Florida's state-backed Citizens property insurance is seeking 13.5% rate hikes

Florida regulators Thursday dug into a proposal that would lead to double-digit rate increases for customers of Citizens Property Insurance Corp., as the state insurer of last resort continues trying to push policies into the private market.

The Florida Office of Insurance Regulation, which would have to sign off on increases, held a three-hour hearing on the proposal, which in part would lead to an average 13.5 percent rate increase for the most-common type of Citizens policy, known as homeowners' multi-peril coverage.

That would translate to the average price of homeowners multi-peril policies going from $3,560 to $4,041, said Brian Donovan, chief actuary for Citizens.

Other types of policies would see varying increases, but all averages would be in double digits. For example, condominium-unit owners would see an average 14.2 percent increase for multi-peril coverage. The hikes would take effect in 2025.

The hearing put on display longstanding tensions surrounding Citizens' rates, as many homeowners struggle to find affordable coverage — or any coverage — in the private market. Meanwhile, Citizens says it typically charges lower rates than private carriers, which effectively creates a disincentive for property owners to turn to the private market.

"We certainly don't take our request for a rate increase lightly," Citizens President and CEO Tim Cerio said during the hearing. "We know that Citizens customers themselves are just like everyone in the private market. Nobody wants to face a rate increase."

But state leaders and Citizens officials want to shrink Citizens, at least in part to reduce financial risks if Florida gets hit by a hurricane or multiple hurricanes. Citizens in recent years has become by far the largest carrier in the state, with nearly 1.229 million policies as of last week.

"The market is recovering, and that is really good news," Cerio told reporters. "But Citizens' rates are actuarially unsound, and we are competing with the private market. The market's rates are up here, and we are down here. It's basically a form of subsidized insurance."

The proposed increases, however, drew opposition from leaders of the group Fair Insurance Rates in Monroe, or FIRM, which has argued for years that residents of the Florida Keys are paying too much for insurance. Homeowners in Monroe County rely on Citizens for what is known as "wind-only" coverage.

"FIRM is totally opposed to this or any other rate increase for Monroe County," Mel Montagne, the group's president, said.

State law limits annual increases for Citizens' customers. For 2025, the law would allow a maximum 14 percent increase for owner-occupied primary residences, while increases could be as high as 50 percent for second homes.

But part of the discussion Thursday also centered on another law that says Citizens' rates should be actuarially sound and not competitive with rates charged by private insurers. In some areas of the state, that has led to Citizens seeking maximum increases to address the competitiveness issue, rather than for actuarial reasons.

"So in a lot of the filings, in a lot of areas, the capping really takes over," Bob Lee, an actuary for the Office of Insurance Regulation, said.

It likely will be weeks before regulators decide whether to approve the increases or require Citizens to make changes.

Citizens officials say moving policies into the private market could help avoid "assessments" that would occur if Citizens did not have enough money to pay claims after a major hurricane or multiple hurricanes. Such assessments could lead to policyholders throughout the state — potentially even non-Citizens customers — getting hit with additional charges to cover claims.

The number of Citizens policies soared in recent years as private insurers dropped customers and raised rates because of financial problems.

Citizens reached as many as 1.412 million policies in fall 2023 before seeing reductions because of what is known as a "depopulation" program designed to shift policies into the private market. Cerio said Citizens could be under 1 million policies by the end of this year.

— News Service Assignment Manager Tom Urban contributed to this report.