Citizens Property Insurance will delay any decision on 2019 rate increases until December, with officials saying they want to assess the impact of a new program designed to curb the cost of non-weather water claims.
The Citizens Board of Governors, meeting Wednesday in Maitland, voted unanimously to wait until a Dec. 12 meeting to consider a rate increase that would average 7.9 percent for residential policyholders across the state. Commercial policyholders, including condominium associations, would face an 8.9 percent average rate increase under the proposal.
Bette Brown, a consumer representative on the board, urged members to put off the vote, saying large portions of the state are still recovering from the impact of last year’s Hurricane Irma.
“I feel very strongly that our state is still under some duress from this last storm. … You can really see it in South (Miami-) Dade and in the Florida Keys,” said Brown, who lives in Monroe County.
Florida Chief Financial Officer Jimmy Patronis said he supported the decision by the board of the state-backed insurer.
“Passing along a costly burden to policyholders while many are still recovering from an active hurricane season is not a solution,” he said in a statement.
Patronis also wrote a letter to the board, urging members to work on a solution to the controversial practice of “assignment of benefits,” where policyholders sign over their insurance claims to contractors. Citizens and other insurers say the practice --- particularly with residential water-damage claims --- often leads to costly lawsuits and drives up rates.
“I remain committed to working with stakeholders from now until the December meeting to come up with better solutions to address the (assignment of benefits) epidemic while keeping policyholders’ best interest at the forefront,” Patronis said.
Although members talked about delaying the rate decision until September, the board supported a recommendation from Citizens President Barry Gilway, who said waiting until December will give the state-backed insurer more time to evaluate the rate impact of a new “managed repair program,” which starts Aug. 1.
Under the program, Citizens policyholders who suffer water damage from a non-weather event like a burst water pipe or faulty water heater will have the option of making a regular claim under their policies but with a $10,000 cap for repairs, including a $3,000 limit for emergency services, like water removal.
If they opt to use the managed-repair program, they will have their damage repaired by Citizens-approved contractors. There would be no limit on the repair costs and the work would be covered by a three-year warranty. Additionally, beginning July 1, policyholders can also use an emergency water-removal and drying service that will be provided at no charge by Citizens.
The managed-repair program option is part of Citizens’ effort to reduce lawsuits stemming from assignments of benefits.
Gilway said waiting until the board’s December meeting will “give us more adequate time, frankly, to determine what impact we can expect from the managed repair program.”
Board member Marc Dunbar of Tallahassee said the delay will allow members to “get our arms around all of the (rate) data and the success of the managed repair program.”
Board member Gary Aubuchon of Lee County supported the delay, but he also asked for the Citizens staff to evaluate the financial impact of delaying a rate increase, which under state law is capped annually at 10 percent.
Typically, the Citizens board advances a rate request in the summer and, after a review and approval by the state Office of Insurance Regulation, rate changes take effect on Feb. 1. But the 2018 rate increase, which included a 6.6 percent hike for homeowners with multi-peril policies, did not take effect until May 1 because of a 90-day rate freeze that was imposed after Irma hit the state in September.
As of May, Citizens had 443,000 policies, representing about 6.5 percent of the residential market in Florida.
