Posted on 24 Jun 2013 by Neilson
Florida's largest property insurer, already under fire for everything from recent business deals to how much it pays its executives, is readying another round of rate hikes for homeowners.
The board of Citizens Property Insurance Corp. meets next week in Miami to consider a range of proposed hikes
If approved by the board and then state regulators rates will go up next January for roughly 1.26 million policyholders.
State law places a 10 percent cap on how much Citizens can raise its rates on an annual basis. But that cap doesn't apply to sinkhole coverage that the insurer offers or additional charges used to purchase backup coverage.
The overall statewide rate hike for all customers will be between 6.9 percent and 8.8 percent.
But the bottom line for many Citizens customers will be higher.
For example, tens of thousands of homeowners in counties such as Broward, Collier, Miami-Dade, Escambia and Palm Beach who use Citizens to cover only storm-related damages could face a 10.7 percent hike. That would translate to an average premium hike of as much as $300 or $400 a year.
Other Citizens customers who have complete homeowners coverage could see their rates could up by a smaller percentage. Some homeowners in Sarasota, Santa Rosa and Walton counties may only see their rates go up by 5 percent to 6 percent.
Citizens is the insurer of last resort in the state and it covers many homes and property that traditional insurers do not cover. But because of rate caps, Citizens says, its does not charge as much as it actually needs to cover potential claims.
Citizens has the power to place a surcharge, also called a "hurricane tax," on its own policies and on the policies of most insurance policies if it can't cover its losses following a major storm.
Gov. Rick Scott and others have pushed to reduce the size of Citizens out of fears that it could not handle the storm-related damages. But some of the deals approved by Citizens' board have come under fire.
State legislative leaders have already announced they plan to hold hearings to review a recent $52 million deal to shift 60,000 policyholders to a fledgling company that is less than one year old.
Citizens does not normally pay companies to absorb its policies, although the board did approve a similar transaction earlier the year. Instead, Heritage Property Insurance and Casualty is being paid to assume any claims associated with policies going back to January. But since Heritage gets to pick the policies it wants, the insurer could cherry-pick policyholders who have no claims pending.
Campaign finance records show that Heritage Property Insurance and Casualty and affiliated companies have donated $176,000 in contributions since last year. Those donations include $110,000 to a political committee controlled by Scott, a Republican, and more than $40,000 to the Republican Party of Florida.
Documents obtained by The Associated Press show that a lobbyist representing Heritage had met with a top Scott aide to discuss the transaction. The Scott administration acknowledged that the meeting happened in late March roughly two months before the Citizens board approved the deal.
Scott's chief of staff Adam Hollingsworth insisted in a statement that no one in the Scott administration took a position before Citizens approved the transaction, known as a "take-out," on May 22.
The governor has his own criticisms of Citizens as well and has criticized the insurer for pay hikes given out to top executives and reports about lavish travel spending.