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Citizens Property Å˽ðÁ«´«Ã½Ó³»­ Corporation’s Board of Governors has approved a 2016 rate package that lowers rates for nearly half of Citizens’ personal lines policyholders while responding to increased water loss claims and continued inadequate rates for its remaining policyholders along the coast with higher rates, according to a statement by the insurer.

The board unanimously approved an overall rate increase of 3.2 percent for personal lines policyholders, with most of the increases targeting property owners along the coast and in South Florida, where the company said rates continue to be inadequate.

While most inland policyholders will see rate reductions under the proposal to be submitted to the Florida Office of Å˽ðÁ«´«Ã½Ó³»­ Regulation (FLOIR), which must approve any rate changes, coastal homeowners will see average multi-peril increases of 8.6 percent. Mobile homeowners and condominium owners will see rates rise by up to 10.2 percent.

Personal lines policyholders clustered in Palm Beach, Broward, Miami-Dade and Monroe counties will see the bulk of higher rates under the legislative glide path established to bring those rates in line with the private market.

Inland homeowners will see an average 1 percent drop in multiperil rates while inland mobile homeowners will see rates reduced by 7.4 percent.

“Every year, Citizens’ actuaries calculate rates based on the same methodology used by insurance companies all over the world, which compares potential risk to the ability to pay claims,” said Chris Gardner, chairman of Citizens Board of Governors. “We are focused on maintaining a transparent process that both the public and the Office of Å˽ðÁ«´«Ã½Ó³»­ Regulation can appreciate.”

The overall increase is fueled by a continued spike in water loss claims in southeast Florida and the fact that many coastal policies have found coverage with private market insurance companies, Citizens said.

Since January 2014, nearly 550,000 policies have been transferred from Citizens to private companies. From a 2012 peak of nearly 1.5 million policyholders, Citizens continues to protect 573,000 personal lines customers as the state’s insurer of last resort. Of those, 255,000 are expected to see lower rates.

Citizens is required by law to recommend rates that are actuarially sound while complying with a legislative glide path that caps rate increases at 10 percent, excluding coverage changes and surcharges.

According to the company, despite there not having been a hurricane in the state in 9 years, rates must be based on expected future losses, not past losses, both by law and according to actuarial principles.

“The lack of major storms in Florida since 2005 has helped Citizens to build reserves and lower its cost of capital, but has not decreased the risk of future hurricanes. Predicted non-catastrophic loss experience is a factor as well. Some policyholders still are paying rates that do not fully reflect the expected future risk, and Citizens must work toward sound rates using the glide path,” Citizens said in its 2016 rate information package.

The 2016 recommended rates now go to FLOIR, which must establish rates for Citizens before they take effect.

Topics Trends Florida Pricing Trends Homeowners