Citizens Property Insurance Board of Governors Approves Phase-In of Proposed Sinkhole Rate Hike
Sep 12, 2011
Under fire for a proposed sinkhole rate hike that would raise some policyholders’ premium costs by thousands of dollars, Citizens Property Insurance Corporation (“Citizens”) Board of Governors (“Board”) met today, September 12, 2011, during which it unanimously approved a measure that would allow the rate increases to be phased-in over several years.
“CFO Atwater asked that the Board quickly convene to ensure that the pending sinkhole filing properly considered the effects of SB 408 and to discuss a phased in implementation of sinkhole rates. I thank my fellow Board members, who acted promptly on the CFO’s request, and came together on short notice to address this important issue,” said Carlos Lacasa, Citizens’ newly appointed chairman.
The action comes a day before tomorrow’s public rate hearing at the Tampa Convention Center, which is expected to draw large crowds of irate Citizens policyholders. The Florida Office of Insurance Regulation (“OIR”) must approve any proposed rate increase before it can be implemented and has not yet done so for the rates in question.
The Board’s decision to phase-in rate increases over several years was possible because of a provision in Section 627.0629 (5), F.S., which states that an insurer has the latitude to implement a proposed rate increase over several years.
Under the phase-in plan approved by the Board, premiums for sinkhole coverage in 2012 would increase by an overall average of 50 percent both statewide and by territory, with new indications to be reviewed annually. If the sinkhole rates approved by the OIR differ greatly from those filed by Citizens, it was recommended that Citizens staff review the implementation schedule.
“I want to tell you how moved I am that those of you new to the Board are initiated to Citizens with such a controversial and important matter,” said Chairman Lacasa.
Citizens original rate plan called for rate hikes that would have raised annual sinkhole premiums by thousands of dollars in areas like Hernando and Pasco Counties, where many of the state’s sinkhole claims are filed.
For example, the originally proposed sinkhole rate increase would have raised rates in Hernando County by 509 percent, causing annual premiums to jump from $1,083 to $6,600. Under the phase-in plan, the first year premium would increase to $1,625, resulting in savings of almost $5,000 over the original proposal.
“By seeking approval of the full sinkhole rate indication, yet phasing in the approved rates, we are both highlighting the severity of the sinkhole claims crisis while allowing time for the provisions of Senate Bill 408 to moderate future rate need,” said Chairman Lacasa.
With no other business before the Board, the meeting was adjourned.
To access the meeting materials, click here.
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