What's Happening?
Florida's Citizens Property Insurance Corp., after years of advocating for rate increases to encourage consumers to switch to the private market, is now seeking a decrease in homeowners' insurance rates. The corporation's Board of Governors has voted to file for an average rate cut of 2.6% for personal lines, effective June 2026. This decision comes as a result of legislative changes in December 2022, which have significantly improved the insurance market by eliminating one-way attorney fees and assignment-of-benefit agreements. Citizens' President Tim Cerio noted that the Florida Office of Insurance Regulation might approve an even larger decrease due to declining litigation costs. The proposed rate cut marks a significant shift from previous
years, where Citizens had requested substantial rate increases, including a 15% hike just six months ago. The corporation is now experiencing its lowest policy count ever, with about 385,000 policies, as new carriers enter the market.
Why It's Important?
The proposed rate decrease by Citizens Property Insurance Corp. is a notable development in Florida's insurance landscape, reflecting the positive impact of recent legislative reforms. This move could lead to significant savings for nearly half of Citizens' personal-lines consumers, with an average annual premium reduction of about $359. The rate cut also signals a healthier insurance market, potentially attracting more private insurers to the state. However, it may pose challenges for primary-market carriers in offering competitive rates to Citizens' policyholders. The decision underscores the effectiveness of policy changes aimed at stabilizing Florida's insurance market, which has been historically troubled by high litigation costs and frequent natural disasters.
What's Next?
The Florida Office of Insurance Regulation will review Citizens' rate cut proposal, with a decision expected early next year. If approved, the rate decrease could further stimulate competition among insurers in Florida. Citizens is also planning a 10.4% average rate increase for commercial lines in late 2026, although this is less than the actuarially indicated rate hike. The corporation's strong reserve levels and the potential for falling U.S. interest rates may allow it to negotiate better terms with reinsurers. As the market continues to evolve, stakeholders will be closely monitoring the impact of these changes on both consumers and insurers.
