Citizens chooses higher rate hikes for South Florida than its own numbers indicate

For a change, South Florida policyholders could have enjoyed a much lower rate increase than the 14% approved by the company's Board of Governors. Indicated actuarial rate increases — which the company says is necessary to pay all estimated claims — are much lower than what was approved. Company actuaries justified the higher rate increase with an analysis stating they are needed to make the company "non-competitive" with private-market insurers.

The cost to keep state-owned Citizens Property Insurance Corp. as your insurer will rise by 14% in 2025 if state insurance regulators agree with rate hikes approved on Wednesday by the company’s Board of Governors.

In South Florida, the rate hikes for single-family homeowners could have been much lower if the company hadn’t applied an analysis that aims to make the company “non-competitive” with private market insurers.

In its quest to reduce the number of policyholders from the current 1.2 million, Citizens approved the 14% maximum rate increase allowed by state law during a hearing that lasted less than 30 minutes.

If next approved by state insurance regulators, the 14% rate hike would affect the company’s personal lines business, which consists of single-family homes, private condominium units, mobile homes and rentals. The rate includes multiperil policies with wind coverage and wind-only coverage for those categories.

It’s the highest rate hike allowed by a law enacted in 2021 that increased the maximum annual rate increase from 10% that year to 15% in 2026.

The company is recommending raising the premium it charges for multiperil coverage of 71,196 single-family homes in Broward County by an average of 13.5% — from an average $5,385 to $6,112.

In Palm Beach County, 61,357 homeowners would see comparable coverage hiked by an average of 13.4% — from $4,904 to $5,561.

The 96,941 single-family homeowners covered by Citizens in Miami-Dade County would also see an average 13.5% increase from $5,113 to $5,804.

Condominium rates would increase by 14.3% in Broward County, 14.5% in Palm Beach County and 14.2% in Miami-Dade County.

Responding to a South Florida Sun Sentinel story outlining the proposed rate increases, Luz Green, a Florida Atlantic University student, noted that the increase could help quash her dream of owning her own home someday.

In an email, Green noted the $657 average increase for a Citizens policy in Palm Beach County.

“I may not be a mathematician, but I am unable to ascertain how someone would be able to increase their payment amounts without an increase in pay,” Green wrote. “I find it especially difficult to defend this increase when there is no change in coverage. There is no added protection, no new features, no incentives; the same policy just with higher rates.”

No one at the Board of Governors meeting argued for a lower increase. But several praised improved financial results made possible by legislative reforms that make it harder for homeowners to sue insurers when they believe their claims are denied or undervalued.

For owners of single-family houses in South Florida, the rate hikes would have been much lower if the board had relied on what’s called the “actuarial” indicated rate.

In insurance terms, actuarial rates are what companies need to cover expected losses. For years, Citizens has approved rates that were much lower than indicated actuarial rates.

This year is no different, although indicated actuarial rate increases have fallen sharply — from 55.1% statewide for personal multiperil and wind-only coverage in 2024 to 25.2% in 2025 — thanks to the decline in litigation that followed passage of reforms in 2022.

The reforms have ushered in what Citizens actuary Brian Donovan called “a dramatic improvement” in the company’s financial picture. The company posted a $746.5 million net profit last year after losing $2.24 billion the year before, S&P Global reported in March.

But in South Florida, the decline in litigation drove the indicated actuarial rate hikes well below the hikes of close to 14% that were approved for Broward, Palm Beach and Miami-Dade counties, according to an analysis presented during the hearing.

The indicated actuarial rate hike for multiperil home policies in Broward County is 0.8%. Palm Beach County rates would increase by 9.8% if the indicated actuarial rate hike was adopted. And the indicated actuarial rate projection calls for rates in Miami-Dade to decline by 4%.

A big reason is that rates have previously been allowed to swell in the tricounty region to cover estimated losses from litigation for non-catastrophe losses prior to the reforms.

In 2015, lawsuits were filed for 56% of all non-catastrophe claims filed in South Florida. By the end of 2023, that number had fallen to 16%, according to data shown during the meeting.

But the company’s actuaries, under a mandate to reduce policy counts, justified the flat 14% hike for multiperil coverage of 225,453 single-family houses in South Florida with an analysis that found that Citizens’ rates remain “competitive” with private-market insurers.

Actuaries who developed the analysis decided that “non-competitive” status would be achieved when Citizens’ rates are higher than seven of 10 private-market insurers. That’s not the case, according to the analysis.

This is the first year such an analysis was used in the company’s rate setting, a Citizens spokesman said after the meeting.

State law requires Citizens’ rates to be “non-competitive” with private market rates to prevent the company from attaining too large of a market share and to encourage private-market growth.

According to the analysis, rates would have to climb 96.6% statewide to be non-competitive. They would have to climb 74.1% in Broward County, 80.5% in Palm Beach County, and 82.6% in Palm Beach County.

Yet the analysis did not factor in rate declines announced in recent months by several private market insurers.

And in public remarks in Marathon on Wednesday morning, Gov. Ron DeSantis noted that “a chunk of people on Citizens” have actually found lower rates with private market companies.

Citizens has grown significantly over the past five years, increasing from about 420,000 policies in 2019 to about 1.2 million today. That growth has triggered concerns that all insurance customers in Florida could face assessments and surcharges if the company cannot pay all claims after a catastrophe.

The Office of Insurance Regulation must approve Citizens’ rate hike requests following a public hearing to be scheduled in the near future.

In recent years, the office has approved lower increases than Citizens and its board have sought.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at rhurtibise@sunsentinel.com.