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State-Run Citizens Heading Toward 1.7M Policies

Fla.’s “insurer of last resort” is the first resort for more and more homeowners. The company hopes to reverse that trend through a series of changes, including a rate hike.

TALLAHASSEE, Fla. – As Citizens Property Insurance Corp. waits for a decision on a plan that would lead to double-digit rate increases for customers, the state-backed insurer remains on a path to grow to 1.7 million policies by the end of the year, President and CEO Tim Cerio said Wednesday.

Citizens, which was created as an “insurer of last resort” for homeowners who could not secure affordable coverage elsewhere, has faced explosive growth during the past three years as private insurers have dropped customers and moved forward with major rate increases because of financial problems.

As of Friday, Citizens had 1.322 million policies making it the largest property insurer in the state.

Citizens has asked the Florida Office of Insurance Regulation for approval of an overall 13.3% rate increase, with the most-common type of homeowners’ policies getting hit with 12% hike. Regulators are reviewing the plan and could order changes.

Cerio and other Citizens officials contend the rate increases are needed because Citizens broadly charges lower rates than private insurers. They say Citizens’ lower rates undercut long-running state efforts to push policies into the private market.

“We have to return to being the state’s property insurer of last resort,” Cerio said Wednesday during a meeting of the Citizens Board of Governors. “Instead, we are the state’s largest property insurer with the lowest rates on top of that. That is going to continue to distort the market and impede recovery efforts.”

Cerio also pointed to the possibility that policyholders throughout the state – including non-Citizens customers – could be forced to pay what are known as “assessments” if Citizens doesn’t have enough money to cover hurricane claims.

“These policyholders in the private market are already paying more for insurance,” Cerio said. “Most have had to absorb much higher rate increases over the last couple of years of 30, 40 or 50%. Now, on top of that, these policyholders in the private market face the risk of having to pay Citizens assessments in addition to their already higher premiums. This is fundamentally unfair and why we need a course correction in the market.”

But homeowners in some parts of the state have few, if any, other choices than Citizens for coverage. During a hearing held last month by the Office of Insurance Regulation, leaders of the group Fair Insurance Rates in Monroe urged regulators to reject the proposed Citizens rate increases in Monroe County, which includes the Florida Keys.

Joe Walsh, a member of the group’s board, pointed to the lack of competition in the Keys.

“The Citizens rate is the rate. And so if Citizens raises rates, rates go up,” Walsh said during the hearing.

Citizens has added thousands of policies a week as private insurers have scaled back in the state. As an illustration of the growth, Citizens had 474,630 policies on June 30, 2020; 638,263 policies on June 30, 2021; and 931,357 policies on June 30, 2022, according to data on its website.

Lawmakers have made a series of changes in recent years to try to shore up the insurance industry, including passing a bill during a December 2022 special session to limit lawsuits against insurers. But lawmakers and industry officials have said those changes could take as long as two years to filter through the system.

Carl Rockman, vice president of agency and market services for Citizens, said Tuesday that Monarch Insurance Co. removed 17,239 policies from Citizens in June and that two insurers could remove as many as 26,000 in August. That is part of what Citizens calls a “depopulation” effort.

But the insurance market took a hit this week when Farmers Insurance said it will end residential, auto and umbrella policies in the state. That will affect tens of thousands of customers, though it was not immediately clear how many homeowners policies are involved.

State Chief Financial Officer Jimmy Patronis lashed out Tuesday night at Farmers, saying he wants “additional scrutiny on the company.”

“I’ve always said that when big decisions are made on insurance, the policyholder is rarely in the room – and unfortunately Farmers Insurance proved me right,” Patronis said in a prepared statement. “I have asked my team to put their heads together in holding Farmers Insurance accountable to Florida policyholders.”

But Democrats disagree, saying current leaders aren’t doing enough to resolve the state’s insurance problems.

“Policyholders will now scramble to find a company that will cover them, and I doubt many families will end up paying less than before,” House Minority Leader Fentrice Driskell, D-Tampa, said in a statement Wednesday. “Despite the promises, we’re moving in the wrong direction.”

15 Florida counties by highest average property insurance premiums

  1. Monroe County: $7,584
  2. Palm Beach County: $5,710
  3. Miami-Dade County: $5,665
  4. Broward County: $5,519
  5. Martin County: $5,157
  6. Collier County: $4,610
  7. Franklin County: $4,525
  8. Walton County: $4,329
  9. Indian River County: $3,698
  10. Pinellas County: $3,210
  11. Gulf County: $3,202
  12. Okaloosa County: $3,185
  13. Escambia County: $3,109
  14. Okeechobee County: $3,088
  15. Lee County: $3,021

Source: Florida Office of Insurance Regulation “Property Insurance Stability Report”

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