Proposed Citizens Insurance rate hike could impact millions in Florida

TAMPA, Fla. - More than a million customers across Florida could soon see another increase in the rate of their insurance policies.

The Citizens Insurance Board of Governors gave a proposed rate hike the first stamp of approval that it needs to be put into effect.

The proposed rate hike would raise personal property insurance policies by an average of 14%.

This would be the biggest average rate hike, and only the second double-digit rate hike in the company’s history.

Insurance experts say this is likely not the last rate increase we’re going to see from the company, as it aims to bring its customer-base down.

"Citizens’ goal is for less customers," Mark Friedlander, the Florida spokesman for the Insurance Information Institute said. "They've been going through population. It's been very successful. They've moved over 400,000 policies to private carriers since last October."

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The proposed 14% rate hike is the cap on rate increases, according to state law.

"These are very positive indications that we’re creating an environment where there’s a potentially more stable marketplace inside of the state of Florida and there’s more competition," Charlie Lydecker, on the Board of Governors said.

Citizens Insurance, which is run by the state, has been known as the "insurer of last resort," but it’s also the largest insurer in Florida. The company covers 1.2 million policies.

It was originally designed for homeowners who couldn’t find insurance on the private market. But as private insurers canceled policies and raised rates over the years, Citizens Insurance became the more affordable choice.

"They cannot charge what we refer to as actuarially sound rates, meaning if they were a private insurer, they would have been charging much higher rates over the past several years just based on market conditions, risk exposure," Friedlander said.

Friedlander says rate increases in the private market are actually running lower this year.

"The bottom line is, the private insurance market has gotten much healthier," Friedlander said. "That's why they're able to adjust their rates now to very moderate levels."

He says Citizens Insurance is tacking on the rate hikes in an effort to reach more sound rate levels.

"So, if their rates are higher on average than the private market this year, that will be another incentive for consumers to choose private insurers over citizens," Friedlander said.

He says Citizens Insurance is expected to take on thousands of new customers a week during hurricane season. Friedlander says the company announced that de-population will be on hold during hurricane season.

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"Our real dream is de-population and reduced rates," Lydecker said.

Citizens Insurance says this proposed rate hike is less than half of what the company would need to raise rates by if there wasn’t a cap.

"38% is the real data," Friedlander said. "That's what they would be charging if they were a private market."

Citizens Insurance Board of Governors says the company could actually see the number of policies drop below a million.

The Board of Governors voted to approve the proposed rate hike.

The Florida Office of Insurance Regulation will have to approve the increase.

The office could send the rates back to the board, and it would have to amend the proposal and re-file.

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