Florida has dodged hurricanes for the last decade, but the state’s largest property insurer says it needs to keep hiking the rates paid by those customers who live along the coast and in heavily populated South Florida.
The board of Citizens Property Insurance voted unanimously Wednesday to raise rates an average of 3.2 percent statewide, although the actual rates paid by homeowners could vary widely depending on where they live. Many inland customers with Citizens, for example, are expected to see a slight decrease.
Citizens officials approved the rate hike without any debate or discussion. State regulators must still sign off on the rate hike, but if it is approved the higher rates would take effect in February 2016.
Nearly half of the state-created insurer’s 600,000 customers will actually see slight decreases in their rates according to figures drawn up by Citizens staff.
But those customers who live near the coast could pay an average of 8.6 percent more. Citizens officials say rate hikes are needed for homeowners in Palm Beach, Broward, Miami-Dade and Monroe counties.
Citizens officials say there are several reasons for the need for higher rates in South Florida. One reason is that Citizens is shrinking in size due to an aggressive push by the insurer to have policyholders switch to privately run companies. That leaves Citizens with customers who are at a higher risk of storm damage.
Another reason cited by Citizens is that there has been a rise in South Florida claims associated with water damage that is not storm-related.
“Every year, Citizens’ actuaries calculate rates based on the same methodology used by insurance companies all over the world, which compares potential risk to the ability to pay claims,” said Chris Gardner, the chairman of Citizens Board of Governors, in a statement.
Gov. Rick Scott and legislators have pushed Citizens to trim the number of its policyholders. That’s because Citizens is allowed under state law to impose a surcharge on most insurance policyholders, including those with auto insurance policies, if it cannot pay off its claims following a major storm.
Several years ago legislators capped the annual rate hikes at 10 percent.