The proposal that would lead to an average rate increase of 13.5 percent in 2025 will go to the Florida Office of Insurance Regulation for review and final approval.
The Board of Governors approved this Wednesday a proposal from Florida’s insurer, Citizens Property Insurance Corp, that would lead to an average rate increase of 13.5% in 2025 for homeowners with the most common type of policy and an average increase of 14.2% for condominium unit owners.
Citizens released information Tuesday night stating that the proposal would lead to an average 14% increase for all “personal lines” policies, which include homeowners, condo owners, renters, and mobile home owners.
The proposal will go to the Florida Office of Insurance Regulation for review and possible approval. Actual increases for customers would vary based on factors such as property location.
A state law will limit increases to 14% for primary residences and 50% for non-primary residences, such as second homes.
Brian Donovan, acting CEO of Citizens, said the insurance market has seen “drastic improvements” over the past year after lawmakers approved reforms that included curbing lawsuits against insurers. But Citizens officials also say the state-backed insurer often charges lower rates than private insurers, reducing the incentive for homeowners to switch to the private market.
State leaders have long sought to keep the number of Citizens policies low, partly due to financial risks if Florida is hit by one or more major hurricanes. However, the number of policies has surged in recent years as private insurers dropped customers and raised rates due to financial problems.
Also on Tuesday, the state-backed insurer reported online that it had 1,202,696 policies as of Friday, up from 1,198,265 policies a week earlier and 1,193,484 policies two weeks prior.
Citizens, which was created as an insurer of last resort, has become the state’s largest insurer in recent years as private companies dropped policies and raised rates due to financial problems.
What does this mean for Citizens policyholders?
Homeowners with HO-3 multi-peril home insurance policies will see an average premium increase of 13.5%.
Condominium owners with HO-6 multi-peril home insurance policies will see an average premium increase of 14.2%.
The premium increase will vary depending on the property’s location, specific coverage, and the policyholder’s claims history.
Why were these increases approved?
Citizens has cited several factors contributing to the premium increases, including:
Rising claims costs: Property insurance claims costs in Florida have increased significantly in recent years due to a higher number of catastrophic events, such as hurricanes, tropical storms, and wildfires.
Increased replacement costs: Construction and building material costs have also risen, meaning insurers must pay more to repair or replace damaged properties.
Insufficient reserves: Citizens has been operating with a deficit in reserves, meaning it does not have enough funds to cover its potential obligations. The premium increases will help the company strengthen its reserves and ensure its long-term solvency.
What can Citizens policyholders do?
If you are a Citizens policyholder, there are a few things you can do to reduce the impact of the premium increases:
Review your coverage: Make sure you have the right coverage for your needs and that you are not paying for coverages you do not need.
Increase your deductible: A higher deductible can lower your monthly premium, but it means you will have to pay more out of pocket if you file a claim.
Look for discounts: Citizens offers discounts for various factors, such as installing storm protection devices or having a good claims history.
Shop around with other insurers: If eligible, you can compare rates with other private insurers to see if you can find a better deal.
Additional resources:
Citizens Property Insurance Corporation: https://www.citizensfla.com/
Florida Office of Insurance Regulation: https://www.floir.com/
Insurance Information Institute: https://www.iii.org/index.html
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