State-backed Citizens Property Insurance Corp. urged regulators last Thursday to back a request for an average 6.8 percent rate hike in premiums to cover a surge in water-damage claims.
The Florida Office of Insurance Regulation, which held a two-hour hearing on the proposal, is expected to rule in early September. Insurance Commissioner David Altmaier said after the hearing that regulators will take their time “vetting the issue.”
The requested change, if approved, would go into effect Feb. 1. For customers, changes would vary by policy and location.
For example, rates would go up an average of 6.3 percent for inland homeowners who have multi-peril policies, which include coverage for water damage, according to Citizens. Multi-peril policies for coastal homeowners would see an average increase of 8.6 percent.
Wind-only policies for personal-lines customers also would go up an average of 8.3 percent under the proposal.
Residents from Monroe County requested that a rate hike on windstorm policies in the Keys be delayed for up to three years. Citizens proposes for Monroe an 8.9 percent hike for 2017. The average annual premium would rise to $3,470 from $3,187.
Key West resident Joe Walsh, representing the group Fair Insurance Rates in Monroe County, read regulators a list of Keys residents who said they may have to move out of the county due to rising premiums.
“We have some significant community challenges to having an affordable place to live,” Walsh said. “When on top of that we add multiple years of 7, 8, 9 percent windstorm rate increases, then we create a massive problem trying to retain the backbone of the community, the people that work for a living ... the teachers, the cooks in restaurants, firefighters, police officers, the people who coach sports teams. These are the people that are most significantly impacted by the rate increase before you and the rate increases over the past dozen years.”
Altmaier called it “troubling” if anyone has to consider moving because of insurance rates.
The driving factor for the requested hike remains an increase in water-damage claims — initially concentrated in Southeast Florida but now appearing statewide — and a related politically charged issue known as “assignment of benefits.”
When homeowners need repairs for problems such as water damage, they sometimes sign over benefits to contractors, who ultimately pursue payments from insurance companies.
Citizens and other insurers have lobbied in the Legislature for restrictions on assignment of benefits, contending the practice leads to fraud and litigation. But contractors argue, in part, the practice helps homeowners hire contractors quickly to repair damage and also can help force insurers to properly pay claims.
Earlier this year, the Office of Insurance Regulation reported the state had seen a 46 percent increase in water-damage claims and a 28 percent increase in costs since 2010.
The Office of Insurance Regulation will continue to take public comments through Sept. 1.