Florida residents flock to Citizens Insurance even as it plans to raise rates

TALLAHASSEE, Florida. Because Citizens Property Insurance Corp. pending a decision on a plan that will result in double-digit rate increases for customers, the government-backed insurer is still on track to grow to 1.7 million policies by the end of the year, president and CEO Tim Serio said on Wednesday.

Citizens, which was set up as the insurance company of last resort, has experienced explosive growth over the past three years as private insurers backed off customers and forged ahead with significant rate hikes due to financial problems. As of Friday, Citizens had 1.322 million policies, making it the largest property insurer in the state.

Citizens have asked the Florida Insurance Authority to approve a 13.3 percent overall rate increase, with the most common type of homeowner policy hit by the 12 percent increase. Regulators review the plan and may make changes.

Cerio and other Citizens officials say the rate hike is necessary because Citizens generally charge lower rates than private insurers. They say the Citizens’ lower rates are undermining the state’s longstanding efforts to push policy towards the private market.

“We need to get back to being the state’s property insurer of last resort,” Serio said Wednesday at a meeting of the Citizens’ Board of Governors. “Instead, we are the largest property insurer in the state with the lowest rates on top of that. This will continue to distort the market and hinder recovery efforts.”

Serio also pointed to the possibility that insurers across the state, including non-citizen customers, could be forced to pay so-called “premiums” if citizens don’t have enough money to cover storm claims.

“These private market insurers are already paying more for insurance,” Serio said. “Most have had to deal with much higher rate increases over the past couple of years of 30, 40 or 50 percent. Now, on top of that, these private market policyholders face the risk of having to pay citizen premiums on top of their already higher insurance premiums. This is fundamentally unfair and therefore we need a course correction in the market.”

But homeowners in some parts of the state have little to no other coverage options other than citizens. During a hearing last month by the Insurance Regulatory Authority, leaders of the Fair Insurance Rates group in Monroe urged regulators to reject a proposed rate hike for citizens in Monroe County, which includes the Florida Keys.

Joe Walsh, a member of the group’s board, pointed to the lack of competition in the Keys.

“The rate for citizens is a rate. And so if Citizens raises the stakes, the stakes will rise,” Walsh said during the hearing.

Citizens are adding thousands of policies a week as private insurers in the state cut costs. To illustrate the growth, as of June 30, 2020, citizens had 474,630 policies; 638,263 policies as of June 30, 2021; and 931,357 policies as of June 30, 2022, according to data on its website.

Lawmakers have made a number of changes in recent years to try to bolster the insurance industry, including passing a bill during a special session in December 2022 to limit lawsuits against insurers. But lawmakers and industry representatives have said these changes could take up to two years before they seep into the system.

Carl Rockman, vice president of the agency and citizen market services, said Tuesday that Monarch Insurance Co. recalled 17,239 policies from citizens in June and that two insurance companies could remove up to 26,000 policies in August. This is part of what Citizens calls “depopulation.”

But the insurance market took a hit this week when Farmers Insurance said it would cancel home, auto and umbrella insurance policies in the state. This will affect tens of thousands of customers, although it was not immediately clear how many homeowner policies were involved.

State CFO Jimmy Patronis criticized Farmers Tuesday night, saying he wants “more scrutiny of the company.”

“I have always said that when important insurance decisions are being made, the insured is rarely in the room – and unfortunately Farmers Insurance has proven me right,” Patronis said in a prepared statement. “I asked my team to come together to hold Farmers Insurance accountable to policyholders in Florida.”

But Democrats have criticized Patronis and other Republican leaders for not doing enough to address the state’s insurance problems.

“The insured will now struggle to find a company to cover them, and I doubt many families will end up paying less than they used to,” House Minority Leader Fentris Driskell, of Tampa, said Wednesday. “Despite promises, we are moving in the wrong direction.”

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