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Regulators approve 6.3 percent average hike for Citizens policyholders

Homeowners who have policies with Citizens Property Insurance Corp. will see their premiums rise an average of 6.3 percent next year, the fifth consecutive increase in rates from the state-run insurer.

The average premium increase approved Monday by the Florida Office of Insurance Regulation comes on the heels of a 10.8 percent hike approved last year, but is less than the 7.9 percent sought by Citizens as part of its aggressive attempt to shed policies.

Homeowners with standard “multi-peril” lines will pay an additional $111 on average --  4.4 percent higher than current average rates -- when their policy renews next year. Those with wind-only residential policies will pay an average increase of $265 more, or 10.5 percent, and businesses with commercial lines coverage will see a 10 percent hike.

Since 2009, rates have risen 43 percent for Citizens’ standard homeowners policies and officials say the company’s rates are still below market. 

"We are grateful to OIR for its diligence in reviewing Citizens' 2014 rates and pleased that it has agreed with our overall approach," said Citizens President and CEO Barry Gilway in a statement. "The agency’s action will allow Citizens to continue providing quality service to our 1.2 million policyholders while reducing the risk of assessments on all Floridians." 

The rate increase, which is effective Jan. 1, will apply to fewer homeowners than in the past if 10 private insurance companies succeed in taking over nearly 400,000 policies from Citizens in the next month.

Under the “takeout” program, companies send letters to homeowners offering a private market alternative to Citizens. Homeowners have 30 days to opt-out before they are automatically shifted to the private companies in November.

The takeout program, coupled with the decision by regulators to routinely raise rates, is part of an aggressive push by Gov. Rick Scott and the Florida Legislature to make the company less attractive to homeowners. 

The company is the largest property insurance carrier in the state with 1.2 million policies and if it doesn’t have enough money to cover its claims after a massive hurricane, it is required to impose emergency assessment on non-Citizens policyholders throughout the state and surcharges on its policyholders to cover the costs.

Beginning in January, Citizens will also launch a new program to push homeowners with standard “multi-peril” homeowners policies into private carriers if they receive an offer from a private company. Agents, working on behalf of consumers, will be able to comparison shop for the best rates to offer people through a clearinghouse run by Citizens.

Consumer advocates, who in the past have complained that Citizens has used back-door methods of increasing rates in the past by reducing coverage, stripping away mitigation discounts and increasing post-storm deductibles, were pleased that regulators rejected the higher rate increase.

“Initially, my reaction is that this is a good thing,’’ said Sean Shaw, a consumer advocate and founder of the Policyholders of Florida. He said that coupled with the clearinghouse, “this seems to be the beginning of a reasonable approach to shrinking CPIC and giving people options.”

But, Shaw noted, customers must be careful and shop around before leaving Citizens to join an alternative company.

The rates approved Monday include five of the 11 lines operated by Citizens, said Amy Bogner, OIR spokeswoman. The department will rule on the remaining rates later this month. For more information, go to http://www.floir.com/Sections/PandC/ProductReview/CitizensPublicRateHearing2013.aspx.

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