20211215 Citizens Board approves 2022 rate recommendations - Public
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Citizens Property Insurance Corporation’s Board of Governors on Wednesday recommended an across-the-board rate increase of up to 12% for 2022 after members expressed concern over Citizens’ continued growth and inability to slow it down.
Board members modified a staff recommendation, changing it to statewide increase of 11% for policies renewing from August 1, 2022, to December 31, 2022, and 12% for policies renewing after January 1, 2023, to comply with new caps put in place by the Florida Legislature earlier this year. The recommendations will be forwarded to the Office of Insurance Regulation, which must approve any rate increase.
Citizens is expected to surpass 1 million policies next year and will be the least expensive or only option for many Floridians as private companies continue to sustain losses and cut policyholders. In November, Citizens’ policies were found to be cheaper than private market options 97% of the time. Since January, Citizens’ policy count has grown from 541,000 to 745,000, a 37.7% increase.
Citizens Chairman Carlos Beruff said the widening premium gap – coupled with high litigation rates – is making it virtually impossible for Citizens to shrink and return to its role as the Florida’s residual insurer. The recommendation to apply the maximum allowable rate increase is necessary to stem the flood of policies to Citizens.
“We need to take a look at all our options to stop this unsustainable trajectory,” Beruff said. “Any solution is going to require legislative action to provide Citizens with the tools and flexibility to return to its role as an insurer of last resort.”
Florida’s property insurance market continues to face challenges. The 52 private companies writing 79% of property insurance policies in Florida lost $847 million through the third quarter of 2021. Meanwhile, Florida leads the nation in litigation. Despite accounting for only 8% of policies in 2019, Florida accounts for 76% of all litigation nationwide.
“We have a litigation system that is truly, absolutely out of control,” said Barry Gilway, Citizens President/CEO and Executive Director.
Citizens is required by law to recommend actuarially sound rates while complying with a legislative glide path. In 2021, the Florida Legislature increased the rate cap on individual polices to 11% in 2022 and 12% in 2023, excluding coverage changes and surcharges.
The Board modified the staff’s actuarially determined recommendations to account for the wide gap between Citizens’ premiums and those charged by private insurance companies in the same market. Citizens prepared a 2022 rate kit, which provides detailed information about its initial 2022 rate filing, including county-by-county estimates for specific policy types and frequently asked questions.
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In 2002, the Florida Legislature created Citizens Property Insurance Corporation (Citizens), a not-for-profit alternative insurer, whose public purpose is to provide insurance to, and serve the needs of, property owners who cannot find coverage in the private insurance market.