Insurance policies

Citizens plans to hold 1 million insurance policies by 2023

With thousands of new policies a week pouring into Citizens Property Insurance Corp., the state-backed insurer’s board of directors on Wednesday approved seeking general rate increases of 11% next year.

The Citizens’ Board of Governors rejected a staff recommendation that, in part, called for homeowner rates to be increased by an average of 7.3% in 2022, with increases varying depending on factors such as location.

The 11% increase would require approval from the state Insurance Regulatory Board and would go into effect for policies that begin renewing in August. In addition, under the board’s decision, a general increase of 12% would come into effect for renewed policies in 2023.

“Why don’t we go get the 11% and call it a day?” Board Chairman Carlos Beruff said after Chief Citizens Actuary Brian Donovan raised it as an option.

The decision, which came after little board discussion and no public input at a meeting in Tampa, would involve citizens raising rates by the maximum amounts allowed by a new state law.

In the past, Citizens was not allowed to pass increases of more than 10% per year to individual policyholders – a concept that has become known as the “glide path” of rates. The new law (SB 76) gradually increases this ceiling to 11% in 2022, 12% in 2023 and finally to 15% in 2026.

Citizens, which was set up as an insurer of last resort, has seen massive growth over the past two years as financially troubled private insurers dumped their policies and demanded steep rate increases from regulators.

As of Friday, citizens had 747,654 fonts. By comparison, it had 532,788 policies as of Nov. 30, 2020, and 444,323 policies as of Nov. 30, 2019, according to data posted on the Citizens website. Citizen leaders expect to have over a million fonts by the end of 2022.

Citizens President and CEO Barry Gilway said private property insurers have been losing money in Florida since 2017.

“When they’re not profitable, they want to write less business,” Gilway told the board on Wednesday. “That’s what’s happening.”

Gilway also said Citizen fares are “ridiculously competitive,” typically charging less than private carriers.

Heads of state have long sought to shift citizen policy to the private market, at least in part because of the potential financial risks if major hurricanes hit the state. But in some parts of Florida, homeowners have no choice but to turn to citizens for coverage.

The Citizens Staff recommendation ahead of Wednesday’s meeting would have led to an average increase of 8% in 2022 for so-called “personal lines” accounts. This included the average increase of 7.3% for owners, as well as increases for owners of condominium units and renters.

It is unclear whether the Office of Insurance Regulation will allow general hikes of 11% and 12%. In approving the 2021 tariffs, regulators rejected some proposals from the Citizens’ Council, including a proposal that would have led to significantly higher tariffs for new customers of the state-backed insurer.

This story was originally published December 15, 2021 2 p.m.