Citizens OKs Higher Rate Increases Due to New Law
The Fla.-owned insurer had its 10% cap raised under a law passed earlier this year, and its board of governors voted Wed. to raise a Feb. 2022 increase by 2.3%.
TALLAHASSEE, Fla. – On Wednesday, Citizens Property Insurance Corporation’s Board of Governors approved rate adjustments that will raise average premiums by an additional 2.3% in February 2022. The change follows recent legislation created to slow the growth of the state’s insurer of last resort.
The board’s unanimous vote modifies rates previously approved by the Florida Office of Insurance Regulation (OIR). Along with the already approved increase – and assuming OIR approves the board’s latest decision – policies renewing after February 1, 2022, will now see average increases of 7.6%.
February’s increase takes into account provisions of SB 76, signed into law in June, that increase Citizens’ glidepath from 10% to 11% in 2022. It also requires Citizens to factor in additional reinsurance cost estimates when calculating rates.
“These necessary adjustments reflect the efforts of the Florida Legislature to return Citizens to its role as a residual insurance company,” Citizens Chairman Carlos Beruff said in a release announcing the increase. “Unfortunately, we have become the first choice, or only choice, in too many regions of the state.”
SB 76 bill raises Citizens’ current 10% cap on annual premium increases by 1% each year over the next five years in order to make its rates more competitive with private insurance coverage. The bill also requires Citizens to factor into its rates the reinsurance costs – essentially insurance policies for insurers that have exceptionally high losses – to protect its surplus from a 1-in-100-year storm. It also steers policyholders to private insurance carriers if a private policy premium is within 20% of the comparable Citizens policy premium.
Since October 2019, Citizens has seen its policy count jump from 420,000 to more than 640,000 and it’s now seeing increases of more 5,000 new policies per week. At this pace, company officials expect the policy count to exceed 750,000 by the end of 2021.
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