Premiums paid to Citizens Insurance Property Corporation by Monroe County policyholders resulted in a net profit of more than $859 million between 2003 and 2021.
Mel Montagne, president for Fair Insurance Rates of Monroe (FIRM), told state insurance regulators during an Aug. 1 rate hearing in Tallahassee that 2022 and 2023 were less than active storm seasons in the Keys — and yielding even more profits to Citizens.
Montagne’s statements come as FIRM pushes back against another rate hike for Citizens policyholders in Monroe County. In June, the Citizens’ board of governors unanimously approved an average rate increase of 14% on policies for primary homeowners, condominium unit owners, dwellings and mobile homes statewide.
Citizens is required by law to charge actuarially sound rates that aren’t competitive with the private market, all while complying with a glide path that allows Citizens to increase their rates 1% each year. By 2026, rates could hike to 15% for policyholders who renew.
“As a governmental insurer of last resort, we should never be competing with the private market. And that’s the situation now,” said Citizens CEO Tim Cerio.
Citizens Insurance provides coverage to property owners who are in good faith and can’t obtain a policy through the private market. Officials with Citizens have said the premium rates remain “well below” other private insurance companies providing coverage. During the hearing, Citizens officials acknowledged its rates would need to increase some 53.9% to avoid competing with the private insurance market. A glide path which caps rate increases for Citizens, however, doesn’t allow for such a large hike.
“While there’s been recent improvement, since 2019 Citizens only raised rates 31% while private insurers raised 103%,” Cerio stated. “We’re just pointing out how far we’ve fallen behind and how competitive we’ve become with the private market.”
Cerio added Citizens Insurance isn’t taking the rate increase lightly, but he noted it’s important for market recovery and pushing policyholders insured through Citizens to other carriers in the state.
In his statements, Montagne expressed the ever-increasing windstorm premiums are especially hitting working families who live in homes built by local Habitat for Humanity organizations in the Florida Keys. Montagne explained their payments are 30% of the household income, at the time of closing, for a period of 30 years. Any increases such as those proposed by Citizens could price families out of these homes, he said.
“This means that Habitat must now make up the difference, which restricts its ability to continue to provide the services that so many families depend upon,” Montagne said.
Some 18,400 personal lines policyholders in Monroe County face a rate increase, which stands to be the second highest in the state. Primary homes are capped at a 14% rate increase, while secondary homes do not have a cap and face even higher rate hikes.
As for condominium owners with wind only or multi-peril policies, their rates increase another 20%, if state regulators approve Citizens’ request.
“FIRM opposes any rate increase for Monroe County because year after year Monroe
consistently is near the top of rate increases in spite of the fact that storm history, mitigation methods and building codes simply are not reflected in the models and we have no reasonable degree of competition,” Montagne said.
Joe Walsh, FIRM vice president, told state insurance regulators a healthy Citizens is critical for Monroe County.
“In fact, Citizens was literally created for us,” he said.
Virginia Christy, Florida Office of Insurance Regulation deputy secretary, said the office will review the filing for rate increases as well as testimony provided during the Aug. 1 hearing before making a final decision. If approved, Citizens’ proposed rate increases would take effect Jan. 1.
