New coastal homeowners seeking coverage from the state-backed insurance pool would see premiums double in some regions under a scenario to be reviewed Thursday by a key regulatory committee.
Members of Citizens Property Insurance Corp.'s actuarial and underwriting committee will review a proposal that would raise premiums for new Citizens customers by nearly 30 percent statewide in an effort to depopulate the state-backed property insurer that now handles nearly 1.4 million policies.
Coastal homeowners who seek Citizens coverage after Jan. 1 would see premiums averaging 41.7 percent higher than those imposed on similar properties in 2010. The rates would add roughly $100 million in new premiums.
No vote will be taken Thursday, but the committee was asked to review the proposal that would allow Citizens to exceed a 10 percent cap on premium increases now in effect. Citizens' legal advisers say the 10 percent cap on premium increases does not apply to new policies, an opinion not shared by others, including state Chief Financial Officer Jeff Atwater.
The actuary committee has already recommended noncapped rates for new policies, but the board postponed action on the proposal last month after an outcry from critics led by Sen. Mike Fasano, R-New Port Richey.
Board members asked Citizens' staff to examine what rates could look like under an uncapped scenario. They asked the insurer to meet with legislative leaders and look at the impact of making such a dramatic change. It could take up any new proposal at its June 7 meeting.
"The subcommittee has already recommended to the full board that they go forward with this uncapped rate issue," said Christine Ashburn, Citizens director of legislative and external affairs, "... This is just staff providing the subcommittee an update of where we are working on those items."
While the statewide increase would be about 30 percent, some areas would be hit much harder. New Citizens policyholders in Santa Rosa County, for example, would see an 82 percent increase under the scenario presented to the committee. New coastal customers in Escambia County would see premiums more than double at the end of 2010.
Citizens has been tasked with depopulating the state-run pool, which has become the largest property insurer in the state. Toward that end, lawmakers and state officials have been trying to raise Citizens' rates to make them more actuarially sound and more closely mirror what private insurers would charge.
"This is just another ridiculous idea from Tallahassee to shrink Citizens," Fasano said. "It's ridiculous because people have nowhere else to go."
At the full board meeting last month, Fasano argued that allowing such dramatic increases would hamper economic recovery along Florida's coast, home to about 80 percent of the state's population. Any rate hike approved by the Citizens board would have to be approved by state insurance regulators before going into effect.
"If the Office of Insurance Regulation were to approve these rates, it would be devastating to the housing market here in Florida," Fasano said.
