More than a million residents of the hurricane-ravaged state of Florida, who already pay some of the highest premiums in the nation, will suffer another setback when their house insurance business, which is backed by the government, plans to raise rates by 14%.
Despite the fact that nine private insurers in the state have filed to lower their rates and ten more have stated they plan to maintain flat rates through 2025, the board of governors of the Citizens Property Insurance Corporation voted unanimously on Wednesday to raise rates for the upcoming year.
Next year, Citizens Property Insurance Corporation plans to increase prices by 14%, as per a vote.
“Paying is necessary because, well, you’re paying for paradise. I concur. A little bit extra is what we have to pay, but by how much? Excessive. Sofia Bereza, a resident of the Tampa region, told WFTS-TV on Wednesday that it was too much.
Bereza stated that she thought about getting a Citizens coverage, but the costs of house insurance were high no matter which provider.
Insurance premiums have skyrocketed due to a combination of rising prices and storms and hurricanes that are becoming more violent.
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Another resident of the Tampa region, Frances Druding, told WFTS-TV, “You know it’s unfortunate, but I also understand that inflation has caused a whole mess of trouble, and on top of that, the climate is not what it used to be as well, so we are hit with a lot of storms that were unexpected.”
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“The rates recommended by the board today seek to continue the move towards actuarially sound rates while reflecting the benefits gained from recent legislative reforms,” Citizens said in a statement to The Post.
Premiums “remain well below the filed and approved rates of most private insurance companies writing in the state,” according to the business.
The company representative told The Post that “the 2025 proposed rates will help reduce the risk of assessments on non-Citizens policyholders, many of whom are already paying higher premiums.”
Owners of primary homes will pay 14% more, and owners of secondary homes (defined as dwellings occupied for nine months or fewer annually) would pay 50% more.
Even with the significant 14% increase, Citizens’ prices are still expected to be significantly less than those of other insurers.
The Miami Herald’s analysis indicates that homeowners in Miami-Dade County with Citizens policies covering windstorms, theft, and fire would experience an increase in premiums from an average of $5,113 to $5,804.
In 2002, the state government of Florida established Citizens. Citizens would increase the average premium for residents of Broward County from $5,385 to $6,112.
The average premium in a less expensive portion of the state, such Hillsborough County, which encircles Tampa Bay, would go from $2,667 to $3,028.
The average premium in nearby Pinellas County, which includes St. Petersburg and Clearwater, would increase from $2,854 to $3,234.
The Florida state legislature established Citizens, the biggest insurer in the state, in 2002 as a last-resort choice for citizens who were unable to obtain coverage on the open market.
The Republican-led state legislature and Florida’s governor, Ron DeSantis, picked the lawyers and business professionals that make up the current board of Citizens.
Since 2007, rates for Citizens insurance have been limited by legislation. Nonetheless, legislators have voted to increase the caps in recent years.
The rate cap, according to the business, has kept Citizens’ rates insufficient for many years, “which is why we are not reducing rates like other carriers in some cases.”
Legislators in Florida mandated in 2022 that holders of Citizens policies obtain flood insurance by March 2027.
By January 1st, 2020, any policyholder of Citizens who owns a house valued at $500,000 is required to have flood insurance.
Florida’s low taxes and business-friendly environment have drawn people from blue areas like New York and California, contributing to the state’s recent population boom; nonetheless, the state’s home insurance market has been unstable.
Florida’s insurance firms turned a profit last year for the first time in seven years, according to a March analysis by S&P Global Market Intelligence.
Legislators in Florida mandated in 2022 that holders of Citizens policies obtain flood insurance by March 2027.
Based on the study, a group of about 50 insurers reported $147.3 million in net profitability for 2023, compared to net losses of more than $1 billion in the two years prior.
According to S&P Global Market Intelligence, the insurers’ combined underwriting losses of $190.8 million were still substantially lower than they were in previous years, when they were over $1.80 billion in 2022 and $1.52 billion in 2021.
Some insurers in the state have gone out of business as a result of devastating hurricanes like Hurricane Andrew in 1992 and other weather-related incidents, while others have been discouraged from operating there.
In the previous year, AAA said that it would not be renewing “a very small percentage” of homeowners’ and auto insurance contracts, while Farmers Insurance announced that it would no longer be offering new coverage for its Florida auto, house, and umbrella policies.
Insurance companies now pay more to cover damages as a result of extreme weather catastrophes like Hurricane Frances in 2004.
Since 2021, nine insurers in Florida have either been absorbed into other businesses or declared insolvent.
Florida’s average annual property insurance premiums increased by 42% to $6,000 last year, while the national average was $1,700.
DeSantis and the state legislature debated the matter in 2021 and 2022, even calling a special session. However, the main points of contention were preventing litigation against insurance firms and allocating funds for reinsurance to provide insurers with more protection.
The insurance firms believe that the adjustments have resulted in lower costs overall, especially when it comes to settling lawsuits.
Furthermore, according to S&P Global Market Intelligence, Florida authorities last year authorized six property and liability insurers to begin offering coverage for residential property.