Citizens Property Insurance rate hike denied as company’s customer base experiences growth explosion

Tampa, Fla. - The state has denied a request by Citizens Property Insurance to push through steep rate hikes, and now the insurer is on the clock to come up with a new proposal. 

Earlier this year, Citizens asked the Office of Insurance Regulation for approval of an overall 13.3 percent rate increase, with 12 percent hikes for "multi-peril" policies on primary residences.

A 12 percent increase would be the maximum allowed this year for those policies under a state law that limits how much Citizens can raise premiums.

PREVIOUS: Citizens Insurance wants double-digit rate hike after spike in Florida policyholders

The company has experienced explosive growth during the past three years, as private insurers have dropped customers, left the state, or raised rates because of financial problems.

Citizens is the largest property insurer in Florida with 1.4 million policies because many people either can’t get private insurance or don’t want to pay the skyrocketing rates.

Citizens President Tim Cerio recently told the company’s board of governors that the rate increases are needed because citizens charges lower rates than private insurers.  

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Before the OLR denied the 13.3 percent increase, he said that if it was approved, policyholders would still be paying on average about 44 percent below the rest of the Florida market.

"The risk of assessments to private market policyholders is exacerbated because of our incredible policy growth," Cerio explained. "We have continued to grow at the rate we have, because we continue to compete with the private market. We continue to compete with the private market, in large part, because our rates are not actuarially sound."

Citizens Property Insurance website. 

Cerio predicts the policy count could reach 1.7 million by the end of the year.

Citizens has typically been considered a last resort, because it covers much less and could subject customers to big surcharges to cover its losses. Plus, if enough claims roll in and citizens doesn’t have the funds to cover them, it could end up costing people with private insurance.

The 13.3 percent rate increase that was shot down might even look fairly affordable for people with private insurance as some companies have proposed 40-60 percent rate hikes for customers.