Citizens’ Homeowners Insurance Rate Hike Request Awaits Approval
Florida homeowners renewing their policies with Citizens Property Insurance Corp. may face higher rates this year, as the state-backed insurer of last resort’s request for an average 14% increase awaits approval from the Office of Insurance Regulation (OIR).
This request, submitted in November, is part of a broader strategy to make private insurance companies more competitive, encouraging policyholders to move out of Citizens and into the private market. The 14% hike is the maximum allowed and would affect new policies and renewals beginning January 1st, though the final decision rests with the OIR.
During a recent state Senate Banking and Insurance Committee meeting, Commissioner Michael Yaworsky said that the market had performed “pretty well” in 2024 despite several hurricanes and a high number of tornadoes. He credited legislative reforms, such as limiting litigation against insurers, annual rate increases for Citizens and the depopulation program for the recent stability.
“We are seeing improvement,” Yaworsky said, emphasizing the positive impact of these policies. He added that, without these measures, the company could have become insolvent, unable to meet its financial obligations.
Rate Hikes and Market Dynamics
Citizens, designed to serve as an insurer for high-risk or uninsurable homes, has become the largest policyholder in Florida.
Lisa Miller, former deputy commissioner of the OIR and CEO of Lisa Miller and Associates, suggested that the situation is somewhat “backward” due to the low rates offered by Citizens, which have not kept pace with rising prices in the private market.
Citizens reported approximately $900 billion in liability, which may not be covered in the event of a large-scale catastrophe.
According to Citizens spokesman Michael Peltier, the rate hikes are designed to prevent financial strain, as Citizens’ rates have been considered artificially low. “As the state’s insurer of last resort, it’s important that Citizens seeks rates that cover its risk,” Peltier said.
The Approval Process
In its November request, Citizens indicated that it needed to nearly double rates to align with private insurers, highlighting the risk Citizens is undertaking and what is necessary to restore economic balance. Currently, the OIR is reviewing the filings.
Mark Friedlander, director of corporate communications at the Insurance Information Institute, believes that the rate hikes are crucial for the continued stabilization of the Florida home insurance market.
“Citizens rate request is an essential component of the ongoing stabilization of the Florida home insurance market. Citizens needs to be allowed to charge actuarially sound rates versus offering coverage at below-market discount rates. It needs to stop competing with private insurers and be a true insurer of last resort as intended,” he said.
Depopulation Efforts
Citizens launched a depopulation program last year, encouraging other insurers to offer “takeout” offers. If a homeowner receives such an offer within 20% of their current rate, they must accept it. However, Friedlander noted that private insurers have difficulty matching Citizens’ low rates.
“What we’re hearing is policyholders are rejecting the takeout offers because they’re too expensive,” Friedlander stated. A rate increase would make the private market more competitive. Both Yaworsky and Friedlander have said that recent policy changes have been effective in attracting more participants to the Florida market.
Approval from the OIR could give private insurers the leeway they need to make more profitable, and therefore more attractive, offers. Citizens, in turn, can potentially avoid insolvency. However, as it stands, Florida homeowners are poised to continue paying some of the nation’s highest, and potentially increasing, insurance premiums.
