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Politics

Blame Lawsuits, Says Citizens: Rates Likely to Rise an Average 8.2 Percent

December 12, 2018 - 1:15pm

The board of Citizens Property Insurance Corp. approved a plan Wednesday that would raise residential insurance rates by an average of 8.2 percent starting in September ---- with the hikes hitting almost all customers of the state-backed insurer.

Members of the Citizens Board of Governors expressed regret about the planned rate increases but blamed lawsuits that officials say are driving up costs in the broader property-insurance market. The issue focuses on litigation related to water-damage claims, particularly in Miami-Dade, Broward and Palm Beach counties.

“Litigation is completely and totally out of hand,” Barry Gilway, president and chief executive officer of Citizens, said during a board meeting in Maitland.

The planned rate increases still need approval from the state Office of Insurance Regulation. If approved, the hikes would begin in September and fully take effect over the following year as policies renew. Citizens has about 435,000 policies.

The average 8.2 percent hike would hit “personal lines” policyholders, including owners of single-family homes, owners of condominiums and renters --- though increases would vary across the state depending on factors such as location. Commercial policies could see an average 9 percent increase.

Brian Donovan, chief actuary for Citizens, said 97 percent of homeowners would see rate increases under the plan.

The Citizens board voted 8-1 to approve the proposed rates, with board member Bette Brown of Monroe County the only dissenter. The vote came after discussion that centered on water-damage claims and the practice known as “assignment of benefits,” which is perhaps the most-controversial insurance issue in Florida.

Under assignment of benefits, homeowners sign over insurance claims to contractors, who then pursue payments from insurance companies. Citizens and other insurers contend the AOB process is filled with fraud and leads to expensive litigation. But contractors and trial attorneys argue that assignment of benefits helps ensure that damage claims are paid properly.

Ground zero for the debate has been Miami-Dade, Broward and Palm Beach counties, and Gilway said private insurers are reducing policies in those counties. Such reductions can shift more policies to Citizens, which has long been a major player in the Southeast Florida market.

“We’re becoming a tri-county company,” Gilway said.

Donovan said another concern is that many private insurers are receiving approval for double-digit rate increases, while Citizens rate hikes are capped by what is known as a “glide path, which blocks increases of more than 10 percent.

The result could be Citizens offering cheaper policies that will lead to the state-backed insurer writing more coverage --- after years of attempts to shrink the Citizens policy count.

Citizens and other insurers have lobbied in recent years to change the assignment-of-benefits process to reduce litigation. But the state House and Senate have not reached agreement.

The issue is expected to draw heavy attention during the 2019 legislative session, with Insurance Commissioner David Altmaier issuing a statement Wednesday that said he will “continue to make AOB reform a top priority, support legislation that addresses AOB abuse and fight to hold consumers harmless.” The session will start March 5.

Comments

The people need to band together and self-insure.....

The next civil war will bring back the "Guillotine": and none too soon..!

Premiums on all forms of insurance in Florida are predatory and are among the highest in the nation. That's what Republican "deregulation" gets the consumer! Don't expect Gov. Trumpnut to do anything substantive about it.

This mess started after Andrew! Where after over 30 years of insurance companies collecting premiums they suddenly had to pay. They decided to pull out of Florida and accelerated that after the mid 2000's. Stop blaming politicians for this they tried to fix it by creating a state run insurance as a stop gap measure. They actually did a lot to fix the problems by strengthing the building codes. The problem is the megcompanies are still refusing new business. Your misguided vitriol only makes you look like the idiot you are!

You nailed it Robert !!! And if it were not for litigation, there would be mega-more issues than there presently are. Talk about government and corporations sticking it to us all!!! Think about it. We have litigation, with courts allegedly dispensing "justice," but corps and gov keep on getting the best of the plaintiffs, and with unlimited litigation accounts!!! How is the litigation working out? Government and big corps have an unlimited amount of money to drag plaintiffs through barbed wire and razor blades.And the litigation process is absolutely to government's and corporations' direct advantage. They play it like a fiddle. Insurance companies are primo at sticking it to the citizens.

There you go shooting off that uneducated cake hole again.

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