Florida Insurance Commissioner Kevin M. McCarty granted Citizens Property Insurance Corp. a fraction of a rate increase that the state-run insurer sought, a request that would have raised premiums for sinkhole coverage by thousands of dollars for some residents.
McCarty granted a statewide average increase of 6.2% for homeowners policies, and an 8.6% average increase for dwelling fire policies. For just the sinkhole portion of the filing, McCarty approved an average 32.8% statewide increase for homeowners.
"Citizens' requested sinkhole rate change, which would result in average increases of as much as $5,521, is not supported by credible evidence," McCarty's order stated.
The decision "is intended to reflect the legislature's intention to give Citizens actuarially supportable rates for the sinkhole portion of the premium," McCarty said in a written statement. "Although more credible data and study is required, these established rates will start Citizens on the path of having a sound rate for their sinkhole risk."
In his order, McCarty said he wants data on the cost savings from a new law designed to address noncatastrophe cost drivers for property insurers, including sinkhole losses. His order instructs Citizens to contract with an independent firm to write a report on the impact of the new law.
During a Citizens board of governors meeting Sept. 12, Citizens representatives said they did consider the effects of the new law, known as Senate Bill 408 when it made its way through the legislature. Indeed, Citizens representatives said if it weren't for the sinkhole changes in S.B. 408, its rate filing would have been higher.
Under the new law, rates for sinkhole coverage are not subjected to the state-mandated 10% rate cap imposed on Citizens.
An effort to reach Citizens for comment on McCarty's decision wasn't immediately successful.
The new rates are effective Jan. 1 for new and renewal multiperil homeowners' and dwelling fire policies, and Feb. 1 for new and renewal wind-only policies.
Citizens, the largest homeowners' writer in the state, has paid out $1 billion in sinkhole claims over the past nine years, and originally filed for a premium increase for sinkhole coverage that would have resulted in some policyholders, specifically in the sinkhole-prone counties of Hillsborough, Pasco and Hernando, paying thousands of dollars a year more for sinkhole coverage. Amid public dismay, and in some cases, furor over the proposed increases, the Citizens' board of governors voted to phase in the rate increases – but agreed that if the rates approved by the Office of Insurance Regulation differ from those that were filed, it would reconsider the rate-increase implementation schedule.