Santa Rosa County Citizens Property Insurance customers could face an average 8.7 percent increase in their rates after the Florida Office of Insurance Regulation (OIR) Aug. 23 rate hearing.
State-run Citizens Property Insurance was established as a catch-all for properties other companies would not insure, and they handle more than 409,000 home and commercial properties throughout the state.
Citizens’ media representative Michael Peltier said the rate increase is a necessary response to abuses in Assignment of Benefit (AOB) claims, specifically in non-weather water damage cases.
“Citizens over the past few years has seen a disturbing increase in water loss claims not related to hurricanes,” he said. “We are seeing both an increase in frequency and severity of these claims.”
The AOB problem
Owner of East Bay Insurance of Navarre John Hays said AOB abuse is an issue across the nation and in more than just property insurance.
But for Citizens, AOB water damage property cases are the biggest cost driver, with nearly 46 cents of every premium dollar going to covering these payouts in 2015, three times more than any other factor the company reports.
Imagine a pipe bursts in a home causing water damage to parts of the floor and wall. A company may approach the homeowner promising to handle billing the insurance company and that the repairs will be free to the homeowner.
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