Florida regulators have ordered Citizens Property Insurance Corporation to revise and lower its proposed rate increases for homeowners.
Citizens, the state-backed insurer of last resort, had requested an average rate increase of 13.3% for 2023. However, the Florida Office of Insurance Regulation (OIR) said that the increase was too high and ordered Citizens to come back with a lower proposal.
The OIR said that Citizens' proposed rate increase was not actuarially sound and did not take into account recent legislative reforms that were designed to stabilize the state's property insurance market.
The OIR also said that Citizens' proposed rate increase would disproportionately impact low-income homeowners.
Citizens has until September 1 to submit a new rate proposal to the OIR.
The order from the OIR is a victory for homeowners who have been struggling with rising property insurance rates. However, it remains to be seen whether Citizens will be able to come up with a rate proposal that is acceptable to the OIR.
If Citizens is unable to come up with a lower rate proposal, the OIR could take further action, such as requiring the company to sell some of its policies to private insurers.
The rising cost of property insurance in Florida is a major problem for homeowners. The state is prone to hurricanes and other natural disasters, which drives up the cost of insurance. In recent years, the problem has been exacerbated by a number of factors, including:
Litigation reform, which has made it more difficult for homeowners to file lawsuits against insurers after a loss.
Increased reinsurance costs, which are the premiums that insurers pay to other companies to cover their risk of loss.
A decline in the number of private insurers operating in Florida, due to the high cost of doing business in the state.
The OIR's order to Citizens is a step in the right direction, but it is only one part of the solution. The state also needs to address the underlying factors that are driving up the cost of property insurance.
In the meantime, homeowners should shop around for the best possible rate and make sure that they have adequate coverage. They should also take steps to mitigate their risk of loss, such as by hardening their homes against hurricanes.
In addition to the measures taken by the OIR, the Florida legislature has also taken steps to address the rising cost of property insurance. In 2022, the legislature passed a number of reforms, including:
Eliminating "one-way" attorney fees, which allowed homeowners' attorneys to collect fees even if they lost their case.
Increasing the amount of money that insurers must keep in reserves to cover claims.
Requiring insurers to offer more affordable policies to homeowners with low incomes.
These reforms are expected to help to stabilize the state's property insurance market and reduce the need for rate increases. However, it remains to be seen whether they will be enough to address the underlying problems.
Homeowners who are struggling with rising property insurance rates should contact their insurance agent or the OIR for more information about their options.
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