TALLAHASSEE, Fla. – Officials have directed Citizens Property Insurance Corp., the state-backed insurance company, to revise and reduce its proposed rate increases. Florida Insurance Commissioner Michael Yaworsky signed an order on Friday challenging certain aspects of Citizens’ rate proposal, which included a 12% rate hike for homeowners with the most common policies. The order, available on the state Office of Insurance Regulation website, instructed Citizens to recalculate new and lower overall statewide rate increases.
Michael Peltier, a spokesperson for Citizens, stated in an email on Monday that they are currently reviewing the final order and will submit revised recommendations based on the findings and directives of the Office of Insurance Regulation. Citizens had sought approval for an overall 13.3% rate increase, including a 12% increase for “multi-peril” policies on primary residences, due to the significant rise in its policy numbers.
However, under state law, the maximum allowable increase for these policies this year is 12%. Citizens argues that rate hikes are necessary because their rates are generally lower than those of private insurers, undermining the state’s efforts to shift policies to the private market and endangering Citizens’ actuarial soundness.
Friday’s order highlighted concerns about the justification for the proposed increases in certain areas of the state. It stated that due to Citizens’ lack of competitiveness with private insurers, rates should be subject to a modified policyholder capping methodology. Consequently, multi-peril policies on primary residences may experience increases ranging from 0% to 12%. Additionally, a law passed last year allows rate increases of up to 50% for homes that are not primary residences.
Initially scheduled for November 1, the rate increases have been postponed to December 9. The Office of Insurance Regulation has approved this change and provided Citizens with 30 days to revise their rate proposal. Furthermore, in a separate order, the Office of Insurance Regulation has granted approval for a series of rate proposals for commercial policies, specifically condominium-association policies, with an average statewide increase of 9.2% for condominium-association multi-peril policies set to take effect on October 1.
During the past three years, Citizens has experienced significant growth as private insurers have withdrawn policies and implemented substantial rate hikes due to financial issues. On August 11, Citizens reported a total of 1,363,606 policies, illustrating substantial growth compared to 486,773 policies on July 31, 2020; 661,150 policies on July 31, 2021; and 994,456 policies on July 31, 2022. State leaders have long aimed to transfer policies from Citizens to the private market, partly due to the financial risks associated with major hurricanes or multiple hurricane occurrences.
In conclusion, regulators have instructed Citizens Property Insurance Corp. to revise and reduce its proposed rate increases. This order comes amid concerns about the justification for the increases in certain areas of the state and the need to maintain Citizens’ competitiveness with private insurers. The revised rate proposal is expected to be submitted within 30 days, ensuring a balanced approach to rate increments for policyholders while maintaining the financial stability of the state-backed insurance company.