Citizens’ board delays voting on rate hike

Insurer acts at state CFO’s urging

A vote on steep rate increases proposed for customers of state-owned Citizens Property Insurance Corp. has been postponed until December.

The decision by Citizens’ Board of Governors on Wednesday followed a letter on Tuesday by the state’s CFO, Jimmy Patronis, urging the board not to “pass on the cost” to Florida customers of rising fraud and litigation from water claims abuses in South Florida.

Citizens has been passing on the costs it claims are from “skyrocketing nonweather water losses in South Florida” to its customers for several years. Rates have increased nearly 10 percent in the past two years for customers in Broward, Miami-Dade and Palm Beach counties.

But this year, citing evidence that the claims abuses were spreading beyond South Florida, Citizens’ staff proposed an average 7.9 percent rate increase statewide for 2019, including increases of 5 percent or more for multiperil homeowner coverage in all but 13 of Florida’s 67 counties, nearly 10 percent in Broward and MiamiDade counties, and 7.7 percent in Palm Beach County. Last year, while the tricounty region saw near-10 percent rate increases, most of Florida’s other 64 counties got rate decreases of up to 9.6 percent, according to a Citizens document.

Known as Florida’s insurer of last resort, Citizens’ mission is to provide affordable multiperil and windonly coverage for properties that private market insurers refuse to cover. Thanks to the state’s depopulation program encouraging private market carriers to absorb Citizens’ policies, the company insures a fraction of the total it covered six years ago — 435,600 statewide as of March 31, compared with 1.4 million in 2012, and 223,938 in the tricounty region, compared with 612,00 six years earlier, state data shows.

Patronis’ letter repeats the assertion from Citizens’ news release late Tuesday that the increases are being driven by “skyrocketing nonweather water losses” in the tricounty region — an assertion disputed by Citizens’ own data showing that claims and lawsuits arising from damage such as broken water pipes and ruptured water heaters have been decreasing in the region over the past two years, even when adjusted for declines in the number of policyholders.

At Wednesday’s meeting, Citizens officials conceded that the number of nonweather water suits in South Florida declined in 2017 and that the rate of lawsuits arising from claims “appears to have flattened out,” according to Chief Actuary Brian Donovan.

Patronis’ letter stated: “We must find the solution to the underlying problem and not pass on this cost to policyholders.”