Regulators are evaluating a proposal to raise Citizens’ insurance costs by 13.5% for the most common type of policy, with a final decision expected in several weeks.
TALLAHASSEE, Fla. — On Thursday, Florida regulators examined a proposal that would result in significant rate hikes for customers of Citizens Property Insurance Corp., the state’s insurer of last resort, as it continues efforts to transition policies to the private market.
The Florida Office of Insurance Regulation held a three-hour hearing on the proposal, which includes an average 13.5% rate increase for Citizens’ most common policy type, homeowners’ multi-peril coverage. This would raise the average policy price from $3,560 to $4,041, according to Brian Donovan, Citizens’ chief actuary.
Other policy types would also see substantial increases, all in the double digits. For instance, condominium-unit owners would face an average 14.2% increase for multi-peril coverage. These changes would take effect in 2025.
The hearing highlighted ongoing tensions over Citizens’ rates, as many homeowners struggle to find affordable coverage in the private market. Citizens often charges lower rates than private insurers, discouraging property owners from switching to private options.
“We do not take our rate increase request lightly,” said Citizens President and CEO Tim Cerio during the hearing. “Citizens customers, like those in the private market, do not want to see rate increases.”
State leaders and Citizens officials aim to reduce Citizens’ size to minimize financial risks from hurricanes. Citizens has become the largest insurer in the state, with nearly 1.229 million policies as of last week.
“The market is recovering, which is positive,” Cerio told reporters. “However, Citizens’ rates are actuarially unsound and compete with the private market. The market’s rates are high, and ours are low, effectively subsidizing insurance.”
The proposed increases faced opposition from Fair Insurance Rates in Monroe (FIRM), which argues that Florida Keys residents pay excessively for insurance. Monroe County homeowners depend on Citizens for “wind-only” coverage.
“FIRM strongly opposes this and any other rate increase for Monroe County,” said Mel Montagne, the group’s president.
State law limits annual rate increases for Citizens’ customers. For 2025, the maximum increase for owner-occupied primary residences is 14%, while it could be as high as 50% for second homes.
Thursday’s discussion also touched on another law requiring Citizens’ rates to be actuarially sound and not competitive with private insurers’ rates. In some state areas, this has led Citizens to seek maximum increases to address competitiveness rather than actuarial reasons.
“In many filings, in various areas, the capping really takes over,” said Bob Lee, an actuary for the Office of Insurance Regulation.
It will likely be several weeks before regulators decide whether to approve the increases or require Citizens to make adjustments.
Citizens officials argue that moving policies to the private market could prevent “assessments” that would be necessary if Citizens lacked funds to pay claims after major hurricanes. Such assessments could result in additional charges for policyholders statewide, including non-Citizens customers.
The number of Citizens policies surged in recent years as private insurers dropped customers and raised rates due to financial difficulties. Citizens peaked at 1.412 million policies in fall 2023 before reductions due to a “depopulation” program aimed at shifting policies to the private market. Cerio mentioned that Citizens could have fewer than 1 million policies by the end of this year.
