Broward County homeowners who sign up for windstorm insurance from Citizens Property Insurance Corp. next year could pay up to 56 percent more than a neighbor with an existing policy, if a cap is removed on rate increases for new customers.
Some new wind-only condominium customers would pay more than twice what existing policyholders pay now. Others would see lower premiums if the changes were to take effect Jan. 1.
In Palm Beach County, a homeowner who joins Citizens would pay up to 54 percent more than a neighbor with the same coverage now.
The rate changes would give Citizens roughly $100 million more in annual revenue, according to a report by the insurer on the effects of removing the 10 percent cap.
Members of a Citizens committee will learn more about the report on Thursday. The insurer’s board could vote on the issue in June or July, said Christine Ashburn, a spokeswoman for Citizens. The board postponed a decision on the cap last month.
Proponents of the plan say the move, with other measures to reduce coverage for existing policyholders, would make Citizens less desirable and cut the state’s risk if a hurricane were to strike.
The insurer has more than 1.4 million policyholders, including about 347,000 in Broward and Palm Beach counties.
“If rates go up significantly, people will not come to us,” Ashburn said.
Critics of the Citizens proposal say many homeowners have no other option than the state insurer because private carriers aren’t willing to accept new business.
State Sen. Mike Fasano, R-New Port Richey, said uncapped rates would devastate the housing industry and force potentially huge insurance bills on existing homeowners whose policies have been canceled by private insurers.
Florida lawmakers approved the cap for Citizens policies starting in 2010. The insurer interprets the law to mean only existing customers are subject to the 10 percent limit. Fasano said the legislature intended the cap to apply to all policies.
Florida Chief Financial Officer Jeff Atwater and Consumer Advocate Robin Westcott also have said they don’t think the insurer has the authority to make the change.
“They just don’t get it,” Fasano said of Citizens. “You’re going to have people lose their homes because they can’t find insurance. I just get so upset about this.”
Board Chairman Carlos Lacasa said at an April meeting that the insurer understands the consequences of raising rates. But Citizens must find ways to “run an actuarially sound, solid company,” he said.
If Citizens removes the 10 percent cap, the average rate increase for new customers statewide will be 30 percent. Some homeowners, including those inMiami-Dade County, would pay twice as much for coverage as existing customers.
The Citizens report contains a range of rate changes for customers throughout South Florida, based on whether they live along the coast, in condos or houses and whether they have multi-peril or windstorm-only policies.
Citizens has reduced coverage and raised premiums since Gov. Rick Scott called its power to levy post-storm assessments a threat to Florida’s economy.
All policyholders in the state may be charged up to 6 percent of their annual premiums if Citizens lacks money to pay claims after a storm. Citizens’ policyholders could pay the most – up to 45 percent of their premiums.
The assessments could cost Citizens customers an extra $1,100 each in a worst-case scenario.
A reduction in coverage prompted Kevin Roth, an Oakland Park homeowner and folk singer, to write a song criticizing Citizens and post the video on YouTube. The song says the insurer is a “rip-off of the poor” and should change its name to “Citi Sin.”
“The system is broken,” he said Wednesday.