Paul Sanchez
Citizens Insurance, a not-for-profit insurer, has been approved for a rate hike of 11.5% on average for homeowner policy rates. This comes after the company's proposal for a 12.6% rate hike was denied by the state Office of Insurance Regulation. Citizens Insurance is the largest property insurer in Florida, with 1.4 million policies, and was created to be the state's insurer of last resort. The rate hike is a result of reinsurance costs, litigation, and recent legislative reforms. Citizens Insurance rates are still significantly lower than those of private insurers, which are increasing by 40% on average. The rate hike has been a cause for concern for policyholders, with some expressing their dissatisfaction with the increase.
| Characteristics | Values |
|---|---|
| Average Increase in Rates for 2023 | 14.2% |
| Average Increase in Rates for Homeowners | 13.9% |
| Average Increase in Rates for Condominium Owners | 14.6% |
| Average Increase in Rates for Homeowners (June Proposal) | 12.6% |
| Average Increase in Approved Rates for 2023 | 11.5% |
| Average Increase in Rates for Part-Time Residents | 50% |
| Average Increase in Rates for Homeowners in Central Florida | 12.5-14.7% |
| Average Increase in Rates for Homeowners in Other Counties | 12-14% |
| Average Rate Below Private Insurers | 44% |
| Cap on Rate Increase in 2023 | 12% |
| Cap on Rate Increase in 2024 | 13% |
| Average Increase in Rates for Multiperil Policies | 13.1% |
| Average Increase in Rates for Homeowner Multiperil Policies | 12.6% |
| Average Increase in Rates for Condominium Owners (HO-6) | 10.8% |
| Average Increase in Rates for 2024 | 12.3% |
| Average Rate Below Actuarially Sound Levels | 55-58.6% |
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What You'll Learn
- Citizens Insurance approved a rate increase of 11.5% in 2023
- Citizens Insurance's proposal for a 12.6% rate hike was denied in June
- Citizens Insurance's rates are 55% below actuarially sound levels
- Citizens Insurance's rates are 44% below private insurance premiums
- Citizens Insurance's rates will increase by 50% for part-time residents
Citizens Insurance approved a rate increase of 11.5% in 2023
Citizens Insurance, or Citizens Property Insurance Corporation, is a not-for-profit alternative insurer that was created by the Florida Legislature in 2002. Citizens Insurance provides insurance to property owners who are unable to obtain coverage from the private insurance market.
In 2023, Citizens Insurance approved a rate increase of 11.5%. This increase reflects the impacts of reinsurance costs, litigation, and recent legislative reforms. The rate increase is intended to stabilize the market and promote depopulation. The approved rate increase is below the cap set by the Florida Legislature, which allows Citizens Insurance to increase rates by up to 12% in 2023 and 13% in 2024 for primary residences.
The rate increase will affect different types of policies, including homeowners, condominium units, dwellings, renters, and mobile homes. Homeowner policy rates are expected to increase by an average of 13.9%condominium owners will see an average increase of 14.6%. Individual premiums may also be higher due to increased replacement costs caused by inflation in the construction, labor, and building materials markets.
The approved rate increase by Citizens Insurance is subject to approval by the Office of Insurance Regulation (OIR). If approved by the OIR, the new rates will go into effect for new and renewal personal residential policies beginning November 1, 2023. Citizens Insurance has stated that the rate increase is necessary to ensure actuarially sound rates and to comply with legislative requirements.
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Citizens Insurance's proposal for a 12.6% rate hike was denied in June
Citizens Insurance, a not-for-profit alternative insurer, was denied a proposal for a 12.6% rate hike in June 2023. The Florida-based company provides insurance to property owners who cannot find coverage in the private insurance market.
Citizens Insurance has experienced rapid growth in its customer base in recent years, as private insurers have faced financial difficulties, causing them to drop customers, leave the state, or raise rates. This has resulted in an influx of new policies for Citizens Insurance, which is intended to be the state's insurer of last resort.
In June 2023, Citizens Insurance proposed a rate increase of 12.6% for all personal lines of multiperil policies, including homeowners, condominium units, dwellings, and renters. The proposed rate hike aimed to address the rising costs of reinsurance, litigation, and recent legislative reforms. However, the Office of Insurance Regulation denied the request, citing the need to protect policyholders from excessive rate increases.
As a result of the denial, Citizens Insurance must go back to the drawing board and propose new rates that balance the need to cover increasing costs while remaining affordable for their customers. The company is under pressure to find a solution that ensures its financial sustainability without placing undue burden on policyholders.
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Citizens Insurance's rates are 55% below actuarially sound levels
Citizens Insurance, also known as Citizens Property Insurance Corporation, is a not-for-profit alternative insurer that was created by the Florida Legislature in 2002. Citizens Insurance provides coverage to property owners who cannot obtain insurance from private companies.
