Florida’s Citizens Property Insurance Corporation is seeking perhaps the steepest rate increases it has implemented for some years at an upcoming hearing with the regulator.
The Florida Office of Insurance Regulation has scheduled a rate hearing for later today, to hear testimony from Citizens Property Insurance Corporation staff on the need for insurance rates to increase and to receive public comment on the proposed rate filings.
The rate increases filed for are the highest seen since at least 2017, with increased as high as 11% being sought.
With Florida Citizens balancing an increasing level of risk, with loss activity, claims inflation, litigation related inflation, and also more expensive reinsurance, it is clear something has to give and further increases are almost assured.
Just the other week, Florida Citizens staff said they will do their best to secure the best deal they can on risk transfer and reinsurance in 2022, but at every public statement Citizens leadership have also cited the likelihood that rate increases would be needed.
This follows trend in the Florida marketplace, where primary property insurers have been requesting more rate at every hearing in the last year, largely with some success, although not at the levels sought in every instance.
With some carriers entering a period of uncertainty over how they will sustain levels of surplus and capital as the 2022 hurricane season approaches, Florida Citizens too needs to ensure it is bringing in sufficient rate to keep its operations viable.
The rate filing will request increases broadly above 10%, with 11% the peak for commercial non-residential wind coverage.
All wind and fire only policy lines require 10% or more in rate, Citizens believes, while multi-peril line rate increases are requested at a little lower levels.
The rates sought are higher than the last few years, reflecting the challenging Florida property insurance marketplace.
With costs rising, both on the claims, operations and reinsurance sides for Citizens, as its book grows and more policies flow back to the residual market insurer, it really has no option but to ensure the rates policyholders pay will support its business model.
With a chance of more insurers failing this year, as has been warned, Citizens could see its policy count and so exposure rising even faster than predicted, making adequate rates a must for the company.