The Florida Office of Insurance Regulation has held a hearing over Citizens Property Insurance’s proposal to raise its rates by a considerable 11%.
In the hearing yesterday, Citizens president and CEO Barry Gilway explained that the insurer suffered a staggering $166 million in underwriting losses last year, and that it was paying more in claims than it was earning in premiums. The chief executive also told regulators that another factor driving the proposed increases is that Citizens was forced to take on more consumers in recent times.
Florida consumers are increasingly flocking to Citizens, the state’s insurer of last resort, as financially beleaguered private insurers either seek considerable rate increases of their own, drop policy renewals, pull out of the state’s market, or file for insolvency. In the last 24 months, five private insurance companies filed for insolvency – including Avatar Property & Casualty Insurance Company and St. Johns Insurance Company this year – Citizens had pointed out.
Gilway explained in the hearing that Citizens currently has about 820,000 policies. With an average of 5,500 new customers signing up each week, he said that the insurer is expected to hit over a million policies by the end of the year.
“There’s no place for this business to go. Capacity [in the private market] is so limited . . . So where does it go? It comes to Citizens,” he said, adding that because Citizens has lower insurance rates than private insurers, it is in a “ridiculous” competitive position.
If approved, the 11% on-average rate increase across all types of policies would take effect on August 01, 2022, though the rate hike may vary depending on the policyholder, News Service of Florida reported. According to Citizens chief actuary Brian Donovan, the average statewide premium for multi-peril policies would increase from $3,044 to $3,371, but areas such as Southeast Florida would see much higher increases.