INSURANCE BUSINESS AMERICA | by Lyle Adriano 12 Oct 2022
In an attempt to take the pressure off the so-called insurer of last resort, Florida Insurance Commissioner Jim Donelon has approved a 63% rate increase for Citizens Property Insurance.
According to the commissioner, the increase is a painful but necessary one, as to comply with state law, which states that Citizens must be the most expensive insurance option in Florida’s market.
“I have no choice in the matter, because Citizens is a quasi-state agency created by the legislature to provide a market of last resort for policyholders that can’t get coverage for whatever reason in the private sector," Donelon said.
Local news station WBRZ reported that the rate increase affects more than 120,000 policyholders upon renewal of their insurance. For new policyholders, the new rate increase takes effect January 01 next year.
Donelon has encouraged policyholders with Citizens to select more affordable insurance options.
“I feel the pain of my constituents and would urge them to continue shopping for alternatives to Citizens because this increase doesn’t go into effect until January 1. So, if they can get coverage between now and January 1, that will never hit them,” the commissioner commented.
The commissioner has also stated that he is looking into a plan that would welcome more insurers into Florida, noting that he carried out a similar measure following Hurricanes Katrina and Rita. The decision helped depopulate Citizens’ policyholders.
“We have been approached by several [companies] who have been reading about and seeing the flood of policies to Citizens and the prices that by law citizens has to charge,” he said. “Companies know that they can get those policies off of Citizens and on to their books with the premium that comes with it in a quick and relatively short period of time.”
With Citizens already above the one million policyholder mark, there are concerns that the insurer could potentially hit two million within the year, or by the end of 2022.
Read more: Could Florida's last resort insurer Citizens hit two million policies?
“Citizens is now going to probably get to two million policies because of [insurance companies] non-renewing here,” said Crawford global president of network solutions Kenneth Tolson in an interview with Insurance Business.
Insurance Business reached out to Citizens, which said that it projects hitting 1.2 million policies by the end of 2022.