With an average dip of 3.2 percent for homeowners policies, nearly seven in 10 Citizens Property Insurance Corporation personal lines policyholders could see rate reductions in 2015, the insurer said Monday.
The reduced rate recommendations are to be considered Wednesday by the Board of Governors in Orlando.
Under the proposed rates, mobile home owners will see rates drop by an average of 3.9 percent.
The 2015 recommended rates will be submitted to the Office of Insurance Regulation, which must establish rates for Citizens before they take effect.
In a 2015 rate kit provided the media, Citizens said that even the 30 percent of policyholders who will see rate hikes next year will experience less severe jumps than in the past.
Citizen noted that while rates had been inadequate in many areas in prior years, a gradual phasing in of actuarially sound rates—beginning in 2010—has helped. Citizens is required by law to recommend actuarially sound rates within the limits of “the glide path, which caps rate increases at 10 percent per year.
Rates for some policies are still inadequate—near the coast, for older homes, condos, and mobile homes, for example—but most policyholders will see an actuarially sound 2015 rate similar to 2014 or lower.
Helping to lower rates are lower reinsurance costs, higher surplus levels (built up over eight hurricane-free seasons) and lower probable maximum losses.
In April, Citizens announced a $3.1 billion lower-cost reinsurance program, including the largest single catastrophe bond issue in history at $1.5 billion of the total.
On Tuesday, Citizens noted that 2011 legislation to rein in sinkhole losses has also helped fuel the rate cuts for policyholders, adding however that some aspects of the reforms are being challenged in court.
Source: Citizens Property Insurance Corporation