TALLAHASSEE — Roughly one million customers of the Citizens Property Insurance Corp. will see a 10 percent increase on their premiums on Jan. 1, but that still won’t come close to making the company solvent.
The board that oversees the state-backed insurer approved the increase Wednesday, ending a three-year rate freeze for businesses and homeowners insured by Citizens.
It also backed off a plan to reject rate cuts for customers in some parts of the state after some contentious debate and input from the Office of Insurance Regulation. The board voted to cap any cut at 10 percent, frustrating board chairman Jim Malone of Naples.
“We’ll take what we can get,” he said after learning that the Office of Insurance Regulation most likely wouldn’t approve a board decision to reject decreases. “Our glide path is severely downgraded by this. We thought we were in the right direction.”
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So Florida residents are still on the hook despite the 10 percent increase in what the Legislature and Gov. Charlie Crist see as a glide pattern — a gradual increase in premiums — to shore up Citizens’ shaky financial standing.
“Hurricane losses not covered by Citizens premiums are paid through assessments on all Florida homes, not just Citizens policies, all business policies and all auto policies,” said Sam Miller, vice president of the Florida Insurance Council. “Citizens will not be moving as rapidly as possible to build sufficient reserves and we probably will have dramatic statewide assessments after a major hurricane.”
Board member Tom Lynch noted that policyholder rates would have to be increased by more than 47 percent without any reductions if the company was to be made solvent.
Tens of thousands of Citizens customers are eligible for a lower rate on their premium based on new rate models. However, a spokesman for the company was unsure of an exact number of policyholders eligible for the reduced rates.
“Those consumers who are in areas of the state where they are paying too much, it’s also appropriate for them to pay the right rate even if it’s lower than what they pay today,” said Christine Ashburn, legislative affairs director for Citizens.
Malone was particularly upset that Citizens cannot appeal decisions by the Office of Insurance Regulation, calling it fiscally irresponsible but perhaps politically expedient.
“We’re the largest game in town and for us not to have the ability to protest in a formal way is wrong,” Malone said afterward. “We could be hammered this year or next year and not meet our obligations.”