Florida's Citizens seeking 13.4% average rate increase
Citizens is expected to hit 1.7M policies with $654B in total insured value by the end of this year.
Citizens Property Insurance Company, Florida’s state-backed insurer, is looking to increase personal property rates an average of 13.4% and commercial rates 11.7%. The proposed increases still require approval by the state’s insurance department.
During the past three years, Citizens has increased rates an average of 15%, while private market players in the state had a cumulative rate increase of 39% during that period.
While it was set up to be non-competitive with the private insurance market, Citizens’ rates are priced considerably below market. According to Tim Cerio, Citizens president, CEO and executive director, Citizens’ HO-3 policies are 44% cheaper than the nine competitors that hold 24% of the market.
Citizens anticipates its policy count to reach as high as 1.7 million by the end of the year. Should it hit the projected number, its total insured value would reach $654 billion.
According to Cerio, Citizens policy growth increased the losses it saw from hurricanes Ian and Nicole, driving the insurer’s surplus down 33%. He said that should a moderately sized storm hit Florida this season it would likely result in an assessment being levied on consumers across the state.
“The larger we grow, the greater our exposure. The greater our exposure, the greater for the potential to put a financial burden on the taxpayers of Florida,” Cerio said at the rate hearing.
He said Citizens must work to depopulate its book of business to reduce the risk of assessment, and achieving rate adequacy is the best way to reach that goal.
According to Brian Donovan, Citizens chief actuary, recently passed insurance legislation has already lowered the insurer’s premium need by more than $900 million. These savings were included in the rate indication calculations.
However, even after the savings from the legislation and the proposed rate increase, Citizens would still need an additional $1.3 billion to be actuarially sound, Donovan said.
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