Update: The governing board for the state-backed Citizens Property Insurance Corp. will take at least another month before deciding whether to charge higher rates on new business than allowed by law.
Although existing Citizens policyholders are protected from large premium increases by a 10 percent statutory cap, the insurer wanted to test what one member described Thursday as an ambiguity in the law to pursue higher rates on customers who contract with the company after Jan. 1, 2013.
Citizens interim President Tom Grady told the board that it must be more outspoken in making a case for charging actuarially sound premiums in exchange for the risk it accepts in its role as the insurer of last resort. Citizens has grown rapidly despite efforts to depopulate hundreds of thousands of policies.
Tampa, Fla. - The Citizens Property Insurance board will meet Thursday to review a proposal to stop capping rates for new policies. The state's largest property insurer is getting blasted for using a "backdoor power grab" to hike insurance rates.
The proposal distinguishes between "existing" and "new" customers. So price increases for exisiting customers would still be capped at 10%, but that's not the case for new customers.
The Policyholders of Florida educates Floridians about issues facing their property insurance market and its speaking out about this proposal.
Founder, Sean Shaw says he rejects the legal argument of the proposal because the statute and press releases from legislators say the legislative intent was always that the cap applied to everybody.
He says this rate hike could be a huge impediment for people wanting to move to Florida and to people who want to help economic recovery in our area because insurance will cost you more.
But he says there is something you can do about it.
"The constituents need to call their legislators, their senators, state senators and state representatives and tell them I don't want my insurance rates to go up like this. And people have to be educated about what is possibly going to happen to their rates," says Shaw.
The board meeting starts at 9:00 Thursday morning at the Tampa Airport Marriott.
The Associated Press contributed to this report