In a move that has sparked anger and outrage among policyholders, the board of governors for Florida’s state-created Citizens Property Insurance Corp. voted unanimously to raise personal lines rates by an average of 14% statewide. This increase is near the maximum allowed under the insurer’s guidance and is set to start next year.
According to reports, the rate hike will affect over 900,000 policyholders, who will see their premiums increase by an average of $200 annually. This move is particularly concerning given that the cost of reinsurance, a key factor in determining insurance rates, has decreased in recent months.
Critics argue that the rate increase is unjustified and will disproportionately affect low—and middle-income households, which are already struggling to make ends meet. They also point out that the board’s decision goes against the state’s efforts to make insurance more affordable and accessible to all Floridians.
Rate Increase Amid Decreasing Costs
The rate increase comes at a time when the insurer’s litigation costs are dropping. Litigation rates for non-catastrophe claims have fallen significantly for Citizens, from a high of 14% in 2020 to 6% in 2023. In the three most populous South Florida counties, litigation rates dropped from 28% in 2020 to 16% last year.
The decrease in litigation rates is primarily due to Senate Bill 2A, approved in late 2022. This bill ended one-way attorney fees for plaintiffs and barred assignment-of-benefits agreements with contractors. Property insurers had blamed these two quirks of Florida law for incentivizing claims lawsuits and overwhelming some carriers with litigation costs.
The Impact on Policyholders
The 14% rate increase will affect Citizens’ 1.2 million policyholders, covering single-family homes, condominiums, mobile homes, and rental properties. For homeowners, this could mean paying significantly more for their premiums. For instance, residents in Duval County could be paying $4,082 instead of $3,581 for their premiums.
The 2025 recommended Citizens rate changes, which would take effect Jan. 1 if approved by regulators, would raise homeowner multiperil (HO-3) rates by an average of 13.5%. Condominium coverage would increase by 14.2%, and commercial policy rates would jump by 13.5%. For second or non-primary homes, which are not subject to the same glide path that limits primary HO rate increases to no more than 15% per year, average rates would rise by 18% for homeowners policies and 15% for condominium units.
A Controversial Decision
The decision to raise rates has been greatly criticized, especially given the decreasing costs. Board member Scott Thomas acknowledged that the news would be about the rate increase but argued that the real story is that the uncapped, indicated rate is much lower than it was just a year ago. However, this argument has done little to quell the concerns of policyholders facing a significant increase in their insurance costs.
Despite the controversy, the proposal will go to the State Office of Insurance Regulation for review and potential approval. As policyholders brace for the potential impact, whether this rate increase is a necessary evil or an unfair burden remains.
As the news of the rate hike spreads, policyholders and consumer advocacy groups express their outrage and disappointment. Many call for the board to reconsider its decision and for state regulators to examine the insurer’s practices closely.