Case Law Update: Citizens Rate Filing Order Increases Annual Caps

Background

On September 2, 2022, the Florida Office of Insurance Regulation (OIR) issued a final order regarding Citizens Property Insurance Corporation's rate filings, implementing significant changes to annual rate increase caps. This order reflects the legislative amendments to Florida Statutes section 627.351(6)(n) during the 2021 session, which increased the single policy annual rate increase cap from 10% to 15% over a five-year period.

Key Holdings and Provisions

The OIR's final order established a progressive rate increase schedule for Citizens Property Insurance Corporation:

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

The order confirmed that Citizens must maintain actuarially sound rates while functioning as a residual market mechanism. Importantly, the rate increases apply to individual policies and exclude coverage changes and surcharges, with sinkhole coverage exempt from these caps.

Regulatory Framework

The order reaffirmed Citizens' statutory obligations under section 627.351(6)(n), requiring that:

• Rates must be actuarially sound and subject to section 627.062 requirements
• Citizens must file recommended rates annually with the OIR
• The OIR must issue final orders within 45 days of filing
• Citizens cannot challenge the OIR's final rate determinations
• The corporation must impose premium taxes to augment financial resources

Impact on Public Adjusters

This rate increase framework has significant implications for public adjusters and their clients. The progressive increases create predictability in premium costs, allowing public adjusters to better advise policyholders on long-term insurance planning. However, the substantial rate increases may lead to policy non-renewals or lapses, potentially affecting claims volumes.

Public adjusters should be aware that these rate increases may influence coverage decisions and claim settlement strategies. Policyholders facing higher premiums may be more inclined to pursue aggressive claim recovery to offset increased insurance costs.

Market Dynamics

The order acknowledges Citizens' role as the insurer of last resort, with rates designed to be non-competitive with the voluntary market. This positioning may drive more policies to Citizens as private insurers exit the Florida market or increase their own rates beyond Citizens' levels.

Practical Takeaways for Claims Professionals

Claims professionals should prepare for several market changes resulting from this rate structure:

• Increased scrutiny: Higher premiums may lead policyholders to more carefully evaluate claim settlements and seek maximum recovery
• Policy shopping: Annual rate increases may prompt mid-term policy changes, affecting coverage periods and claim handling
• Documentation importance: With higher stakes due to increased premiums, thorough documentation becomes even more critical
• Settlement negotiations: Policyholders may be less willing to accept quick settlements when facing significant premium increases

Long-term Planning Considerations

The five-year progression to 15% annual increases requires strategic planning. Public adjusters should help clients understand the cumulative impact of these increases and plan accordingly for future coverage needs and claim recovery strategies.

Regulatory Compliance

The order emphasizes Citizens' obligation to use the public hurricane loss-projection model when available, combined with private models for windstorm rate calculations. This hybrid approach ensures scientific rigor in rate-setting while maintaining regulatory oversight.

Public adjusters should understand that these rate increases are regulatory mandates, not discretionary business decisions, which may affect policyholder perception and claim expectations.

How Louis Law Group Can Help

Navigating the complex landscape of Citizens Property Insurance claims requires experienced legal counsel who understands both the regulatory framework and practical implications of rate increases. Louis Law Group's property damage attorneys have extensive experience handling Citizens claims and can help public adjusters and policyholders maximize claim recovery under these changing market conditions.

Our team understands how rate increase pressures affect claim handling and can provide strategic guidance on documentation, valuation, and negotiation tactics. Whether dealing with coverage disputes, appraisal demands, or settlement negotiations, we work closely with public adjusters to achieve optimal outcomes for policyholders.

For consultation on Citizens Property Insurance claims or assistance with complex property damage cases, contact Louis Law Group at (833) 657-4812. Our experienced attorneys are ready to help you navigate the evolving insurance landscape and protect your clients' interests.

Source: OIR Orders & Memoranda - Citizens Property Insurance Corporation Residential Property and Commercial Property Rate Filings