Florida Insurance Company Sets Stage for Another Rate Hike

florida insurance company sets stage for another rate hike

Storm clouds gather over Bayshore Drive in Fort Lauderdale, Florida, on June 13, 2024, after heavy rainfall hit the area. The cost of insurance has soared as weather-related events increase in the state,

Florida's state insurer has approved a hike in insurance rates that could potentially see its coverage costs in the state go up at a time when the price of insurance in the state has soared.

Citizens Property Insurance Corporation, a non-profit that helps Floridians who struggle to afford insurance from the market, green-lit a proposal to increase rates in the state by an average of 13.5 percent for homeowner multiperil policies, while condo owners could see their coverage go up by 14.2 percent.

"This proposed rate hike shows that Florida residents need more carrier options in the marketplace," Christopher Schlafer, senior home insurance editor at Insurify, told Newsweek. "The average rate of home insurance in Florida is already over $10,000 a year and Citizens is the state's largest carrier, in terms of policies written. An insurer of last resort is the only option for too many Floridians."

Across the board, the overall average cost for homeowners, including renters and mobile home dwellers, the average rate hike is set to see a 14 percent jump, the company said. For nonprimary residences, the insurance rate increases were capped at 50 percent. The company had approved an increase of 12.6 percent for this year.

Florida's Office of Insurance Regulation will now take up the proposal and, should they rubber stamp it, the new rates could go into effect in January.

"The recommendations will be submitted to the [Office of Insurance Regulation], which will review the filings and hold a public hearing before establishing Citizens' 2025 rates," the company said before its board meeting.

Climate-change-related weather disruptions have been blamed for soaring insurance costs in the state. Some private providers have left the state saying that the costs of doing business were too high to sustain their presence in the market.

"Nonweather water losses, reinsurance costs and litigation are the major determinants of insurance rates," Citizen said. "Citizens must take all these factors into consideration when it proposes recommended rates."

The Office of Insurance Regulation recently said that there were some signs that the market was stabilizing.

"Ten companies have filed a zero percent increase and at least eight companies have filed a rate decrease to take effect in 2024," they said in a statement last month.

The high costs of securing insurance amid the departure of private companies have pushed some residents towards Citizens, helping it to become the largest insurer in the state. The company has 1.2 million policyholders, it said in March.

Newsweek contacted Citizens for comment via email on Thursday.

There have been some concerns that the growth of Citizens could expose the state to risks should claims grow beyond what it can afford. As part of the effort to mitigate against such risks, the insurer has instituted a process—known as depopulation—geared towards helping some of its customers secure coverage from private markets.

This process may pause in the coming months as companies hold back amid hurricane season, according to Florida's News Service. Citizens expected the process of depopulation to resume after the summer to bring its policyholders below a million.

"Hopefully, October, November, December will be very active (for depopulation)," Jennifer Montero, the chief financial officer at Citizens, told the News Service of Florida. "That's the expectation."

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