For most of the 1 million policyholders of Citizens Property Insurance there will be an increase by up to 10% on premiums as early as January 1 2010. This increase will most likely affect other policy holders of other insurers as they seek to increase rates to meet the new legislature measures being passed.
The increases in premiums are due to the credit crunch which makes it more difficult for the state of Florida to borrow money to pay claims in the event of a major hurricane. The new measure helps to reduce the risk to all Floridians if there is a shortfall for Citizens.
The new law allows the state-backed Citizens to increase premiums yearly up to 10% until there are sufficient funds to pay for claims. Rate increases will still need final approval through the state Office of Insurance Regulation.