Local claims, not Miami-Dade’s, drive Citizen premiums
An Aug. 22 column by The Post’s Frank Cerabino, “Billing us for insurance as if we’re Miami is a low blow,” incorrectly suggests that losses in Miami-Dade County are driving rising rates in Palm Beach County. That is not the case. It also suggests that hurricane premiums are rising despite a lucky hurricane-free decade, when in fact hurricane rates are relatively stable and hurricane premium is calculated and shown separately for each policy. Premium increases are due almost solely to rising frequency of nonweather water damage claims and more frequent litigation of those claims.
In Palm Beach County, the average Citizens Property Insurance Corp.’s policyholder with homeowners’ multi-peril coverage will pay $2,668 a year if Citizens’ 2017 recommended rates are established by the state Office of Insurance Regulation. Miami-Dade policyholders will spend an average of $3,493 for the same coverage. Palm Beach County residents also pay less per $1,000 in coverage than their counterparts in Miami-Dade. Still, policyholders in both counties pay higher rates than the statewide average of $2,548.
Note that all rate calculations are public record, discussed at public hearings and vigorously reviewed by the OIR each year.
By Florida law and actuarial principles, rates must be set to cover statewide costs but must be adjusted for costs in each of 159 individual rating territories. However, losses per unit of premium or coverage, and the recent trends in those statistics, tell a similar story in both Miami-Dade and Palm Beach counties — claims costs are far outstripping premiums. If Citizens’ actuaries had eliminated all Miami-Dade losses and premiums from the rate calculations, the rate impact in Palm Beach County would have been nearly identical.
At Citizens, the “glide path” law ensures rates may only increase by no more than 10 percent per year for any one policyholder no matter how inadequate the current rate may be, so progress toward correcting the cost imbalance is gradual. The proposed 9 percent increase in homeowners’ coverage in Palm Beach County is driven by local claims.