TALLAHASSEE, Fla.-- The Florida Office of Insurance Regulation has approved new rates for Citizens Property Insurance Corp. that will increase average rates for residential personal-lines policies by just under 4.7 percent, down from an earlier plan for an 8.2 percent hike.
The new rates, which will vary for individual policyholders depending on details of their coverage and locations, will go into effect Dec. 1. The planned 8.2 percent hike was approved in December but did not take effect.
The Citizens Board of Governors in June scaled back the planned increase after lawmakers passed a measure this spring that revamped a controversial insurance practice known as assignment of benefits. The state-backed Citizens and other insurers had blamed higher rates on fraud and litigation involving assignment of benefits, commonly known as AOB.
In a news release issued late Monday, state Insurance Commissioner David Altmaier credited the new law (HB 7065) with helping reduce the Citizens rate hike. “We are pleased to see that AOB reforms passed by the Legislature are already having a positive effect on rates,” Altmaier said. “We will be closely monitoring new rate filings to ensure that cost savings are passed along to Florida consumers.”
Assignment of benefits 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 AOB helps make sure claims are properly paid. The new law makes changes such as placing limits on attorney fees in AOB lawsuits.
Along with the AOB changes, the new Citizens rates also reflect the Office of Insurance Regulation freezing rates in Monroe County for many wind and multi-peril residential policies.
Citizens has about 420,000 policyholders statewide. While the majority will see rate increases, about 67,000 will see rates go down.