The surge of water damage claims in South Florida is the primary suspect for why Citizens Property Insurance Co. increased insurance rates for most homeowners.
Because most water damage claims in the nation come from South Florida, rates for multi-peril and single-family residential coverage will go up in 2016 in the Broward, Palm Beach, Miami-Dade and Monroe counties. However, they're going down everywhere else in Florida, pending final state approval.
The Citizens' Board of Governors issued a unanimous vote to approve recommended rate increases, which averaged 3.2 percent statewide for all personal property insurance lines. The increase includes 1.1 percent for multi-peril and single-family coverage and 8.8 percent for high-risk, wind-only coastal policies. Overall personal lines rate will increase by an average 6.2 percent in Miami-Dade and 10.3 percent in Monroe County. However, the impact of the water damage claims only affects multi-peril policies, not wind-only coverage.
Implementing rate increases only in the areas where the most claims are originating is a sound practice for insurers because the frequency and severity of such claims winds up being paid for by policyholders who reside in those regions.
There have also been efforts to restrict homeowners' ability to sign over insurance benefits to contractors, which have failed in court. The "assignment of benefits" practice is creating additional financial challenges for Florida insurers and there is no quick fix to the issue.
Claims adjusting services can provide the much-needed manpower to resource-starved insurers in regions where weather or other unique circumstances create a large number of claims. Having such an organization on hand when needed relieves the pressure on insurers.