Florida Citizens Property Insurance Rates Rising

Florida lawmakers are working on measures increasing the insurance rates levied by the state-backed Citizens Property Insurance to make the insurer more viable as well as encourage coverage through private insurance entities.

Measures making their way through the Florida Legislature would increase property insurance rates by as much as 25 percent annually and make it more difficult for property owners to qualify for coverage through the cash-strapped public insurer. Lawmakers also want to eliminate coverage for homes worth more than $500,000.

The proposed rate increase initially would be less than the 55 percent increase Citizens officials said would be necessary to cover potential claims. And Florida Governor Rick Scott has said he wants to ensure Citizens is financially sound by raising property insurance rates, making a rate increase likely.

Citizens has a $4 billion surplus, but officials for the Associated Industries of Florida say the state-backed property insurer currently has $413 billion in exposure on the more than 1 million properties it has underwritten. And state law limits annual rate hikes by no more than 10 percent. State officials in 2009 proposed rate increases of between 5 percent and 10 percent, saying a sudden 10 percent jump in insurance rates would be too burdensome on homeowners and job providers already struggling to make ends meet in a down economy. And Florida insurance officials last approved rate increases of 1.8 percent for mobile home owners, 5.4 percent for homeowners and 8.8 percent for dwelling fire insurance protection. Increases of 2.1 percent for mobile home physical damage insurance and 10.1 percent for commercial properties and homeowners association insurance plans also are proposed.

Florida lawmakers in 2002 created the state-backed Citizens Property Insurance Corporation to provide insurance protection to residents and businesses in the Sunshine State's hurricane-prone areas. But if damages exceed available funds for property damage claims, property owners across the entire state are assessed to make up the shortfall. Floridians already are paying a 1 percent assessment to replenish the state's Hurricane Catastrophe Fund, which was severely depleted after four hurricanes struck Florida within a month during 2004 and Hurricane's Katrina and Rita inflicted more damages in 2005.

The Florida Legislature recently approved increasing premium rates to offset potential funding shortages if a major hurricane or other catastrophe were to strike. But state insurance officials and representatives of various special interests are at odds over how much rates should be increased.

The proposed rate increases were much lower than officials for Citizens Property Insurance Corporation said would be necessary to adequately fund the state-backed program. Citizen's actuaries have said rates need to go up by my more than 10 percent for commercial residential properties, such as apartment complexes, 40 percent on private homes and 140 percent for wind-only commercial policies to properly fund the program.