Policyholders of Florida's largest residential property insurer could be paying more in annual premiums, an increase that advocates say is necessary even if it leads to more frustration among homeowners reeling from higher rates.
The state-backed Citizens Property Insurance Corp. has asked the Florida Office of Insurance Regulation for permission to raise rates by an average of 13.5%. The request is meant to make Citizens' rates actuarially sound to cover the costs of potential claims, according to company spokesperson Michael Peltier.
Florida insurance has typically cost more than most states, but some homeowners in the Sunshine State have had their rates double or more in the past several years. Before state lawmakers intervened in 2022, nearly every insurer offering residential property coverage in Florida raised rates, reduced their footprint or stopped writing new business, according to the Florida Office of Insurance Regulation.
A spike in insurance claim fraud and deep underwriting losses from such storms as Category 4 Hurricane Ian in 2022 prompted some insurers to pull out of the state, sharply raise rates or cancel coverage. This year, hurricanes Milton and Helene caused billions in damages.
Roofs are a good indicator of potential insured losses, so some insurers haven't renewed coverage on older properties or forced policyholders to replace the roofs to maintain coverage. That has made the cost of securing insurance coverage a top priority for prospective Florida buyers.
Higher property insurance rates are also a concern in Texas and other states along U.S. coastlines, with predictions of severe weather and higher material costs for rebuilding homes factoring into widespread premium increases, according to a report this year from Insurify, a virtual insurance agent. But the narrow Florida peninsula, with more than 1,300 miles of coastline along the Atlantic Ocean and Gulf of Mexico, has always faced a heightened hurricane risk compared to other states.
Last resort insurer
Despite offloading hundreds of thousands of policies to private insurers in recent years, Citizens still has more than 1 million policyholders statewide. It's the Florida insurer of last resort for homeowners who can't find coverage elsewhere.
In Miami-Dade, the state's most populous of its 67 counties, Citizens proposes raising homeowners' annual fire, theft and hurricane rates to $5,804 from an average of $5,113. Homeowners insured by Citizens in Tampa's Hillsborough County would see the average annual premium jump to $3,028 from $2,667.
It's unclear when a decision on the rate request will be announced, Peltier said in an interview. He noted that an insurer of last resort should be charging rates that are higher than those of private companies, but Citizens' rates are lower, in part due to recent capped increases.
"We are charging rates that are below what we would need to be able to pay claims," he said.
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To address the insurance crisis, Gov. Rick DeSantis called a three-day special legislative session in 2022. That resulted in reforms that included making it illegal for contractors to file insurance claims on behalf of homeowners, also known as assignment of benefits, and eliminating one-way attorney fees that forced insurance companies to cover the legal costs of plaintiffs suing them.
The new laws have helped bring new insurers to the state and led to some existing insurers filing for rate decreases, according to the Florida Office of Insurance Regulation. As of Nov. 9, OIR has received 24 filings indicating a rate decrease and 46 filings indicating no change in current rates.
Citizens needs to have higher average pricing to encourage more consumers to choose coverage from private insurers, noted Mark Friedlander, director of corporate communications for the Insurance Information Institute, a research and education group.
"Florida’s home insurance market has improved dramatically this year due to legislative actions that addressed a man-made crisis caused by legal system abuse and claim fraud," Friedlander said in an email. "Implementation of Citizens’ rate change in 2025 will further advance the market’s recovery from its long-term risk crisis."
There's no timetable for a decision on Citizens' rate request, although a spokesperson for OIR wrote in an email it likely will be made as hurricane season comes to a close. The 2024 hurricane season ends Nov. 30.
"OIR is looking at the filings carefully and taking the time to get it right so that consumers don't have to pay more than is absolutely necessary," press secretary Shiloh Elliott said.