Florida Citizens Board Approves 14% Rate Hike Amid Falling Litigation Costs

In a significant move, the board of governors for Florida's Citizens Property Insurance Corporation has unanimously approved a 14% increase in personal lines insurance rates starting next year. This decision, made on June 19, 2024, comes as a response to ongoing challenges in the insurance market and the need to ensure financial stability for the state-created insurer.

The board approved a 14% rate increase for personal lines insurance statewide, which is near the maximum allowed under the insurer's glide path. This change, pending approval from the state Office of Insurance Regulation, aims to address the gap between current rates and the actuarially indicated rate, which stands at about 25%.

The rate hike affects policyholders under Citizens Property Insurance Corporation, particularly those holding homeowners, condominium, and commercial policies. The increase varies by property type and county, with significant impacts on both primary residences and non-primary homes.

Policyholders and the broader insurance market should take note of this development due to its implications for insurance costs and market stability. Despite the rate increase, there is positive news: litigation costs for non-catastrophe claims have significantly decreased due to reforms enacted in late 2022. Senate Bill 2A, which eliminated one-way attorney fees for plaintiffs and barred assignment-of-benefits agreements, has led to a dramatic drop in litigation rates, from 14% in 2020 to 6% in 2023.

Furthermore, Citizens' depopulation plan is showing promise, with the number of policies expected to drop below 1 million by the end of the year, as many as 400,000 policies moving to private carriers. This shift indicates a healthier, more competitive insurance market in Florida.