A proposal by Citizens Property Insurance Corp. to raise rates for new customers by an average of 30 percent is receiving some pushback from a couple of state lawmakers, although most elected officials have remained eerily silent on the pocketbook issue.
Rep. Carlos Lopez-Cantera, R-Miami, sent a letter to Citizens interim president Tom Grady on Wednesday, urging him to reject a proposal to remove the 10-percent rate cap for customers who join Citizens after 2012. The Herald/Times reported Wednesday that the plan would lead to average premium increases of 30 percent, with 95-percent hikes in some parts of the state.
"I write to you in order to express my unequivocal opposition to any increase on the rates being offered by Citizens to new and/or existing customers, without the approval of the Florida Legislature," wrote Lopez-Cantera, who was part of a Legislature that passed a 10 percent cap on rate increases in 2009. "I strongly believe that the plan being discussed to increase Citizens premiums for new customers...would be a blatant circumvention of state law and not in the best interest of the state of Florida and its residents."
Sen. Mike Fasano, R-New Port Richey, was the first lawmaker to speak out publicly against the uncapped rate plan--traveling to Citizens' board meeting last month to scold the board for considering the massive rate hikes. Chief Financial Officer Jeff Atwater sent a cautiously-worded letter to the board, stating that uncapped rates for new business was not what he had in mind when he voted for the 10-percent rate cap as Senate President in 2009.
Still, most lawmakers (on both sides of the aisle) have been radio silent on Citizens' aggressive push to raise rates on its 1.4 million clients by hundreds of millions of dollars. The rate hikes are part of a push--chiefly backed by Gov. Rick Scott--to shrink Citizens' size and exposure to risk.
That plan--which, at the request of Scott, is being done without approval from the Legislature--includes dozens of policy changes that will increase premiums on homeowners to the tune of hundreds of millions of dollars in the coming years. The Legislature declined to pass any major property reform legislation this year, rejecting plans that would raise rates on already-struggling voters homeowners.
But rates are rising anyways, with Citizens' 8-member Board of Governors assuming more authority to make policy changes that are usually directed by the Legislature.
The uncapped premium measure is expected to raise about $100 million in additional premium, money that will come out of the pockets of Florida's property owners.
Additionally, Citizens' massive reinspection program is forecast to bring in more than $70 million in higher premiums, costing homeowners' who are reinspected about $600 each.
Other recent moves by Citizens--sinkhole deductible hikes, increased "all other perils" deductibles and dropped coverage of carports and screened porches--will increase the costs of Florida homeowners if a storm hits.
Citizens' board of directors and Scott defend the actions as necessary to shore up the state-run insurers' finances and prevent financial calamity and "hurricane taxes" if a major storm hits.
Read Lopez-Cantera's letter here.