Potential Double-Digit Rate Increases for Citizens Insurance Policyholders

TALLAHASSEE, Fla. – The state’s Citizens Property Insurance Corp. has recently revised its proposed rate increases, which are expected to result in double-digit hikes for many homeowners starting later this year. The proposal, sent by Citizens to the state Office of Insurance Regulation, outlines an average increase of 11.5 percent for homeowners with the most common type of policies, known as “multi-peril” policies. Additional personal-lines residential policies, such as wind-only and mobile-home policies, would see an average increase of 12.3 percent. Meanwhile, various types of commercial policies, including condominium association policies, are projected to experience a 10.2 percent average increase.

These revisions were made in response to concerns raised by the Office of Insurance Regulation regarding an earlier rate proposal. The aim was to address these concerns, although Citizens had not received final approval as of Friday morning, according to Citizens spokesman Michael Peltier. Peltier stated, “We’ve responded to OIR’s concerns and think the rates we’re presenting to our board reflect those requested changes.”

The rate increases for personal-lines policies are set to take effect on December 16, while the commercial increases will be implemented on November 20. These anticipated increases occur amidst significant growth at Citizens, which was initially established as an insurer of last resort but has since expanded to cover 1.387 million policies as of last week. Homeowners have increasingly turned to Citizens in recent years as private insurers have dropped customers and raised rates due to financial difficulties.

State leaders have long advocated for policies to be shifted into the private market, partially due to the financial risks associated with major hurricanes or multiple hurricanes hitting Florida. However, Citizens argues that it often charges significantly lower rates than private insurers, thus providing an incentive for homeowners to continue purchasing coverage from Citizens.

Earlier this year, Citizens requested an average rate increase of 13.1 percent for personal-lines policies, including proposing 12 percent increases for all primary residences with multi-peril policies. However, in an order dated August 18, regulators opposed the 12 percent rate increase on all such policies, contending that the proposal prioritized “overall actuarial soundness, instead of individual actuarial soundness.”

The order, signed by Insurance Commissioner Michael Yaworsky, raised concerns about the justification for the proposed increases in certain areas of the state. It stated that due to Citizens’ non-competitiveness with private insurers, rates should be subject to a modified policyholder capping methodology. Under this methodology, increases could range up to 12 percent for multi-peril policies on primary residences, with the possibility of some policyholders not experiencing any rate increases. However, a law passed last year permits rates to increase up to 50 percent for homes that are not primary residences.

In conclusion, Citizens Property Insurance Corp. has revised its proposed rate increases, resulting in anticipated double-digit hikes for many homeowners. These revisions were made in response to concerns raised by the Office of Insurance Regulation. The rate increases, set to take effect later this year, come amidst significant growth at Citizens, which aims to provide lower rates compared to private insurers. State leaders continue to push for policies to be shifted into the private market, while Citizens argues for the benefits of its lower rates. The final approval for the revised rate proposal is still pending.

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