Homeowners who have Citizens Property Insurance may have to prepare for a hike in insurance rates. According to a press release, outgoing Florida Chief Financial Officer Alex Sink said the inequity in homeowners’ insurance rates must be addressed. Currently, Florida residents are subsidizing those who own homes in coastal areas. Notwithstanding Sink’s views, a return to sound actuarial levels for Citizens may signal a rate hike.
CFO Sink stated that Citizens Property Insurance’s actuarial studies show there are homeowners out there whose rates are being subsidized 40% to 50% by other Floridians. According to CFO Alex Sink, that’s the inequity that has to be addressed going forward in some kind of measured way that does get to the point that the people who are living in places that are riskiest are bearing more of their share of the risk.
In light of the current economic environment, the state will have a problem facing this issue because it must strike a balance between consumers’ wallets and reducing Florida’s financial risk if we are hit by a hurricane.
Gov. Charlie Crist vetoed a bill that would have capped a rate adjustments for reinsurance costs, financing products, and an inflation trend fact. Governor-elect Rick Scott has promised to return Citizens to actuarially sound levels and to end its reliance on assessments to pay claims following a major disaster.
The top five writers of homeowners multiperil insurance in Florida in 2009 were: State Farm Group with a 15.09% market share; Citizens Property Insurance Corp., with 13.44%; Universal Insurance Holdings Group with 8.62%; USAA Group with 5.9%, and St. Johns Insurance Co. Inc. with 4.59%.
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