TALLAHASSEE (CBSMiami/NSF) – With thousands of new policies, a week pouring into Citizens Property Insurance Corp., the state-backed insurer’s board on Wednesday approved seeking 11 percent across-the-board rate increases next year.
The Citizens Board of Governors tossed aside a staff recommendation that, in part, called for increasing homeowners’ rates by an average of 7.3 percent in 2022, with the hikes varying based on factors such as location.READ MORE: 13-Bedroom Home Gifted To Florida Family Raising 15 Kids
The 11 percent increase would need approval from the state Office of Insurance Regulation and would take effect for policies that start to renew in August. Also, under the board’s decision, an across-the-board hike of 12 percent would take effect for policies that renew in 2023.
“Why don’t we go for the 11 percent and call it a day?” board Chairman Carlos Beruff said after Citizens Chief Actuary Brian Donovan raised it as an option.
The decision, which came after little board discussion and no public input during a meeting in Tampa, would involve Citizens raising rates by the maximum amounts allowed by a new state law.
In the past, Citizens was prevented from passing along increases of more than 10 percent a year to individual policyholders — a concept that has become known as a rate “glide path.” The new law (SB 76) gradually increases that cap to 11 percent in 2022, 12 percent in 2023 and ultimately to 15 percent in 2026.
Citizens, which was created as an insurer of last resort, has seen massive growth during the past two years as financially struggling private insurers have dropped policies and sought large rate increases from regulators.
As of Friday, Citizens had 747,654 policies. By comparison, it had 532,788 policies on Nov. 30, 2020, and 444,323 policies on Nov. 30, 2019, according to data posted on the Citizens website. Citizens officials expect to have more than 1 million policies by the end of 2022.READ MORE: Alaskan Dr. Kimberly Jean Kilgore Died While Scuba Diving In Keys
Citizens President and CEO Barry Gilway said private property insurers have been losing money in Florida since 2017.
“When they’re unprofitable, they want to write less business,” Gilway told the board Wednesday. “That’s what’s happening.”
Gilway also said Citizens’ rates are “ridiculously competitive,” typically charging less than private carriers.
State leaders have long sought to shift policies from Citizens to the private market, at least in part because of potential financial risks if major hurricanes hit the state. But in parts of Florida, homeowners have little choice but to turn to Citizens for coverage.
The Citizens staff recommendation going into Wednesday’s meeting would have led to an average 8 percent increase in 2022 for what are known as “personal lines” accounts. That included the average 7.3 percent hike for homeowners, along with increases for condominium-unit owners and renters.
It is unclear whether the Office of Insurance Regulation will allow 11 percent and 12 percent across-the-board hikes. In approving 2021 rates, regulators rejected some proposals by the Citizens board, including a proposal that would have led to substantially higher rates for new customers of the state-backed insurer.MORE NEWS: Giant Asteroid To Safely Zoom By Earth On Tuesday
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