Consumer advocate Sha'Ron James also asked McCarty in a letter Monday to review Citizens' debt financing and water-loss claims before setting rates for 2016.
Reinsurance is essentially backup coverage purchased by insurers – an insurance policy for insurers.
"The purchase of additional reinsurance has led to the need for increased premiums, despite the decrease in the number of policies and the significant reduction in reinsurance costs worldwide," James wrote to McCarty. She questions whether the level of reinsurance Citizens carries "exceeds the level of adequacy needed to fulfill its obligation to its current policyholders."
The Florida Office of Insurance Regulation is currently reviewing the rate hike request. The new rates would vary by county and depend on a property's location, the home's style, and the type of policy.
Yesterday, the chief risk officer for Citizens Property Insurance sent a letter back to James defending the proposed rate hike.
"Citizens has secured enough reinsurance, at historically low rates, to blunt the possibility of assessments even in a benchmark severe event, known as the '100-year storm,'" Rollins said in his letter. "Better yet, much of this $6.9 billion in protection kicks in more often for smaller storms, such as a named storm with a 10 percent chance of striking each year, and it covers the case of multiple storms in a season."
According to Rollins, Floridians would have paid $11.5 billion in assessments if a 100-year storm hit four years ago, but today they would likely pay nothing.
Citizens President and CEO Barry Gilway contended last month that a "disturbing" rise in water-damage claims in South Florida has driven the need for the proposed rate increase.
Florida Realtors Sept. 2015
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