Citizens Property Insurance Corp., backed by the state, continued to add thousands of policies per week in December, while new legislative proposals would attempt to steer more homeowners into the private insurance market.
According to newly posted data, Citizens had a total of 759,305 policies as of Dec. 31, an increase of nearly 217,000 policies from a year earlier as private insurers shed customers and sought hefty rate increases amid financial difficulties in the industry. Citizens added nearly 18,000 policies in December.
Many state leaders have long sought to reduce the number of policies in Citizens, which was created as a last-resort insurer, citing financial risks if a major hurricane strikes. However, Citizens President and CEO Barry Gilway stated last month that private property insurers in Florida have been losing money since 2017, prompting a policy shift to Citizens.
“When they’re losing money, they want to write less business,” Gilway explained to the Citizens Board of Governors. “That’s exactly what’s going on.”
Senator Jim Boyd, R-Bradenton, and Rep. Tommy Gregory, R-Sarasota, introduced bills (SB 1728 and HB 1307) on Friday that would attempt to shift at least some customers away from Citizens and into the private market.
The bills, for example, address situations in which homeowners receive coverage offers from private insurers as their Citizens policies are about to expire. According to the legislation, such customers would be ineligible for renewal with Citizens unless their private insurers’ premiums were more than 20% higher than what Citizens would charge.
As another example, the bills would allow surplus-lines insurers to participate in programs aimed at removing Citizens policies. Surplus-lines insurers are generally less regulated than standard insurers.
Officials say Citizens frequently charges less for coverage than private insurers, with Gilway last month describing Citizens’ rates as “ridiculously competitive.” One of the reasons for this is that state law limits the annual increases that Citizens customers can face.
Citizens was previously prohibited from passing along increases of more than 10% per year to individual policyholders, a concept known as a rate “glide path.” A law passed last year gradually raised that cap to 11 percent in 2022, 12 percent in 2023, and 15 percent in 2026.
Despite their actuaries’ recommendation that homeowners’ rates rise by an average of 7.3 percent in 2022, members of the Citizens Board of Governors voted last month to seek 11 percent rate increases across the board. Rate increases are subject to final approval by the state Office of Insurance Regulation.
The bills introduced by Boyd and Gregory will be debated during the legislative session, which begins on Tuesday. Citizens and the broader property-insurance system can be politically charged, as many homeowners in areas like South Florida pay high rates and have few options for coverage other than Citizens.
During a pre-session news conference Monday, Rep. Fentrice Driskell, a Tampa Democrat and policy chairwoman for the House Democratic Caucus, provided a glimpse of the controversy surrounding the issue.
“Property insurance rates are exorbitant,” Driskell said. “That’s something I hear everywhere I go in my district.” Property insurance rates are a source of concern for many people. “The Republicans have run that into the ground, and they must accept responsibility for their failure.”