Citizens Property Insurance president and CEO Barry Gilway warned that the state-run insurer’s flood insurance rates would surge as a result of Florida’s lawmakers being unable to address the spike in water damage claims.
Gilway told the Citizens Board of Governors that annual rate hikes could reach as high as 10% in South Florida. He pointed out that with private insurers raising rates as a result of the surge in water damage claims, more people would turn to Citizens for insurance—overturning the insurer’s recent downsizing efforts to reduce its risk.
According to CBS Miami, Gilway articulated to the board that Citizens needs to do a better job of convincing the state’s lawmakers of the damage caused by the abuse of assignment of benefits.
“I just don’t believe that we got the story across that this is a crisis, this is going to reverse all the improvement we’re seeing in the overall marketplace over the last two to three years,” Gilway remarked.
Assignment of benefits is a business practice which allows homeowners to sign over their benefits to contractors for repair work. It has been noted that a number of contractors in areas such as Miami-Dade, Broward and Palm Beach have abused the practice as an opportunity to demand as much payment as possible from the carriers of their clients.
Although the issue of the abuse of assignment of benefits drew strong opinions from both sides of the fence, lawmakers were unable to reach an agreement on the issue.
In preparation for the next legislative session, board member James Holton recommended that Gov. Rick Scott should organize a “blue ribbon panel” consisting of members of several carriers and the Florida Bar to address the assignment of benefits issue, as well as other related water-damage concerns.
The Board later agreed to approach the Office of Insurance Regulation (OIR) to enact ways to reduce the number of non-storm water-damage claims.
Among the changes proposed by the Board include allowing policyholders to receive discounts on their premiums by choose contractors vetted by Citizens.
The OIR is reviewing Citizens’ earlier request for losses to be reported within 72 hours, as well as a $3,000 cap on temporary and emergency repairs—with additional money for repairs made available only after approval from the insurer.
