Marion County homeowners insured by Citizens Property Insurance Corp. are facing a potential 11.1 percent hike in their homeowners insurance and more than a doubling of their sinkhole coverage.
The state-run insurance of last resort is requesting changes to its rates based on customer location, which means proposed rate changes would vary throughout Florida.
The Florida Office of Insurance Regulation is slated to make a decision on the rate request Monday.
Critics of the proposed hike say that Citizens can’t justify its request.
“This is a company that has strayed from its mission of serving policyholders to one of indulgence and putting its own needs first,” said state Sen. Mike Fasano, R-New Port Richey on his website. He called the proposed rate hike “the epitome of arrogance.”
Fasano is also calling on the insurer to better evaluate its own efficiencies, citing criticism of the company’s high legal costs and reinspection program that increases costs.
The insurer has been pushing for higher rates in an effort to get more customers to move their coverage to private insurers.
The insurer was created for property owners who could find no other insurer and currently holds more than 1 million policies, according to its website. Citizens says it isn’t collecting enough money in case of a weather catastrophe.
“It is a fact that Citizens could have more dollars in hurricane losses after a catastrophe than we do in resources,” Citizens’ Chief Financial Officer Sharon Binnun said during a public forum last week in Miami.
The hike request comes after three years of increasing premiums.
The average yearly premium, without surcharges, in 2009 was $1,893. In 2011 that increased to $2,089. During that year, the company collected $1.7 billion, including surcharges.
The insurance company’s website said that the increase request includes “risk load” assessment, which is additional money in case of a major catastrophe.
The website does not say how many years of “risk load” fees would be necessary.
Citizens did not return calls for comment.
Citizens had 1,003,856 policies during 2011, up from 407,387 policies in 2005.
As for wanting to more than double some counties’ sinkhole insurance, Citizen’s website said it is paying out more in sinkhole claims than it collects in premiums.
Citizens collected $51,049,824 in sinkhole-related premiums during 2011 but received $445,839,309 in sinkhole claims and paid out $136,089,177, according to the website.
“Sinkhole losses are significantly increasing the probability and amount of potential assessments by absorbing premiums needed to pay for other types of losses, such as hurricane,” the website said. “Citizens has a financial responsibility to charge rates for sinkhole coverage that are actuarially sustainable and reflect the true cost of providing sinkhole coverage.”
Some critics of the rate hike also want Citizens audited, especially after the company made loans to other insurers to take some of its customers.
Last week State Rep. Frank Artiles, R-Miami wrote the Office of Insurance Regulation asking for an audit of Citizens’ decision to loan $350 million from its $6.2 billion surplus to private insurers as an incentive for companies to take over some of their policies.