Florida OIR Trims Citizens’ HO Rate Increase to 6.4%

June 27, 2022

Five months ago, Citizens Property Insurance Corp. filed for a near-maximum-allowed rate increase for most of its policies, citing the need to continue depopulating the rapidly growing insurer of last resort.

Last week, despite concerns that Citizens’ premiums are significantly lower than other insurers in many parts of the state, the Florida Office of Insurance Regulation approved the corporation’s requested average increase only for mobile home lines and commercial policies. Regulators trimmed a 10.7% homeowners multi-peril rate hike to 6.4%; an HO wind-only rate request of 10.0% was reduced to 9.8%; and dwelling fire multi-peril was cut back from 10.8% to 8.4%.

Citizens is restricted by Florida law to increases of no more than 11% in 2022 and 12% in 2023. With the June 24 approval, the average Citizens HO-3 annual premium will increase by $187, to $3,108. That’s about $130 less than what Citizens had requested. The new rates will take effect Sept. 1, the OIR said.

The larger increase would have allowed Citizens “to reach overall actuarial soundness as quickly as possible. It is a change from prior years,” in which Citizens recommended smaller rate changes, the corporation wrote in its rate filing memo. “The reason for this change is to prioritize Citizens’ financial soundness, which is rapidly deteriorating due to Citizens’ precipitous growth.”

If no statutory rate cap were in place, the corporation would need a 30% average increase for HO-3 policies, the filing memo suggests.

The state-created insurer has faced growing concerns about its continued expansion, fueled by policyholders seeking coverage after their market-based insurers stopped writing in Florida, became insolvent, or instituted large premium increases. Under a worst-case scenario, Citizens’ reserves could be depleted if multiple hurricanes strike Florida, potentially resulting in a surcharge on Citizens’ and all Florida policyholders.

Citizens policy count jumped by 40% in 2021, and officials expect another 40% increase this year, making Citizens the largest property insurer in the state with some 1,064,000 policies in force.

Regulators on Friday approved the full extent of Citizens’ commercial lines rate increases, including 8.7% for residential multi-peril for condominium associations.