Citizens raising Manatee insurance rates 9 to 22 percent

TALLAHASSEE -- Insurance regulators have approved a rate increase for Citizens Property Insurance Corp. of 9 to 22 percent in Manatee County, which local critics are saying is a way to force hundreds of thousands of homeowners statewide out.

The rate increase statewide is estimated at around 11 percent.

Reaction in Manatee County was swift Tuesday as at least one insurance agent blasted the rate hike and what it will do to local clients.

"Isn't this great?" said a sarcastic Andy Gregory, president of DesChamps, Gregory and Hayes, 1812 Manatee Ave. W., Bradenton which has roughly 10 percent of its customers insured through Citizens. "Add this to the list of Citizens' absurdity."

Gregory, as do others, believes the rate hike is just an attempt by Citizens to cut back on some of its exposure in the state of Florida by encouraging some consumers to drop coverage.

When Gregory learned Tuesday that Manatee's rates could soar up to 22 percent depending on the value of the home and if it was located in coastal Manatee or inland, he estimated that would mean a hit of $500 to $1,500 annually for some Manatee homeowners.

"Citizens is the state of Florida's great contradiction," an angry Gregory said. "They don't have to follow the same regulations of any other standard carrier that operates in Florida, meaning they are not properly funded. They have a huge deficit between what they have in cash versus their exposure."

Gregory estimates that Citizens has $450 billion in policies but only $45 billion to cover those policies. The danger is that a cataclysmic storm could bankrupt Citizens and leave Florida residents to pay the bill, Gregory said.

"They think raising the rates will help," Gregory said. "I say no. They need to get rid of it. The state needs to deregulate."

Since the news of the rate hike broke after Citizens had closed for the day, officials there were not able to respond to Gregory's charges.

Although premiums in Manatee may average out a bit higher due to the county's coastal assets, the average homeowner covered by Citizens will have to pay an additional $250 when their policy renews next year, and some will have to pay hundreds of dollars more under the rate increases approved by the Florida Office of Insurance Regulation.

"This is the mentality of Tallahassee -- raise rates as high as you can, force people out," said Sen. Mike Fasano, R-New Port Richey, who has criticized Citizens' board for unilaterally overhauling the state's largest insurer. "Citizens should not be granted any rate increase because they have already given themselves rate increases through the back door."

Florida Rep. Jim Boyd, R-Bradenton, who is also an insurance agent, did not immediately return a phone call for comment.

Gregory believes Citizens is a "ticking time bomb."

The rate increase comes as five different private insurance companies begin plans to take over as many as 210,000 policies from Citizens.

Under the "takeout" program, companies began sending letters to homeowners this week offering them an alternative to Citizens. Homeowners have 30 days to opt-out before they are automatically shifted to the private companies.

The push for higher rates and more takeouts is part of an ongoing effort -- championed by Gov. Rick Scott -- to shrink Citizens and bolster the private insurance market.

In the last year, Citizens has raised rates, reduced coverage, stripped away discounts and increased post-storm deductibles in an multibillion-dollar effort to shred risk and make itself less attractive. The insurer of 1.4 million says its rates are below market value, leaving state taxpayers at risk if a monstrous storm hits.

"Citizens is pleased that Insurance Commissioner [Kevin] McCarty has approved its measured approach to achieving sound rates and reducing the potential financial burden of assessments for all Floridians," spokesperson Christine Ashburn said in a statement.

Consumer advocates and policyholders decried the multimillion-dollar rate increase as heavy-handed and insensitive to struggling Floridians who have already weathered hundreds of millions of dollars in insurance cost increases.

"This isn't just a rate hike of more than 10 percent, it's a rate hike of more than 10 percent after Citizens changed the rules -- taking away mitigation discounts, reducing coverage, and changing replacement values," said Sean Shaw, founder of Policyholders of Florida. "Citizens is getting away with charging more for less and policyholders and our economy are worse off because of it."

In the case of homeowners like Pauline McCoy, Citizens' aggressive downsizing strategy appears to be achieving the board's desired result.

McCoy, of Lauderhill, saw her insurance premium nearly double after an inspector came to her home and found that she did not deserve insurance discounts that she was getting. Together with the upcoming 10.8 percent rate increase, her insurance bill is expected to jump by nearly $1,500 next year.

Now, she wants out of Citizens.

"I called my mortgage people, I called my agent and said, 'Take them off. I don't want Citizens'," said McCoy, one of more than 200,000 property owners who have lost discounts during Citizens' massive and controversial reinspection effort.

McCoy lost her job as a telephone operator in 2008, and has only been able to find part-time work as a home health care aide, where she makes about $10 an hour. She is on the verge of falling behind on her mortgage, she said, and is not sure how she will come up with the extra money to pay for her upcoming policy renewal.

When she heard that private companies were sending letters to more than 200,000 policyholders with offers to take them out of Citizens, McCoy said she would gladly accept if given the chance.

"Citizens has us in a trap," she said.

But in most cases, shifting to a private company will not lead to lower rates. Citizens is the only insurer in the state mandated by law to cap rates hikes at no more than about 10 percent annually. Despite seven hurricane-free years, private insurers have been raising rates faster than Citizens.

Homeowners who do receive a takeout letter will be automatically shifted to one of four private companies if they do not opt out by Nov. 6. The companies participating in the take out program -- Citizens' largest in many years -- are: Florida Peninsula Insurance Company, Homeowners Choice P&C Insurance Company, Southern Fidelity P&C, Southern Oak Insurance Company and American Integrity Insurance Company of Florida.

Citizens originally requested a rate increase of 11.8 percent -- the full 10 percent cap plus a little more for various fees and costs. In reviewing the request, OIR pointed out that the Citizens had been cherry picking the highest of three different estimates of annual losses, effectively maximizing the rate increase. OIR decided to use the middle estimate instead, and knocked the rate hike down to 10.8 percent.

-- Toluse Olorunnipa of the Herald/Times Tallahassee Bureau contributed to this story

Related stories from Bradenton Herald