Governor applauds ongoing property insurance market recovery
After an unusual six-month wait, Florida’s largest property insurance company, state-backed Citizens, learned last Wednesday that regulators reduced their requested rate increase for 2025 by nearly 40%. They didn’t learn it from insurance commissioner Michael Yaworsky or his office, but rather from Governor DeSantis, who held a news conference in Miami about it and the strong ongoing recovery of Florida’s property insurance market.
Governor DeSantis news conference at the Wall of Wind at Florida International University in Miami, FL, February 5, 2025. Courtesy, EOG
The official order posted the next day had reduced Citizens’ requested 14% statewide average rate increase for its Personal Lines policies to 8.6% instead, effective June 1. The most popular component of that, the HO3 homeowners multiperil policies, saw the rate request cut from 13.5% to 6.6%. Last year, during its Board discussion leading to its rate filing and subsequent August public rate hearing before regulators, Citizens decided to go for the full 14% hike statewide, the maximum allowed under the legislature’s rate increase glide path. Citizens has struggled with the dual legislative mandate that its rates be actuarially sound and that they be “non-competitive” with private insurance companies. “Even after a 14% increase, 98% of the policies would remain competitive,” Citizens Chief Actuary Brian Donovan testified at the rate hearing. South Florida policyholders, for example, would see higher rate increases solely based on the non-competitiveness requirement and not actuarial rate need.
The order itself offers insight on the compromise regulators reached on the dual legislative mandate, as pointed out by the News Service of Florida. “Based on the review by the office, it is noted that for each of the policy types offered by Citizens, several territories reflect an actuarial indicated rate decrease and if implemented to be non-competitive, most policyholders in these territories would receive an increase at the 14 percent cap,” the order said. To strike a balance, it said allowing rate decreases of as much as 10 percent “will provide lower premiums to some of the policyholders in the indicated territories while complying with the statutory requirements of actuarial sound rate and non-competitiveness.”
As a result, the Governor was able to announce at the Miami news conference that 73% of Citizens homeowners policyholders in Miami-Dade County will see rate reductions averaging 6.3%; and that 52% of customers with homeowners policies in Broward County will see reductions averaging 4.5%.
Citizens Property Insurance President & CEO Tim Cerio appears before the House Insurance & Banking Subcommittee, February 4, 2025. Courtesy, The Florida Channel
Ironically, just the day before, Citizens President & CEO Tim Cerio appeared before the House Insurance & Banking Subcommittee, explaining that it is stuck in a cycle of charging below-market rates because of the legislature’s cap on increases. “Insurance companies must charge an actuarially sound rate. We’re not doing that,” Cerio said. “We’re below that. So our customers, not everybody, but most of them around the state, are getting, it’s fair to say, subsidized insurance not based on any economic need.” So what’s the risk in that? It’s that Florida could have another major hurricane or a series of hurricanes that would wipe-out Citizens’ reinsurance and surplus, requiring the “hurricane tax” emergency assessment to be put on every property insurance customer in Florida, across multiple lines, to pay the balance owed in Citizens claims.
After the order was released, Citizens issued a statement, saying “It is common and appropriate for Citizens’ rate-making process to involve a deliberate and thorough regulatory analysis, especially after a particularly active hurricane season. Moreover, as Governor DeSantis stated, the 2025 rates reflect the many positive developments that have taken place in the Florida property insurance market since our original recommendations were filed.”
The Governor credited Florida’s series of reforms for “delivering real savings for Floridians.” Among the state’s top 10 insurance carriers, 60% have expanded their business and 40% have filed for rate decreases. The average rate increase has dropped significantly, from over 21% in 2023 to a projected 0.2% for 2025. He touted an S&P Global report that Florida homeowners rates in 2024 had the smallest increase of any other state – just 1% – as most states struggled with double-digit increases for the second year in a row. The Governor said the reforms are also driving down auto insurance costs. He said companies such as GEICO, Progressive, and State Farm have filed for rate reductions of -10.5%, -8.1%, and -6%, respectively. The Governor’s Office created the infographic below as the latest snapshot of the Florida marketplace.
Source: Executive Office of the Governor, February 2025
LMA Newsletter of 2-10-25
