Citizens OK's rate hike for associations
TALLAHASSEE,
Fla. -- March 31, 2006 -- Condominium associations covered by Citizens
Property Insurance should brace themselves for an average statewide rate increase
of about 20 percent in the coming months.
At a meeting in
Tallahassee, Citizens' board on Thursday approved a rate-increase request from its
staff and will submit it to state regulators, said Justin Glover, Citizens'
spokesperson.
Condo associations
will have a chance to voice their concerns about this increase at public hearings
that insurance regulators will call once Citizens has submitted its filing. State
law requires public hearings when an insurer requests a rate hike averaging more
than 15 percent.
The state-run
insurer of last resort covers 36,554 condo associations statewide, with more than
half of that exposure -- 20,749 policies -- in South Florida. These policies
generally cover the building structures.
Citizens must
increase its condo association rates now because the Australian company QBE
Insurance Group has just begun raising its rates by an average of 38 percent, and
state law requires Citizens to charge the highest rates. This measure is designed
to encourage consumers and businesses to shop around for a private insurer rather
than turn to Citizens.
Condo associations
are already reeling from double-digit rate increases in recent years as well as
hurricane-related expenses.
Anticipating the
hikes, Joseph Buerk, president of the 61-unit Seacrest Towers Condominium
Association in Pompano Beach, insisted on doubling the budget for insurance, from
last year's $47,000 to the current $90,000 a year, for its QBE premiums.
That comes to about
$1,500 per unit. Individual owners usually get additional insurance to cover the
interiors of their units, and they have been hit with increases as well.
"Something has got
to be done," he said Thursday. "It's ridiculous, the costs are so high."
The market for
condominium association insurance, already tight before the 2004 hurricane season,
has clamped down even more. Citizens and QBE are among a handful of companies
still writing this coverage.
Southern Family, a
unit of the Poe Financial Group, has been selling condo association coverage as
well. But the company announced earlier this month that it will cancel policies as
they come up for renewal because of its financial problems since the 2004 storms.
That means more policies will be flowing into the Citizens' pool.
In another action,
Citizens' board also approved changes to its underwriting guidelines that will
give owners of older homes a break. Surcharges on policies will be removed for
homeowners who retrofit their homes and bring them up to the current building
code.
Surcharges on these
older homes ranged from 1 percent for a 20-year house to 20 percent on homes more
than 40 years old.
Copyright © 2006,
The Miami Herald, Beatrice E. Garcia. Distributed by Knight Ridder/Tribune
Business News. Miami Herald staff writer Donna Gehrke-White contributed to this
report.
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