Citizens Insurance rates are 55% below actuarially sound levels, with some sources stating that rates are 58.6% below these levels. This means that the premiums collected do not equal the expected claims and expenses. While nobody wants to see their insurance rates increase, it is important to ensure that insurance rates are adequate to cover potential costs.
In 2023, Citizens Insurance recommended a statewide average increase of 13.1% for all personal lines multiperil policies, including homeowners, condominium units, dwellings, and renters. This recommendation was made to the Office of Insurance Regulation (OIR) and reflected the impacts of reinsurance costs, litigation, and recent legislative reforms. The Board of Governors approved a slightly higher rate recommendation of 14.2% for all personal lines policies, with individual premiums potentially increasing by more due to higher replacement costs caused by inflation.
In 2024, Citizens Insurance rates are projected to rise by 0.5%. Additionally, Citizens Insurance is allowed to increase rates for non-primary residences by up to 50%. These rate increases are necessary to ensure that Citizens Insurance remains competitive with private insurers and can continue to provide coverage to Florida property owners.
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Citizens Insurance's rates are 44% below private insurance premiums
Citizens Insurance is a not-for-profit alternative insurer created by the Florida Legislature in 2002. Its purpose is to provide insurance to property owners who cannot find coverage in the private insurance market. Citizens Insurance is required by law to recommend actuarially sound rates, while complying with a legislative glide path that caps individual rate increases at 12% in 2023 and 13% in 2024 for primary residences.
Citizens Insurance rates are 44% below private insurance premiums. An analysis of homeowners multiperil rates conducted in November 2022 found Citizens’ statewide average premium was 44% below premiums charged by nine private companies representing 24% of the market. Citizens Insurance policies continue to be significantly underpriced compared to private carriers. If Citizens Insurance were to be competitive, its average premium for regular homeowner's insurance would need to almost double.
Citizens Insurance has been seeking to increase its rates. In 2023, Citizens Insurance recommended rates that call for a statewide average increase of 14.2% for all personal lines policies, including homeowners, condominium units, dwellings, renters, and mobile homes. Homeowner policy rates would increase by an average of 13.9%, while condo owners would see an average increase of 14.6%. However, individual premiums may be higher due to increased replacement costs caused by inflation in the labor and building materials markets.
Citizens Insurance's efforts to increase rates are in response to the need to charge adequate rates while considering recent legislative reforms. The legislative reforms passed in December 2022 included provisions to eliminate "one-way" attorney fees and allow increases of up to 50% for non-primary residences. These reforms have already reduced projected costs by $900 million and are expected to stabilize the market over time. Additionally, Citizens Insurance's rates are artificially low, which distorts competition with the private market. By increasing rates, Citizens Insurance aims to return to its role as the state's insurer of last resort.
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Citizens Insurance's rates will increase by 50% for part-time residents
Citizens Insurance, or Citizens Property Insurance Corporation, is a not-for-profit government-backed insurer that was created by the Florida Legislature in 2002. Citizens Insurance provides coverage for property owners who cannot find insurance coverage in the private market.
Citizens Insurance rates will increase by 50% for part-time residents or non-primary residences. This decision was influenced by a legislative reform passed in December 2022, which allowed Citizens to raise rates for non-primary residences by up to 50%. This reform was part of an effort to stabilize the market and reduce projected costs.
The rate increase for part-time residents is also related to Citizens Insurance's below-market rates, which have been deemed "unsound and artificially low." These low rates have been a concern for the company and the state, as they can distort competition and create financial risks, especially if Florida is hit by a major hurricane.
The rate increases are expected to go into effect for new and renewal personal residential policies beginning November 1, 2023. Citizens Insurance policyholders will be notified during the renewal process and will have the opportunity to appeal if their residence is misclassified as non-primary.
It is important to note that Citizens Insurance rates for primary residences are also increasing but are capped at 12% in 2023 and 13% in 2024, excluding coverage changes and surcharges. These rate increases aim to strike a balance between charging actuarially sound rates and ensuring affordability for policyholders.
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Frequently asked questions
Yes, Citizens Insurance was given approval to raise their homeowner policy rates by an average of 11.5%.
The new rates will come into effect for policyholders when they renew over the next 12 months.
The rate increase is due to reinsurance costs, litigation, and recent legislative reforms. Citizens' rates are also below actuarially sound levels, which is unsustainable and heightens the risk of assessments on Florida insurance consumers.
The Board of Governors approved an average increase of 14.2% for all personal lines policies. However, individual premiums may increase by more than that due to higher replacement costs caused by inflation in the construction market.
