TALLAHASSEE - (CBS4) - Millions of homeowners who rely on Citizens Property Insurance may not like the news that rate hikes will be required to make it "actuarially sound," according to newly elected Gov. Rick Scott
But raising homeowners' rates by 55 percent is the state's largest insurance company only alternative to achieve that goal, officials have said.
That's according to a response given by Citizens Chief Financial Officer Sharon Binnun to members of the Florida House of Representatives Banking & Insurance Subcommittee Wednesday.
However, it will be a tough battle as legislation prohibits Citizens from increasing rates by more than 10 percent. Those restrictions on hikes come after the 2004 and 2005 hurricane seasons – which is when the state had eight storms over a two-year period.
Since then, many private insurers have fled leaving many homeowners little choice. About 1.3 million Floridians use Citizens Insurance which covers a total of $457 million worth of property.
Binnun says if Citizens doesn't hike rates, then they may not have enough money to pay claims in the event of a storm.
Should a storm hit and if Citizens could not pay out the claims, the insurer would have to make up the shortfall by taxing all insurance policyholders, including those on private companies.
(© 2011 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Orlando Sentinel contributed to this report.)
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