Policy depopulation, litigation, rates ‘good news for consumers’
The Citizens Property Insurance Board of Governors met last week to hear news of a series of record lows for the state-created company: in policy count, in Probable Maximum Loss (PML), and in its share of the Florida property insurance market. It’s operating with significantly fewer employees, too, as a result. The resulting reduction in costs led to an average 8.7% rate decrease that will be effective this Wednesday (July 1, 2026).
The televised meeting was preceded by a series of committee meetings, including its Audit Committee and Finance and Investment Committee earlier in the morning, of which relevant news is also reported here. Specifics of its successful depopulation of 1.4 million policies to the private property insurance market since 2023 are detailed in our report on its Market Accountability Advisory Committee and Consumer Services Committee of June 10, 2026.
In his President’s Report to the Board, President & CEO Tim Cerio said that Citizen’s policy count as of last Friday (June 19, 2026) was 278,662, “an all-time low, I believe,” with $80 billion in total insured value. It’s Probable Maximum Loss (PML) – the level of loss that has a 1% change of being equaled or exceeded in any given year – also hit an all-time low of $4.8 billion. “This graph (below) really shows how successful the (legislative) reforms have been as the market has strengthened and stabilized. We are continuing to see depopulation of policies (to the private market) as well,” Cerio told the Board. Since 2023, Citizens has returned more than 1.4 million policies and $600 billion in exposure to the private market.
Citizens predicts it will end 2026 with anywhere between 274,750 and 310,295 policies. “We kind of thought we already would have started to grow again,” said Cerio, noting the rate of return is slightly under 2%, which is also its share of the Florida residential property insurance market, down from a 23% market share in 2011 and from 17% in 2023. “If history is any indicator, we would expect that count to start to creek up sometime over the next 18 months…. but again, with the reforms, what we think we’re going to see is instead of a drastic increase in it, if the market really turns south at some point, those increases and decreases would be more gradual, they wouldn’t be as drastic, and that’s good news for consumers.” (See slide deck for details.)
Litigation
Litigation rates and associated costs have also been steadily declining in recent years, shown in the chart below. Cerio credited the Florida legislature’s consumer insurance and litigation reforms of 2022 and 2023, which eliminated Assignment of Benefits (AOB) contracts and one-way attorney fees. “Citizens’ litigation rate for non-hurricane claims that occurred in 2022 was about 15.1%…and in 2025 the projected ultimate litigation rate, we’re still working on the numbers, is around 5% or one-third of what it was prior to the passage of Senate Bill 2-A,” said Cerio. Citizens’ projected severity of those claims has fallen to nearly $18,000, a 43% decrease from 2022. “It should be noted also that the use of DOAH, sending cases to the Division of Administrative Hearings for an arbitration resolution, is still in its infancy, but it’s clearly helping to reduce litigation costs.”
Cerio told the Board these legislative reforms have clearly helped policyholders. “This reduction in cost is frankly what led the way for Citizens to recommend lowering its rates for the first time in over 10 years,” he said. He shared the graphic below showing the entire property insurance market benefiting, too. “It’s made a significant impact. Comparing the year-end data for 2023 after the reforms were effective to year-end data in 2025, the industry experienced a 28% decrease in lawsuits and Citizens’ decrease was around 55%.”
Monroe County & the Florida Keys
Citizens’ policy depopulation efforts have also been effective in Monroe County, including the Florida Keys, traditionally a non-competitive market and a big subject at the Board’s March meeting, held in Key West. The Board had heard from a panel of local Monroe County officials that shared its views, concerns, and suggestions about insurance affordability. Chair Carlos Beruff directed staff to determine which issues Citizens can tackle itself, and which have to be advocated to the Florida Legislature.
Chief Actuary Brian Donovan reported back at this Board meeting that Citizens’ market share of the admitted market in Monroe County has decreased from 41% to 28% since December 2023. On average, the takeout company’s premium was 2% higher than Citizens’ premium. Donovan reminded the Board that Citizens’ own rate decreases are going into effect on July 1 statewide, as well as in Monroe County. (See page 10 of the slide deck for details.)
Donovan said Citizens could provide additional relief to its Monroe County policyholders “by capping the rate changes at a different level, because we can choose any level we would like to cap.”
“What we’re going to do is try to make sure we hold the rates steady,” answered Board Chair Beruff, noting the progress already made with policy takeouts to Citizens Board member Robert Spottswood, a developer in the Keys who arranged the March panel presentation. “The other thing we discussed was helping you change the legislature’s flood insurance requirement, taking that requirement out as it relates to your market…and I’m happy to recommend that and I think we could probably get the other board members on board for that,” Beruff told Spottswood.
Spottswood replied with thanks adding, “I believe there’s distinctions we can push for in connection with the modeling for the Keys. You know, construction down here is a little bit different than it is in other parts of the state, and when the modelers consider types of construction, wood frame is wood frame. But wood frame in the Keys is different than wood frame in other parts of the state… they’re much more hardened construction than you would see in some of the parts of the state.”
Other Depopulation Impacts
Citizens’ reduced policy count has also afforded it an opportunity to cut operational costs. A recently completed voluntary employee separation program has reduced Citizens’ staff level from 1,354 employees in 2025 to 876 today.
Chair Beruff asked CFO Jennifer Montero if Citizens will continue to be operationally profitable at its reduced policy count. Montero replied that the carrier’s first quarter 2026 underwriting gain was $111.7 million, “and so we’re definitely not spending any money out of surplus.”
There was also discussion of the financial impact of Citizens continuing to manage those depopulated policies through their renewal date (functionally, up to nine months), as it’s required to do after their takeout by a private insurance company. “It costs us to maintain these policies that actually someone else is receiving the premiums for, right?” asked Chair Beruff.
“Correct,” replied Montero. “As of Friday the 19th, it was 296,518 policies that we are still servicing… which is more than the 278,000 policies we actually have in force.”
Citizens Reinsurance Buy for the 2026 Hurricane Season
Citizens Chief Financial Officer Jennifer Montero in her Risk Transfer Program Update to the Board, reported that Citizens has completed its reinsurance purchase for the summer hurricane season, as authorized by the Board at its special May meeting. Crediting favorable market conditions, Citizens was able to meet its goal of purchasing $2.82 billion of coverage, which includes $1.29 billion of new placement and $1.53 billion of multi-year coverage from 2025. The net Rate on Line (ROL) – the ratio of reinsurance premium paid to the maximum loss recoverable – was 9.52%, with a total cost of $276.5 million. The Board had authorized spending up to $280 million for the coverage.
The new risk transfer program placement for 2026 of $1.29 billion includes $691 million in the traditional market and $600 million in the capital markets, and has a net ROL of 8.46%, which Montero said is 29.2% lower than the net ROL for the new risk transfer program placed in 2025 of 11.95%.
“Only 23% of surplus is exposed in the 1-in-100-year event, and I think it’s noteworthy to mention that the emergency assessment does not kick in until the 1-in-360-year event,” Montero said.
LMA Special Report 6-29-26
