Florida regulators have begun discussing a proposal that would lead to double-digit rate increases for customers of Citizens Property Insurance.
During a hearing held by the Florida Office of Insurance Regulation last week, Citizens chief actuary Brian Donovan said the state-backed insurer is recommending a 12% increase for primary residences with multi-peril policies.
The proposed rate is slightly lower than the 14% hike that Citizens initially announced earlier this year, after the company revealed that Hurricane Ian had reduced its surplus to $4.9 billion, down nearly $2 billion from what it had during the previous two hurricane seasons.
In the hearing, Citizens president and CEO Tim Cerio said he understood the gravity of asking for a rate increase and acknowledged the challenging circumstances faced by consumers.
“We take asking for a rate increase very seriously,” he said. “[For] homeowners’ insurance consumers, it’s a very difficult time right now.”
Citizens’ proposed rate increases are part of broader issues within Florida’s property insurance market. Over the past two years, private insurers have dropped policies, requested substantial rate hikes, and, in some cases, even faced insolvency due to financial troubles.
This situation has resulted in an influx of homeowners seeking coverage from Citizens, which was initially established as an insurer of last resort.
The number of policies held by Citizens has more than doubled in the past two years, according to the News Service of Florida, reaching 1.308 million as of last week. At the same time, it has witnessed a 33% decline in reserves in reserves.
Florida Insurance Commissioner Michael Yaworsky acknowledged the need to reduce the number of Citizens policies by facilitating a recovery of the private market.
“I think everyone in this room has probably experienced rate increase in their property rates over time,” Yaworsky said during the hearing. “It is not fun. It is painful. It’s not fun to approve those rates, but we’ve all had to make the best decisions we can as we go forward.”
Learn the biggest factors why Florida insurance rates are going up with this article.
Last week’s hearing on Citizens’ rate proposal lasted two and a half hours, the News Service of Florida reported, with approval still pending.
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