Citizens Property Insurance makes case to state for double digit rate hike
Florida insurance regulators Thursday afternoon considered a rate hike for homeowners using the state-backed insurer of last resort. Citizens Property Insurance was asking for a sizable increase as Florida’s still unsteady property insurance market continues to wobble.
The rate hike plan has average overall increases of 13.1% in 2023 and 14% in 2024 for all Citizens' personal lines of insurance. Officials told Florida's Office of Insurance Regulation, the decision-makers, they're trying to offset non-weather related water losses, high reinsurance costs and a glut of litigation.
"Excess litigation has done incredible harm to the capacity of Florida's private insurance market," Tim Cerio, Citizens Property Insurance President/CEO, said. "This has in very large part caused Citizen's policies to double in a two-year period from about 610,000 to over 1.2 million."
Florida's former deputy insurance commissioner turned insurance adviser, Lisa Miller, said increases are a good thing. Florida, she said, is trying to return Citizens to a true last resort to reduce taxpayer liability. Higher prices, Miller noted, also can make the market more competitive.
"If a rate in Citizens is $2,000 a year— if a private insurance company sees that policy, they might come in and offer $1,800 a year," Miller said. "I know it seems counterintuitive that Citizens rates should be the highest in Florida, but for the long-range health of our entire market, our economy ... Citizens' rates must be higher and continue to increase."
The change comes on top of more than a year of reforms. Lawmakers in Tallahassee cut back access to the courts to tamp down litigation, they installed more insurer oversight and bolstered reinsurance with a promise of relief in time.
"It's been long overdue," Florida CFO Jimmy Patronis said after a cabinet meeting last month. "That's why we had the two special sessions that we did. Look, Rome wasn't built in a day — some of this stuff is going to take 12 to 18 months."
Policyholders, however, are sick of waiting.
Willie Butts, a disabled veteran from Apopka, recently signed up with Citizens after his previous property insurance carrier offered a massive price hike for renewal.
"The letter went from $2,800 approximately to over $15,000," Butts said. "So to say, skyrocket, it might be a little bit of an understatement."
Butts dropped his old carrier and secured a new rate of about $3,400 a year with Citizens. He's now worried about how much that rate might increase in the coming years if Florida's market troubles aren't resolved.
"My message is, look— we elect you guys to go up there and to represent us. And we elect you to figure this type of stuff out," Butts said. "You know, we — we're depending on you to do this."
State officials at OIR will now take public comment until June 22. They plan to make their decision sometime after that. New rates would start in November of this year.
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