After holding off on approving its 2021 rates last month, Citizens Property Insurance Corporation’s Board of Governors has approved rate recommendations that the insurer says will make its rates more competitive with the private market to slow the flow of policyholders returning to the Florida’s insurer of last resort.
The Citizens Board approved rates recommendations for 2021 that call for a statewide average increase of 7.2 percent for personal lines policyholders – homeowners, condominium unit owners, mobile homeowners, dwelling, and renters. If approved by the Florida Office of Insurance Regulation (OIR), the 2021 rates would go into effect for policies renewed after Aug. 1, 2021.
Homeowner policies would increase by an average 6.1 percent. Condo owners would see an average 9.4 percent increase. Renters rates would increase 4 percent on average.
The board also approved a recommendation that new policyholders pay actuarially sound rates instead of joining the insurer with capped premiums that existing Citizens policyholders receive. If approved by OIR, the recommendation would increase rates for new business by an average of 21 percent. Florida State Senator Jeff Brandes had urged the insurer to make these changes as the Florida market tightens and policyholders flock to Citizens. A recent report commissioned by Citizens also identified the need for the insurer to make changes to the Citizens’ glide path for rate increases.
In a related vote, the board urged OIR to maintain caps for new business in Monroe County at 10 percent over the rate charged to renewing policyholders.
The moves comes as Citizens policy count over the past year has risen from 443,000 to 552,000, a 19.7% increase. Higher than expected losses from Hurricanes Irma and Michael coupled with stubbornly high litigation and reinsurance costs have prompted many private insurers to raise rates, limit coverage and exit particular markets.
“The objective here is to create a healthy, private insurance market in Florida that better represents what we are supposed to be, Florida’s insurer of last resort,” said Carlos Beruff, chairman of the Board of Governors.
In December, Citizens Board of Governors deferred action on a slate of 2021 rate recommendations that called for an average 3.7 percent increase in personal lines coverage, including a 2.2 percent increase in homeowners coverage. The board directed Citizens actuarial staff to work with OIR to address a growing disparity between Citizens rates and those charged by private insurance companies in many areas of the state.
Citizens is required by law to recommend actuarially sound rates, while complying with a legislative glide path that caps individual rate increases at 10 percent, excluding coverage changes and surcharges. Meanwhile, private insurers are receiving rate increases far in excess of the 10 percent cap, widening the premium gap between private insurer and Citizens policies.
- Florida’s Property Insurance Market Is ‘Spiraling Towards Collapse’ Due to Litigation: Report
- Florida Market Stabilization Critical to Reducing Citizens’ Exposure: Study
- Hurricane Irma’s ‘Last Gasp’: 3-Year Claims Deadline Put to the Test
- Florida Market Study Will Evaluate Exposures, Strategies for Citizens Property Insurance
- Florida Carriers Seek Staggering Rate Increases Amid Market Turmoil
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