Case Law Update: Citizens Rate Cap Increase Approved for 2022-2026

Citizens Rate Filing Order Sets Stage for Significant Premium Increases

The Florida Office of Insurance Regulation (OIR) has approved Citizens Property Insurance Corporation's rate filings that implement the Legislature's 2021 amendment allowing progressive annual rate increases from 11% in 2022 up to 15% by 2026. This regulatory action represents a fundamental shift in Florida's residual property insurance market that will directly impact public adjusters, claims professionals, and policyholders statewide.

Background on Citizens Property Insurance Corporation

Citizens Property Insurance Corporation was created by statute to serve as Florida's insurer of last resort, ensuring an orderly market for property insurance when private insurers are unwilling or unable to provide coverage. As a residual market mechanism, Citizens is designed to provide insurance only when coverage cannot be obtained in the voluntary market.

The corporation operates under strict regulatory requirements, including that its rates must be actuarially sound and not competitive with approved rates in the admitted voluntary market. This non-competitive requirement ensures Citizens functions as intended - as a last resort rather than a preferred option.

Key Holdings and Rate Structure Changes

Progressive Rate Cap Increases

The OIR's Final Order establishes the following annual rate increase caps for Citizens policies:

• 2022: 11% maximum increase
• 2023: 12% maximum increase
• 2024: 13% maximum increase
• 2025: 14% maximum increase
• 2026 and beyond: 15% maximum increase

These caps apply to any single policy issued by Citizens, excluding coverage changes and surcharges, and represent a significant departure from the previous 10% annual cap.

Actuarial Requirements and Model Usage

The order reaffirms that Citizens must maintain actuarially sound rates while considering the public hurricane loss-projection model developed under Florida Statute 627.06281. Citizens may combine results from both public and private catastrophe models when calculating windstorm portions of their rates, providing flexibility in risk assessment methodologies.

Impact on Public Adjusters

Increased Policy Values and Coverage Limits

With annual rate increases of up to 15%, public adjusters can expect to see higher policy limits and coverage values in Citizens policies. This trend may result in:

• Larger potential claim settlements
• More complex coverage analysis requirements
• Enhanced documentation needs to justify higher replacement costs

Market Dynamics and Competition

The rate increases may accelerate the movement of lower-risk properties back to the voluntary market, leaving Citizens with a more concentrated high-risk portfolio. Public adjusters should be prepared for:

• More challenging claims environments on Citizens policies
• Increased scrutiny from Citizens on large loss claims
• Potential changes in settlement patterns as the insurer manages financial exposure

Implications for Claims Professionals

Enhanced Financial Resources

The rate increases, combined with the additional premium tax collections required under Florida Statute 624.509, will augment Citizens' financial resources. This strengthened financial position may lead to:

• More robust claims handling capabilities
• Faster claim resolution processes
• Reduced reliance on emergency assessments

Regulatory Oversight and Compliance

Claims professionals working with Citizens policies must understand that the rate structure is subject to ongoing OIR oversight. The order specifically prohibits Citizens from pursuing administrative or judicial review of OIR rate decisions, emphasizing the regulatory authority's final say in rate-setting matters.

Practical Takeaways for Policyholders

Premium Planning and Budgeting

Policyholders should prepare for substantial premium increases over the next several years. With potential cumulative increases approaching 75% from 2022 to 2026, property owners need to:

• Budget for higher insurance costs
• Regularly review coverage limits and deductibles
• Consider risk mitigation measures that might qualify for discounts

Market Shopping Opportunities

As Citizens rates increase, the voluntary market may become more competitive for certain risks. Policyholders should:

• Annually shop for coverage in the voluntary market
• Work with agents familiar with multiple carriers
• Consider coverage modifications that might improve marketability

Long-Term Market Implications

The approved rate structure reflects the Legislature's intent to gradually move Citizens toward actuarially appropriate pricing while maintaining its role as a residual market. This approach should theoretically:

• Encourage private market growth and competition
• Reduce Citizens' market share over time
• Improve the overall stability of Florida's property insurance market

However, the success of this strategy will depend on the voluntary market's willingness and ability to absorb risks currently held by Citizens.

How Louis Law Group Can Help

The changing landscape of Citizens Property Insurance rates and coverage creates new challenges and opportunities for property damage claims. At Louis Law Group, our experienced attorneys understand the complexities of Citizens policies and the evolving regulatory environment affecting Florida property insurance.

Whether you're a public adjuster navigating larger claim values, a claims professional dealing with enhanced scrutiny, or a policyholder facing significant premium increases, our team can provide the legal expertise needed to protect your interests. We stay current with all regulatory changes affecting property insurance in Florida and can help you understand your rights and options under evolving policy terms.

Contact Louis Law Group today at (833) 657-4812 to discuss how recent changes in Citizens Property Insurance rates might affect your property damage claim or insurance coverage needs.

Source: Florida OIR - Citizens Property Insurance Corporation Residential Property and Commercial Property Rate Filings