INSURANCE

Insurance rate hike would be disastrous, homeowners tell Citizens

 

Homeowners covered by Citizens Property Insurance Corp. spoke at a hearing Thursday to urge state regulators not to approve an insurance rate increase.

hsampson@MiamiHerald.com

Hernan Santiesteban installed hurricane shutters on his home in Westchester, believing it would reduce the cost of his property insurance.

Instead, his rates under Citizens Property Insurance Corp. increased from about $1,500 to $3,000.

“At this moment, I have no insurance because the cost is going so high,” said Santiesteban, 83. “I know there are many, many old people that cannot afford to have insurance for their home because right now it’s so high.”

Homeowners and politicians — and at least one elected official who is insured by Citizens — spoke Thursday night at a public hearing in Miami, held by the Florida Office of Insurance Regulation, about proposed Citizens insurance rate increases.

Citizens is proposing increases of up to 12 percent statewide, though the figure more common in South Florida is closer to 11 percent. The increase still must be approved by the state’s insurance office, a decision due on Oct. 1.

The state-run insurer has been pushing for higher rates in an effort to get more customers to seek coverage from private insurers — no easy task. Created to be a last resort for homeowners who could find no other insurer, Citizens has more than 1.4 million policyholders and, it says, insufficient money to cover a major disaster.

“We’ve got to have money to pay claims when the hurricane comes or series of hurricanes come,” said Citizens’ chief financial officer, Sharon Binnun. “The premium that we are collecting is not enough to pay claims.”

But more than a dozen people who spoke blasted the company for its reinspection program, which often leads to higher costs; for its own legal costs; and for a controversy over travel spending by its executives.

“This is a company that has strayed from its mission of serving policyholders to one of indulgence and putting its own needs first,” said state Sen. Mike Fasano, R-New Port Richey, who called the proposed rate hike “the epitome of arrogance.”

State Rep. Frank Artiles, R-Miami, a critic of Citizens whose own home is covered by the insurer, said Floridians are already paying too much. He urged the insurance office not to approve any increase until the company’s costs are managed better.

“Their costs are out of control,” he said. “I, as a legislator, cannot get the information as to how much money Citizens is spending on attorneys’ fees.”

Eduardo Gomez, a Coral Gables attorney who represents homeowners in lawsuits against Citizens, said the company’s policies result in a long and difficult process to get money for his clients, even after the cases are settled.

“You cannot continue to say that litigation costs are driving the premiums up because it is the company’s policies that are driving the premiums up,” said Gomez, who is himself facing a rate increase from Citizens.

He told the story of a client who is facing a rate hike that could cost him his home.

“To have a rate increase now with the insurer of last resort would be disastrous for thousands of Floridians and the national economy,” Gomez said.

Florida Insurance Consumer Advocate Robin Smith Westcott, who spoke against the rate increase, said homeowners should try to find other coverage, even if it means paying higher rates.

“Consumers should take away from this: When it’s time for my policy to renew with Citizens, shop,” she said. “Make sure you understand and see the benefit that might be in the private marketplace.”

Miami Herald Staff Writer Toluse Olorunnipa contributed to this report.

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