Florida’s Citizens Property Insurance Corp. Board Ratifies 2012 Rates

Posted by on Oct 22, 2011 | 0 comments

By Joan E. Collier, PropertyCasualty360.com

At its October 12 meeting, the board of governors of Citizens Property Insurance Corp. ratified rate increases recently approved by the Florida Office of Insurance Regulation. The rates will increase a statewide average of 6.2 percent and have a sinkhole cap of 32.8 percent. The new rates on homeowners’ and dwelling fire policies take effect on Jan. 1, 2012, for new and renewal multi-peril business, and Feb. 1, 2012, for new and renewal wind-only business.

In addition to ratifying the rates, the board also voted unanimously not to pursue a phase-in schedule for sinkhole rates that it approved at a September 12 meeting. The board reversed its position on the phase-in because the rates ultimately approved by the OIR were substantially lower than what the board sought.

This summer, amid its 13 other filings, Citizens’ sinkhole rate increase requests ranged from zero to 2,688 percent, for an overall average rate increase of 447 percent. On September 12, the board voted to cap rate hikes for sinkhole coverage at 50 percent in 2012 and then phase in future increases over the next several years. It also approved a proviso that allowed it to review that implementation schedule if the OIR approved significantly different rates.

Good thinking.

On September 19, Florida Insurance Commissioner Kevin McCarty axed Citizens’ request to an overall statewide and territorial premium increase for sinkhole coverage of 32.8 percent for homeowners, and a 96.5 percent increase for dwelling fire policies.

Growth Continues, Especially in Older Homes

In his report to the board at the October meeting, Citizens’ President Scott Wallace said that Citizens is consistently insuring older, less expensive homes; 97 percent of all insured personal lines accounts and 82 percent of coastal account policies are written for values of $400,000 or less. He further noted that 78 percent of those homes are 20 years or older in both the coastal and personal lines accounts. Mobile homes track the same way, with 75 percent of the policies issued for homes that are 20 years or older.

Despite attempts over the past several years to scale back Citizens’s growth overall, it continues to reign as the largest property insurer in Florida. On Jan. 1, 2010, the in-force policy count for all lines of business was slightly over 1 million . As of Jan. 1, 2011, it was just under 1.3 million policies. By Sept. 30, 2011, the in-force policy count had reached 1.46 million—a 42 percent increase in 21 months.

Not all the news was disheartening. Citizens’ CFO Sharon Binnun, reporting data from the June 30, 2011, financial statements, noted that:

  • In the last three years, surplus has grown from 3.1 billion to 5.1 billion as of June 30, 2011.
  • Citizens has nearly $4 billion in additional claims-paying ability available through its pre-event liquidity program.
  • Citizens purchased $575 million of private reinsurance for this hurricane season.
  • It has more than 43 reinsurers participating in the reinsurance program

In other action, the board selected Rob Wallace to serve as vice chairman.

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