August 2, 2019 (Courtesy: News Service of Florida)
The Citizens Property Insurance Board of Governors approved a revised rate hike in June, lowering a proposed increase after passage of long-sought legislation that overhauls the controversial insurance practice known as assignment of benefits.
The plan to increase average residential premiums by 4.7 percent, down from a proposed 8.2 percent hike that Citizens advanced in December, must still be approved by the state Office of Insurance Regulation.
The 8.2 percent increase never took effect. Customers’ rate changes would vary depending on their amounts of coverage and property locations. With the revision, more than 67,000 policyholders won’t face hikes. Commercial policies face an average 8.9 percent increase, unchanged from December.
If approved, the hikes would begin in September and fully take effect over the following year as policies renew. Citizens officials say the scaled-back rate hikes are possible largely because of a new law (HB 7065) that overhauls assignment of benefits, a practice that involves policyholders signing over claims to contractors who pursue payments from insurance companies.
While insurers contend the practice has become riddled with fraud and litigation, plaintiffs’ attorneys and other groups say so-called AOB helps make sure claims are properly paid. The new law makes changes such as placing limits on attorney fees in AOB lawsuits.
John Wortman, a member of the Citizens Board of Governors from St. Johns County, noted there is a concern that the state-backed insurer could see an increase in policies. That is because Citizens is scaling back its planned rate hike while most private insurers are expected to wait to see the impact of the new law. “We’re going to watch that very close,” Wortman said. Citizens has been holding around 420,000 policies after years of efforts to shed policies.