Thursday, December 15, 2005

Huge Hike in Premiums Proposed

Gannett's capital bureau reporter Paige St. John is reporting late Thursday in the Ft. Myers News-Press that the governing board for Citizens Property Insurance decided today to seek a second, "steep" premium increase from state insurance regulators.

Specific increases will depend on how close to the coast a home may be and where in the state it is located. Homeowners close to the coast will see an average 45 percent increase, according to St. John, and about 21 percent for structures further inland.

The higher premiums, once approved by the Insurance Division of the Department of Financial Services, would come "on top of average 17 percent hikes approved last month to keep the company's rates higher than the private market." Writes St. John --
Combined, it means insurance will cost Citizens policyholders nearly 80 percent more for coastal homes and 51 percent for mobile home owners. The increases still face public hearings and state regulatory approval. Citizens' nearly 840,000 policyholders could get notices for the higher bills as early as March.

More than 243,000 homeowners live in areas set for average increases that exceed $1,000, an analysis of Citizens' documents shows.
The proposed rate increase also will apply unevenly across geographical areas of the state. For three examples, St. John says:
The average premium increase for more than 12,000 residents in Lee County will range from $401 to $1,826 a year, raising the average annual insurance bill for more than 8,000 residents to over $6,700.

In Escambia County, more than 1,100 coastal residents will be charged an average $1,638 a year more for home insurance, pushing their average bill to $3,897. For example, a newer, $200,000 block home on Pensacola Beach or Perdido Key, without storm shutters, would have a $3,690 premium, on a policy with a 2 percent hurricane deductible. The premium for the same house within Pensacola would be $2,185.

In Brevard County, coastal insurance bills will go up an average $795, to $2,030.
Citizens officials claim the increase is needed to cover a $1 billion assessment for storm losses and to build up reserves for the next tropical strom season.

"This is the reason we've been running deficits, because we didn't have the reserves built up to cover eight storms," St. John quotes Citizens board chairman Bruce Douglas as saying. "As distasteful as it is to have to consider actuarially sound rates, from an insurance standpoint if you're going to break even, you better have them."

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