Insurance providers in Florida are leaving the state, leading to residents struggling to find affordable rates. The state’s Citizens Property Insurance Corp. has revised proposed rate increases, which are expected to result in double-digit hikes for many homeowners starting late this year.
According to information presented to the Citizens Board of Governors on September 27, homeowners with the most common type of policies, known as “multi-peril” policies, could see an average increase of 11.5 percent. When other types of residential policies are included, such as wind-only and mobile-home policies, the average increase would be 12.3 percent. Commercial policies, including condominium association policies, are also expected to see an average increase of 10.2 percent.
The revisions to the rate proposals were made after the Office of Insurance Regulation took issue with certain parts of an earlier proposal and ordered some reductions. Citizens spokesperson Michael Peltier stated that the revisions aimed to address the regulators’ concerns, but the final sign-off had not been received as of Friday morning.
The proposed rate increases for personal-lines policies would take effect on December 16, while the commercial increases would take effect on November 20. These increases come as Citizens experiences significant growth, having grown to 1.387 million policies as of last week. Homeowners have turned to Citizens as private insurers have dropped customers and raised rates due to financial difficulties.
State leaders have been working to push policies into the private market to mitigate the financial risks associated with major hurricanes. However, Citizens argues that it often charges lower rates than private insurers, incentivizing homeowners to continue buying coverage from the company.
Earlier this year, Citizens requested a 13.1 percent average rate increase for personal-lines policies, including a 12 percent increase for primary residences with multi-peril policies. However, regulators objected to the proposed increases, stating that the emphasis should be on individual actuarial soundness rather than overall actuarial soundness. The Office of Insurance Regulation also found that due to Citizens’ non-competitiveness with private insurers, rates should be subject to a modified policyholder capping methodology.
Under this methodology, multi-peril policies on primary residences could see increases ranging up to 12 percent, with some policyholders potentially not experiencing any increases. For homes that are not primary residences, rates could increase by up to 50 percent, as permitted by a law passed last year.
As insurance providers leave Florida and rate increases become a reality, homeowners in the state are faced with the challenge of finding affordable insurance options. The situation highlights the need for continued efforts to promote competition in the insurance market and ensure that residents have access to reasonable rates and coverage options.