Doubledigit Property Insurance Hikes The Norm
By Scott Blake
Those who have looked at their property insurance premiums already know it: Double-digit rate increases are the norm this year for many in South Florida.
Citizens Property Insurance Corp., the state-run insurer of last resort, is raising rates 10% to 12% for most residential and commercial customers in Miami-Dade County, records show.
Citizens, South Florida’s largest property insurer, had more than 658,000 policyholders in Miami-Dade, Broward, Palm Beach and Monroe counties as of the end of April. Policyholders in the four-county area accounted for more than 45% of its customers statewide, according to Citizens data.
Most of those policyholders in South Florida are east of Interstate 95, in the coastal region where many private insurers are won’t take on new business due to potential exposures to storm-related property damage.
Even so, some industry observers said, policyholders of private insurers also are seeing some significant premium increases.
Some homeowners with private insurance companies are getting hit with larger-than-usual rate increases of 12% to 14% this year, said Jorge Pena, a Miami-based independent insurance broker and a board member of the Commercial Industrial Association of South Florida.
"There’s the perception that we are more prone to hurricanes [than the rest of the state], although that hasn’t been true in recent years," said Mr. Pena, who works with Citizens and a number of private insurers.
"We also typically have higher rates [in South Florida] because we typically have a higher rate of claims," Mr. Pena said.
Making matters worse for many homeowners are stricter Citizens guidelines.
"They’ve gotten a lot stricter with the [property] inspection process to verify the information that is given to them," Mr. Pena said.
"Before," he added, "they didn’t inspect [property] for every policy. But now they do, and if you don’t meet the guidelines, they won’t renew" the policy.
Mr. Pena said Citizens is aggressively trying to shrink by trimming its number of policies and thus its exposure to potential losses. One way of doing that, he added, has been to target homes valued at $1 million or more for removal from its customer rolls.
The situation isn’t much better for business owners.
Commercial policyholders generally are seeing premium increases this year ranging from 5% to 15%, said Tom Vinciguerra, a Fort Lauderdale-based commercial-property insurance broker and another member of the Commercial and Industrial Association of South Florida.
The increases mainly come from private insurance companies, because Citizens is not a big player in the commercial property market. A large majority of Citizens policies cover single-family homes and condominiums.
Mr. Vinciguerra said this year’s increases follow several years of generally flat rates for commercial properties, which include offices, warehouses and manufacturing facilities.
He attributed the commercial increases mainly to the industry’s latest risk models that have shown higher potential losses in the event of hurricanes. Part of the potential for greater losses, he added, is due to resurgence in the real estate market, which has pushed up property values.
"After Hurricane Wilma [in 2005] rates shot up for two or three years," Mr. Vinciguerra said. Then, prior to this year, "rates came down and flattened, and settled to where they were slightly higher than pre-2005 levels.
"By and large, there has not been an uproar" from commercial policyholders, he said, adding that they were notified in advance and had time to budget for it. "It minimized the level of surprise."To read the entire issue of Miami Today online, subscribe to e -Miami Today, an exact digital replica of the printed edition.