The Florida Senate’s insurance chairwoman blasted a proposed rate hike up to 10 percent in South Florida by Citizens Property Insurance Corp. Wednesday and said she will consider legislation to limit its “borderline unAmerican” moves to restrict consumer choice in fixing certain claims.
“Make no mistake: This takes away a right someone already has,” said state Sen. Anitere Flores, R-Miami, interrupted several times by applause from the audience at a hearing in North Miami.
Flores said “unfortunately” the state’s Office of Insurance Regulation had already approved part of the state-run company’s plan before the hearing and before the public-comment period had ended on rates.
Citizens will limit payments to $10,000 for water claims if consumers do not choose contractors the company approves in a “managed-repair” plan.
Consumers under duress have little way to know how much fixing damage will eventually cost, and many do not trust Citizens, she said. In a follow-up statement later, Flores urged regulators to reject the rate increase outright: “Citizens has unfairly raised insurance rates on policyholders since 2010, forcing my South Florida constituents to pay $700 million more in premiums than in actual claims since 2004.”
Citizens president Barry Gilway defended the repair policy as well as the rate increases to take effect Feb. 1, 2018, if approved by regulators in early September. He said the real problem is a “scam” perpetrated by some contractors and attorneys to inflate costs for non-storm claims such as water damage from a leaky pipe. The cost of a water claim in South Florida has roughly doubled to $20,000 in recent years, he said.
Gilway said “we continue to experience a surge in non-catastrophe losses and litigation that have forced us to make policy changes and, for the purposes of today’s hearing, to seek rate increases again this year for more than half of our 452,000 policyholders.”
The average statewide increase for homeowners is 6.7 percent, but South Florida would see the highest increases.
Miami-Dade and Broward counties face increases of about 10 percent, but Palm Beach County is not far behind with a 9.3 percent average hike for a standard homeowner’s policy. A records request by The Palm Beach Post showed Palm Beach County’s share of water-claims lawsuits is proportionately small: 5.1 percent, below the county’s 7.1 percent share of the company’s insured risk.
Losses from water claims-related lawsuits totaled just $4.8 million in Palm Beach County in 2016, dwarfed by Miami-Dade County’s $70.7 million in losses, records show.
In Wednesday’s hearing, regulatory staffers inquired about whether Palm Beach County was being treated properly. Citizens officials acknowledged the county had a smaller water-damage problem compared to its southern neighbors but maintained the proposed increase was still justified, with one saying, “Palm Beach really does pay for costs within Palm Beach.”
Customers and the general public are welcome to submit comments on the rate proposal until 5 p.m. Aug. 31 by sending an email to: firstname.lastname@example.org with “Citizens” in the subject line.