Fountain pen and a property/liability claim form on a clipboard waiting to be completed, filled and signed by a policyholder or insured person – Photo and Caption: William Potter/Shutterstock.com
The biggest insurer in Florida has asked for a rate rise of 13.5 percent, but claims that a nearly 93 percent increase is necessary to keep up with the competitive market.
Because state restrictions limit the amount rates can increase annually, Citizens Property Insurance Corp. is currently pursuing a more moderate hike from the Florida Office of Insurance Regulation (OIR).
In a meeting held last week, Chief Actuary Brian Donovan of Citizens stated that this would result in an increase in the average cost of homeowners multi-peril plans, which are the most popular form of policies offered by the insurer, from $3,560 to $4,041.
Increases in the double digits would also be seen in other policy kinds, but in different quantities.
However, he noted that in order for the prices for Citizens’ personal multi-peril policies to become non-competitive, they would have to rise by 92.8 percent.
The double-digit premium rise, according to Citizens President and CEO Tim Cerio, was required to lower the insurer’s financial risk, and the decision was not made “lightly.”
“We’re the state-sponsored insurer of last resort, and the insurer of last resort in any state should never be competing with the private market,” Cerio stated.
“The market is recovering, and that is really good news,” Cerio stated. “Nevertheless, we are in competition with the private sector, and Citizens’ rates are actuarially unsound. We are down here, and the rates of the market are rising. In essence, it’s subsidized insurance.”
Citizens was founded as a last-resort insurer supported by the state for citizens unable to find more inexpensive insurance elsewhere. It was developed in reaction to the state’s rising house insurance costs brought on by hurricanes and tropical storms.
Presently, a few corporate and government representatives wish to shrink Citizens, in part to lessen the financial risk of future disasters that could hit Florida.
Critics counter that many Floridians already pay excessive premiums for insurance.
The state has the highest national rates for homeowners insurance. Insurify, a virtual insurance provider, recently conducted a study that found that Florida homeowners will pay an average of $10,996 in premiums annually in 2023. In the same year, the average premium paid across the country was $2,377.
In addition, Florida had the largest percentage of insurers shifting risk to reinsurance companies last year, and it also saw some of the biggest rises in house insurance premiums nationwide.
By August 26, it should be known whether the rate increase is approved.
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Born and raised in South Florida, Krystal is a recent graduate from the University of Miami with professional writing experience at the collegiate and national news outlet levels. She’s a foodie who loves all things travel, the beach, & visiting new places throughout Florida.