Keys face insurance rate hikes

Florida Keys property owners are again facing a steep property insurance rate increase, as Citizens Property Insurance Corp.’s Board of Directors approved a statewide windstorm insurance rate increase that is 4% higher than what its staff had recommended.

The board modified the staff’s actuarially determined recommendations to account for the wide gap between Citizens’ premiums and those charged by private insurance companies in the same market.

Board members modified a staff recommendation, changing it to statewide increase of 11% for policies renewing from Aug. 1, 2022, to Dec. 31, 2022, and 12% for policies renewing after Jan. 1, 2023, to comply with new caps put in place by the Florida Legislature earlier this year. The recommendations will be forwarded to the Office of Insurance Regulation, which must approve any rate increase.

Staff had recommended an 8% increase statewide, according to Citizens spokesman Michael Peltier.

Citizens is expected to surpass 1 million policies next year and will be the least expensive or only option for many Floridians as private companies continue to sustain losses and cut policyholders. In November, Citizens’ policies were found to be cheaper than private market options 97% of the time. Since January, Citizens’ policy count has grown from 541,000 to 745,000, a 37.7% increase.

Citizens Chairman Carlos Beruff said the widening premium gap — coupled with high litigation rates — is making it virtually impossible for Citizens to shrink and return to its role as the Florida’s residual insurer. The recommendation to apply the maximum allowable rate increase is necessary to stem the flood of policies to Citizens.

“We need to take a look at all our options to stop this unsustainable trajectory,” Beruff said. “Any solution is going to require legislative action to provide Citizens with the tools and flexibility to return to its role as an insurer of last resort.”

Florida’s property insurance market continues to face challenges. The 52 private companies writing 79% of property insurance policies in Florida lost $847 million through the third quarter of 2021. Meanwhile, Florida leads the nation in litigation. Despite accounting for only 8% of policies in 2019, Florida accounts for 76% of all litigation nationwide.

“We have a litigation system that is truly, absolutely out of control,” said Barry Gilway, Citizens President/CEO and Executive Director.

Citizens is required by law to recommend actuarially sound rates while complying with a legislative glide path. In 2021, the Florida Legislature increased the rate cap on individual polices to 11% in 2022 and 12% in 2023, excluding coverage changes and surcharges.

Monroe County had been facing at 9.8% increase for single-family homes and 10.7% increase for condos, but those figures will now increase.

The recommendation will next go to the state Office of Insurance Regulation for its approval or denial.

The office will hold a public hearing before making a decision. The new rates would go into effect Aug. 1, Peltier said.

The Florida Keys-based insurance watchdog group FIRM (Fair Insurance Rates in Monroe) are tracking the rate increase and will have representatives at the public rate hearing to speak against increases. The group also has lobbyist working to fight the rate increase and again ask for a carve out from the increase for the Florida Keys, FIRM Administrative Manager Caroline Horn said.

The group is concerned and questioned the authority of the Citizen’s Property Insurance board to exceed the recommendation of its staff, Horn said. FIRM has worked for more than 10 years of insurance rates issues and have fought to limit rate increases, arguing the state is not taking into account that the Keys has some of the most strict building codes in the state and flooding is more of a problem than wind.

Windstorm and flood insurance rate increases have become a big concern in the Florida Keys in the past decade, as insurance rates now rival the cost of monthly mortgages in the chain of islands.

Citizen’s proposed rate increases come just months after the state Legislature passed and the governor signed a bill that allows the annual rate cap of 10% for property owners to be increased by as much as 15% within the next five years.

This is the first proposed rate increase in roughly four years for the Florida Keys. Rates in the Keys were frozen after Hurricane Irma in 2017.

In addition to windstorm increases, the Keys property owners are facing significant increases in flood insurance rates, as the federal government is tweaking the flood maps used to set rates for the National Flood Insurance Program and implemented a new rate program called Risk Rating 2.0, which could significantly increase flood insurance rates in the Keys and other coastal areas of the country.

In addition, the Federal Emergency Management Agency enacted Risk Rating 2.0 in October for new policy-holders. The program goes into effect in April for existing holders.

A database analysis conducted by FIRM shows Monroe County policyholders could expect increases averaging $3,200 annually. FIRM’s rate analysis is thousands of dollars higher than FEMA’s projected increases and contradicts them sharply.

FEMA has said rates should increase about $240 annually for almost 93% of Monroe County policyholders.

Information on FIRM’s work and windstorm and flood insurance rates increases can be found at http://www.firmkeys.org.

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