TBO.com - TBO is Tampa Bay Online

Insurance Task Force Backs Capped Hike Of Citizens' Rates

Associated Press file photo (Aug. 25, 1992)

Florida City shows the effects of Hurricane Andrew. A storm such as this could overwhelm Citizens Property Insurance Corp.

ADVERTISEMENT

By RUSSELL RAY | The Tampa Tribune

Published: January 6, 2009

TAMPA - At the end of 2009, Citizens Property Insurance Corp., Florida's largest home insurer, probably will be free to raise rates for the first time in three years.

Tuesday, a state-appointed task force charged with returning Citizens to its original role as the state's insurer of last resort agreed that any increase in Citizens' rates should be capped at 10 percent a year for three years to ease the financial burden on policyholders.

It's one of several recommendations the 11-member task force will submit to the Florida Legislature this month.

Citizens' rates, which were frozen at 2006 levels, aren't high enough to pay claims should a major hurricane strike the state, experts say. The rate freeze expires at the end of this year, and the state-run insurer said it plans to impose higher rates as soon as possible.

An annual cap of 10 percent would shield Citizens policyholders from a sudden and sharp increase in premiums, said Bruce Douglas, task force chairman and former chairman of the Citizens board.

"If we were to implement actuarially sound rates today, you might be looking at a 30 percent increase," Douglas said.

The task force also discussed a recommendation to eliminate a policyholder's option to reject offers from private insurers that want to assume their policy at a lower rate.

Most task force members were opposed to the idea, saying consumer choice should be preserved.

Task force member Teri Johnston said the option to reject offers from private insurers hasn't hurt Citizens' efforts to shed policies. Of the 400,000 takeout offers issued to Citizens policyholders this year, about 10 percent were rejected.

"Citizens is depopulating with this in place," Johnston said.

Task force member Locke Burt said the right to reject a takeout offer should be preserved. But he suggested that policyholders who receive a takeout offer should be issued a nonrenewal notice and forced to look for coverage in the private market.

If comparable coverage can't be found, those policyholders can reapply with Citizens, Burt said.

The task force, which met Tuesday at the Marriott hotel at Tampa International Airport, will meet again Jan. 22 to finalize its recommendations. Those recommendations must be submitted to the Florida Legislature this month.

Reporter Russell Ray can be reached at (813) 259-7870 or rray@tampatrib.com.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT