Last week the Citizens Board of Governors approved the Citizens Property Insurance Corp. proposed rate increase for 2019. The lone dissenting vote was Governor Bette Brown, Monroe County’s representative on the Board. Citizens is proposing a statewide average increase of 8.2 percent for personal lines policyholders – homeowners, condominium owners and renters with an increase of 7.6% for Monroe County wind only policies. If approved by Florida’s Insurance Commissioner David Altmaier the rates will go into effect on September 1, 2019.

Citizens is again blaming assignment of benefit (AOB) fraud on nonweather water losses in Miami-Dade, Broward and Palm Beach Counties for “eroding financial progress made following more than a decade without a hurricane.” Assignment of benefits is a contract between an insurance policyholder and a third party, such as a contractor. An AOB transfers control for the claim benefits and other policy rights and provisions to the third party, including evaluating damage, filing and settling the claim and receiving payments.  According to a new study released by the Insurance Information Institute “The state’s legal environment has encouraged vendors and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, conduct unnecessary or unnecessarily expensive work, then file tens of thousand of lawsuits against insurance companies that deny or dispute the claims.”  The study estimates that policyholders have paid about $2.5 billion in insurer legal costs over the last 12 years.

Citizens’ inability to reign in the AOB fraud, which only exists in the Tri-County area, is causing rate increases for the entire state. According to the Citizens 2019 Rate Kit if the litigation over AOB was reduced to the previous levels “many South Florida policyholders would see rate decreases in 2019 and the overall average rate increase would be 1.5 percent.”

FIRM is preparing its legislative agenda for the 2019 session which begins on March 5, 2019. The AOB abuse combined with a modeling methodology that unfairly estimates Monroe County’s risk have led to property insurance rates that are not affordable for Monroe County residents, contributing to our current housing affordability crisis.

The proposed increases for Monroe County are 9.7% for homeowners multi-peril, 7.6% for homeowners wind only, 7.7% for condominiums multi-peril and 9.7% for condominiums wind only.

If you’re interested in learning more about how Citizens determines the rates you can read the full 2019 Rate Kit Here:  Citizens rate increase 2019 media kit

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