Citizens spokesman Justin Glover said Friday the 45 percent increase may change due to tweaks in the request. "It's still under (regulatory) review. The date can change as well," he said.

While only Citizens policyholders are directly affected by the rate increases, all Florida homeowners are affected by the staggering deficits Citizens has amassed over the last two hurricane seasons. Everyone with property insurance in Florida had to pay an assessment last year to help Citizens cover its $516-million deficit from 2004. Another assessment is planned for this year to help Citizens pay off a $1.7-billion deficit caused by the storms of 2005.

But some relief may be on the way. Committees in both the Florida House and Senate voted Monday to use between $750-million and $920-million in surplus tax dollars to pay down part of the latest deficit.

No matter the final amount, the bailout would apply only to the deficit.

By law, every Florida homeowner has to help pay down Citizens' deficit through assessments on their homeowners policies. The drumbeat of rate hikes, however, applies only to Citizens policyholders, who account for about one in five Florida homeowners, many of them in high risk areas such as Pinellas and Pasco counties.

People like Judy Catalano, who was one of the first Citizens policyholders to find out about plans for a third hike within a year.

When Catalano, who lives on a fixed income, moved to her 34-year-old home in Dunedin in 1999, her homeowner's insurance with a private carrier was $998.

But that carrier dropped her, leaving Citizens as her only alternative. "The insurance check I wrote to Citizens yesterday was for $2,959," Catalano said Friday.

When she called Citizens Thursday to ask why rates were so high, she was told yet another increase was on its way. "I just said, "Really? Think about what's going on with property taxes and utility bills and gas prices.' "

She said she has no choice but to pay, and then allowed herself a chuckle.

"Honey," she said, "I've never seen a state like this."

In addition to a 16.9 percent average rate increase for homeowners insurance this year, Citizens Property Insurance has requested a 45 percent rate increase, plus a third increase for an amount yet to be determined. None of the requests has been formally approved, but Citizens began collecting the 16.9 percent increase from policyholders last month.

Source: Citizens Property Insurance Corp.

[Last modified April 22, 2006, 01:39:14]