Thursday, September 03, 2015

Citizens Insurance New Rates questioned

Kudos to our advocate! 

I totally agree with our Insurance advocate.

Everything was working out fine. Citizens was doing a great job. It handled well all claims during the last storms; And Citizens was even able to put together an adequate reserve fund.

Then the private insurers that had deserted us Floridians a few years ago as soon as they had a taste of substantial losses, came back after more than a decade.  Apparently the business wasn’t so bad after all. Citizens was created because Insurance companies did not want to insure our homes; that's the bottom line.  But they found up that Florida wasn't that bad and that they could generate enormous profits off Citizens' demise.

They (by way of their lobbyist, I guess) forced Citizens into giving up a large part of its policies to a bunch of companies – unknown of most of us.  

And now Citizens is starting to do what   all these new insurance companies will soon start to do on us:(you can bet on it: Come back periodically with rate hikes, which we thought were a thing of the past.  

Want to think of a parallel?  What if Medicare was forced to privatize and leave to private insurance the task of covering senior citizens health?  

I can surely affirm that what is now an excellent coverage would soon degrade into a bureaucratic mess, cost double, and hike up our contributions every year.

I just read today in 

Florida consumer advocate questions Citizens’ rate hike

Insurance Commissioner Kevin McCarty to "strongly consider" the large amount of reinsurance purchased by the state-backed Citizens Property Insurance – and to do it before the Florida-owned firm makes a decision about its requested 3.2 percent rate hike.

Consumer advocate Sha'Ron James also asked McCarty in a letter Monday to review Citizens' debt financing and water-loss claims before setting rates for 2016.

Reinsurance is essentially backup coverage purchased by insurers – an insurance policy for insurers.

"The purchase of additional reinsurance has led to the need for increased premiums, despite the decrease in the number of policies and the significant reduction in reinsurance costs worldwide," James wrote to McCarty. 

She questions whether the level of reinsurance Citizens carries "exceeds the level of adequacy needed to fulfill its obligation to its current policyholders."

The Florida Office of Insurance Regulation is currently reviewing the rate hike request. The new rates would vary by county and depend on a property's location, the home's style, and the type of policy.

Yesterday, the chief risk officer for Citizens Property Insurance sent a letter back to James defending the proposed rate hike.

"Citizens has secured enough reinsurance, at historically low rates, to blunt the possibility of assessments even in a benchmark severe event, known as the '100-year storm,'" Rollins said in his letter. "Better yet, much of this $6.9 billion in protection kicks in more often for smaller storms, such as a named storm with a 10 percent chance of striking each year, and it covers the case of multiple storms in a season."

According to Rollins, Floridians would have paid $11.5 billion in assessments if a 100-year storm hit four years ago, but today they would likely pay nothing.

Citizens President and CEO Barry Gilway contended last month that a "disturbing" rise in water-damage claims in South Florida has driven the need for the proposed rate increase.

Henry B. Nathan

United Realty Group Inc.

  (954) 296-6741   –  (80) 416-2747

I am a Licensed Realtor in South Florida, specializing in pre-construction
and luxury real estate.
Please visit my websites:

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