Florida Citizens Board Votes to Raise Rates 14% But Costs Are Down

The board of governors for Florida’s state-created Citizens Property Insurance Corp. voted unanimously in June to raise personal lines rates by an average of 14% statewide – near the maximum allowed under the insurer’s glide path – starting next year.

The rate increase, if approved by the state Office of Insurance Regulation, would still be well below the actuarially indicated rate, a Citizens’ actuary said at the board meeting. But that indicated rate increase for 2025 is about 25%, a vast improvement over the 41% that would have been indicated before Florida lawmakers passed major litigation reforms in 2022.

“The news today will be about the rate increase. But to me the real story is that the uncapped, indicated rate is so much lower than it was just a year ago,” board member Scott Thomas said at the meeting. “That’s a phenomenal change.”

It’s largely because of Senate Bill 2A, approved by Florida lawmakers in late 2022, which ended one-way attorney fees for plaintiffs and barred assignment-of-benefits agreements with contractors. Those were two quirks of Florida law that property insurers had blamed for incentivizing claims lawsuits and overwhelming some carriers with litigation costs.

Since the law and other reforms were enacted, litigation rates for non-catastrophe claims have fallen significantly for Citizens, from a high of 14% in 2020 to 6% in 2023.

“The primary driver of Citizens’ improved results is due to the continued decrease of the litigation rates for non-catastrophe losses,” reads an actuarial slide presentation at the meeting.

Another bit of good news for insurers: Citizens’ depopulation plan appears to be working, perhaps better than expected. Citizens policies topped 1.2 million this year, but the number is expected to drop below 1 million by years’s end, officials said. As many as 400,000 policies should be moved to private carriers this year, thanks partly to take-out offers made by insurance companies.

The 2025 recommended Citizens rate changes, which would take effect Jan. 1 if approved by regulators, would raise homeowner multiperil (HO-3) rates by an average of 13.5%. Actual premiums will vary by property and by county. Condominium coverage would increase 14.2%, and commercial policy rates would jump an average of 13.5%.