Florida’s largest insurer has requested a 13.5 percent rate hike but says it needs a nearly 93 percent increase to match the competitive market.
Citizens Property Insurance Corp. is currently requesting a more modest hike from the Florida Office of Insurance Regulation (OIR) because state regulations cap the amount rates can increase annually.
Brian Donovan, Citizens’ chief actuary, said in a hearing last week that this would increase the average price of homeowners multi-peril policies, the insurer’s most common type of policy, from $3,560 to $4,041.
Other types of policies would also see increases in varying amounts in the double digits.
But he added that rates for Citizens’ personal multi-peril policies would need to increase by 92.8 percent to be non-competitive.
Citizens President and CEO Tim Cerio said that the double-digit rate increase was necessary to reduce the insurer’s financial risk and that the decision wasn’t 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 said.
“The market is recovering, and that is really good news,” Cerio added. “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.”
Newsweek reached out to Citizens via a contact form on its website for comment.
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Citizens was established as a state-backed insurer of last resort for residents who couldn’t get plans elsewhere with a more affordable option. It was created in response to home insurance prices being driven up in the state due to hurricanes and tropical storms.
Some company and state officials now want to reduce the size of Citizens, partly to minimize the financial risks associated with potential hurricanes affecting Florida.
However, critics have said that many Florida residents already pay too much for insurance.
The state has the highest home insurance rates in the country. According to a recent study by virtual insurance company Insurify, Florida homeowners paid an average annual premium of $10,996 in 2023. The national average premium in the same year was $2,377 per year.
Florida also experienced some of the sharpest home insurance premium increases in the entire country last year and had the highest share of insurers transferring risk to reinsurance companies.
A decision on whether the rate hike is accepted is expected by August 26.