By Charles Elmore
A new state law billed as holding down home insurance rates won’t stop average premiums from breaking through the $3,000 mark for the first time in Palm Beach County at a company important for coastal residents.
Increases approved by state regulators become effective Dec. 1 for state-run Citizens Property Insurance Corp., the second- largest insurer in the state and county. One area public insurance adjuster’s take in written comments to regulators: “Very concerned.”
For example, make it a 9.1 percent increase to an average of $3,109 annually for Palm Beach County residents who buy Citizens coverage only for the windstorm portion of their policy. Many such customers live near the coast where storm risks are higher. That’s up from an average of $2,851, calculations provided by the company show.
County homeowners buying full coverage from Citizens face an average hike to $3,016 from $2,901 for a standard policy known as an H03, according to company filings. That represents a 4 percent boost.
Individual policies differ and virtually no one pays the exact average, of course. Projections from the company can vary slightly from those of state regulators. Still, the bottom line remains higher costs ahead for most customers.
Citizens refiled 2019 rates to reflect passage of a state law this spring. Insurance industry officials say HB 7065 makes it harder for contractors, attorneys and others to inflate costs when consumers sign papers that let third parties take over control of insurance benefits for a claim. That’s known as “assignment of benefits.”
Supporters say the new law is designed to control abuses particularly prevalent in certain claims, such as water damage from a broken pipe. These are often the costliest kind of claims besides damage from hurricanes and other natural disasters, particularly if plaintiff attorneys take the cases to court. The costs are ultimately passed along to consumers through rates.
Passage of the law after seven years of legislative stalemate represents “a major step forward in our efforts to stem rising premiums caused by unnecessary litigation and assignment-of-benefits abuse,” Citizens President Barry Gilway said. “It is going to make a difference.”
Statewide, Citizens raised premiums 2.3 percent for HO3 policyholders, compared to an 8.5 percent increase requested before the law. An original filing would have raised Palm Beach County HO3 rates more than 7 percent, with the final increase landing at 4 percent.
The effect is far less pronounced in “wind-only” policies, because full-service policies tend to have more claims affected by the new law. Increases for wind-only coverage remain at more than 9 percent in Palm Beach County, for example, even after the new legislation.
In addition, state law caps Citizens’ premium increases at 10 percent in any given year, and company officials say they have pent-up rate need in parts of the state, including southeast Florida.
The law puts new restrictions on attorney fees and changes requirements for how insurance companies must be notified of lawsuits, among other changes. The law could face challenges in court.
Passage of the measure came over the objections of some legislators and professional groups that insurance companies wanted to get rid of rules that encouraged them to pay claims fully and promptly.
“This bill is designed to cure a crisis that has not been actuarially shown and does things that treat some vendors unfairly,” Democratic state Sen. Gary Farmer, an attorney whose Broward County district abuts Boca Raton, said during session debate.
Citizens had more than 36,000 policies in Palm Beach County as of March 31, the second-largest market share, according to state records. It continues to play a key role particularly for coverage near the coast, where many private carriers seek to limit their risk.
Some backers of the new law say they hope it encourages private insurers to write more policies in South Florida and increase competition, but that remains to be seen.
Residents such as Eli Casper of Highlight Realty in Boca Raton told regulators in written comments they opposed the rate increases.
“I am very concerned for myself and my fellow consumers,” Casper said. He said customers are already paying more money for less coverage and said he must “strongly recommend and request” no increase.
Biggest home insurers in Palm Beach County
Company and number of its local policies:
1. Universal Property & Casualty Insurance Co.: 86,355
2. Citizens Property Insurance Corp.: 36,211
3. FedNat Insurance Co.: 28,443
4. American Bankers Insurance Co.: 21,513
5. Homeowners Choice Property & Casualty Insurance Co.: 15,437
Source: Florida Office of Insurance Regulation as of March 31, 2019
Citizens’ insurance hikes in county
Coverage/average annual premium after Dec. 1, 2019/current premium/% increase
Multi-peril homeowners (H03): $3,016, $2,901, 4%
Wind-only homeowners (HW2): $3,109, $2,851, 9.1%
Multi-peril condo (HO6): $1,043, $976, 6.9%
Wind-only condo (HW6): $990, $920, 7.6%
Source: Citizens Property Insurance Corp.