Citizens Property Insurance Corp, the insurer of last result in Florida, remains on solid financial ground despite regulators deciding not to give the state-run company its requested overall rate increase last month, company officials said.
The Florida Office of Insurance Regulation (OIR) said on June 24 that while Citizens asked for an average 2022 insurance rate increase of 10.7% for homeowners, regulators settled on a rate of 6.4%. Some homeowners merited rate reductions as lawsuits costs have been on a relative decline since last year, officials said.
“OIR and Citizens relied upon different assumptions in the 2022 rate,” Michael Peltier, Citizens’ spokesman, told the Florida Record in an email. “The Citizens’ proposal calculated its recommendation by aggregating all Citizens policies when calculating its proposed rates. On aggregate, Citizens remains about 30% below where it needs to be to charge actuarially sound rates.”
The company did not call for reductions to policyholders whose rates are already actuarially sound, according to Peltier, but regulators granted some policyholders rate reductions that put the average rate change for homeowners at a 6.4% increase.
“Citizens remains in a strong financial position, with nearly $13 billion in claims-paying ability,” he said. “We’re in good shape.”
During the company’s July 13 Board of Governors meeting, Citizens Chairman Carlos Beruff expressed disappointment with the rate approval, calling it foolish. The OIR action ends up subsidizing some regions of the state while Citizens continues to take on more policies as private insurers have become insolvent or reduced their portfolios, Beruff said.
“The other foolish thing that this company does is we’re forced to take over failed policies from failed companies” while charging lower rates, he said.
Barry Gilway, Citizens’ president, said during the July 13 meeting that although the company’s claims litigation costs have gone up, the ratio of lawsuits to total claims has dropped.
“Yes, we’re going up in terms of total litigation, but we’re three times the size,” Gilway said, adding that non-catastrophe litigated water claims as a share of total claims have gone from 51.5% at their peak to 15.5% last year.