Citizen Board Cites Legislative Compliance in 13.5% Rate Increase

The Citizens Property Insurance Board of Governors outlined an average rate increase of 13.5 percent for 2025 on Wednesday in order to maintain financial stability and adhere to legislative requirements.

The requested rate hike spans various policy types. Personal multiparallel policies will see an average uncapped rate indication of 23.1 percent, with a non-competitive indication of 92.8 percent. This means that in order to be actuarially sound, the rate would need to increase by 23.1 percent, but to be non-competitive as required by law, the increase would need to be 92.8 percent. Personal lines wind-only policies will have an actuarially sound rate increase of 73.2 percent, capped at 15 percent due to legislative limits.

The proposed increase exceeds the 14 percent glide path limit for non-primary homes because these homes are not subject to the same caps as primary residences. The Office of Insurance Regulation will have the final say on these proposed increases, ensuring compliance with regulatory standards.

The board contended that challenges posed by maintaining artificially low rates can hinder the transition of policyholders back to the private market. Artificially low rates, the Governors said, make Citizens more competitive than intended, disrupting its role as the insurer of last resort. Adjusting rates to reflect actual risk and market conditions is “essential for long-term stability and reducing Citizens’ market share.”

Citizens Property Insurance Corp. CEO Tim Cerio expressed chagrin towards the rate hikes, but deemed them necessary for actuarial sustainability.

“Nobody is thrilled to propose a rate increase,” he said. “But I think by having rates that are artificially low, it hampers us as the business cycle returns to a normal course. As the market recovers, it hampers our ability to shrink back down.”

Cerio claimed that while Citizens enjoys certain advantages as a government entity, such as tax exemptions and less reliance on reinsurance, these benefits need to be balanced against the need to avoid unfair competition with private insurers.

“We’re tax exempt, we don’t have to buy as much reinsurance as the private market. We have advantages government instilled advantages over the private market,” Cerio said. “Most insurers last resort, if not all of them around the country, are non competitive, or, in other words, slightly more expensive than the private market. And the idea is you have nowhere else to go.”

The Board additionally reported that legislative reforms targeting fraud and litigation have positively impacted the reinsurance market, resulting in a 7.9 percent reduction in risk-adjusted pricing for Citizens’ reinsurance program. The reforms, including measures like Senate Bill 76, ratified and authorized in 2021, have reduced assignment of benefits abuse and frivolous lawsuits. The total reinsurance coverage procured for 2024 is $3.564 billion, which includes $3.064 billion of new placements and $500 million from existing multi-year coverage.

Citizens reported progress in reducing its policy count and exposure. In 2023, 408,000 policies were assumed by private insurers, with an additional 132,445 policies taken out in 2024, which has led to a $65 billion reduction in exposure. Improving market conditions have allowed Citizens to adjust its policy forecasts, now expecting to have fewer than one million policies by the end of the year, down from earlier estimates of 1.24 million. The total insured value is projected to be $432 billion, reflecting positive trends in market recovery.

Cerio also detailed Citizens’ readiness plan for the hurricane season, which includes stress testing, equipment readiness assessments, and mock catastrophe testing. The plan involves coordination across all departments to ensure a prompt response to policyholders’ needs, encompassing training and preparation for independent adjusters, system load testing, and call center stress tests.