Case Law Update: Citizens Rate Filing Order Sets 2022-2026 Caps

Overview of Citizens Rate Filing Order

In September 2022, the Florida Office of Insurance Regulation issued a comprehensive final order addressing Citizens Property Insurance Corporation's rate filings for both residential and commercial property coverage. This order implemented statutory changes that increased annual rate increase caps from 10% to 15% over a five-year period, representing a significant shift in Florida's property insurance regulatory landscape.

Legislative Background and Statutory Framework

The Florida Legislature amended paragraph (n) of subsection 627.351(6), Florida Statutes, during the 2021 legislative session to address Citizens' financial challenges and market positioning. The key statutory requirements established include:

Rate Setting Requirements

Citizens' rates must be actuarially sound and comply with section 627.062, Florida Statutes. The corporation must file recommended rates annually with the Office of Insurance Regulation, which has 45 days to issue a final order establishing the rates.

Market Positioning Mandate

Citizens rates must not be competitive with approved rates in the admitted voluntary market, ensuring Citizens functions as a residual market mechanism providing insurance only when coverage cannot be obtained in the voluntary market.

Annual Rate Increase Caps

The order established specific annual rate increase limitations for single policies issued by Citizens, excluding coverage changes and surcharges:

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

Note: These caps do not apply to sinkhole coverage, which remains subject to different regulatory treatment.

Additional Rate Components

Beyond base rates, the order confirms Citizens must impose and collect amounts equal to the premium tax under section 624.509, Florida Statutes, to augment the corporation's financial resources.

Hurricane Loss Projection Model Integration

The order addresses the use of the public hurricane loss-projection model under section 627.06281, Florida Statutes. Once found accurate and reliable by the Florida Commission on Hurricane Loss Projection Methodology, this model must be considered when establishing windstorm portions of Citizens' rates. Citizens may combine public model results with private model results for rate calculations.

Actuarial Soundness Requirements

Citizens must make recommended actuarially sound rate filings for each personal and commercial line of business it writes. This requirement ensures rates adequately reflect the risk exposure while maintaining the corporation's financial stability.

Impact on Public Adjusters

This regulatory framework creates several important considerations for public adjusters:

Premium Cost Implications

The graduated rate increases affect policyholders' insurance costs, potentially influencing their decisions regarding coverage levels, deductibles, and claims reporting. Public adjusters should understand how rising premiums might impact client behavior and coverage choices.

Market Dynamics

As Citizens rates increase toward actuarially sound levels, more policies may become attractive for assumption by private insurers. This could affect the volume and nature of Citizens claims that public adjusters handle.

Coverage Availability

The rate structure aims to encourage private market participation while maintaining Citizens as a viable option. Public adjusters should monitor how these changes affect coverage availability for their clients.

Implications for Policyholders

Citizens policyholders face several important considerations under this rate structure:

Predictable Rate Increases

The five-year schedule provides predictability for budgeting purposes, but also guarantees substantial premium increases. Policyholders should plan for these increases and consider coverage adjustments as appropriate.

Market Alternatives

As Citizens rates increase, policyholders should regularly evaluate private market alternatives. The rate structure is designed to encourage movement to the voluntary market when available.

Coverage Decisions

Rising premiums may influence policyholder decisions regarding deductibles, coverage limits, and additional coverages. These decisions can significantly impact potential claims outcomes.

Regulatory Oversight and Compliance

The order establishes clear regulatory parameters for Citizens' operations:

• Annual rate filing requirements with OIR review
• 45-day review period for regulatory decisions
• Prohibition on Citizens challenging OIR rate orders
• Integration of public hurricane models in rate development
• Actuarial soundness standards for all lines of business

Long-term Market Implications

This rate structure represents part of Florida's broader strategy to:

• Reduce Citizens' market share and exposure
• Encourage private insurer participation
• Ensure Citizens' long-term financial stability
• Maintain residual market availability for Floridians

Practical Considerations for Claims Professionals

Claims professionals should understand that these rate changes reflect underlying risk and regulatory pressures in Florida's property insurance market. This context may be relevant when evaluating coverage decisions, claim values, and settlement strategies.

How Louis Law Group Can Help

The evolving regulatory landscape surrounding Citizens Property Insurance Corporation creates complex legal and coverage issues for policyholders and public adjusters. Understanding how rate structures, regulatory requirements, and coverage limitations interact is crucial for protecting policyholder interests.

Louis Law Group's attorneys have extensive experience with Citizens Property Insurance matters, including coverage disputes, claims handling issues, and regulatory compliance questions. We understand how Citizens' unique statutory framework affects coverage interpretation and claims resolution.

Whether you're dealing with Citizens coverage disputes, claim denials, or questions about how regulatory changes affect your rights, our team provides knowledgeable representation based on deep understanding of Florida insurance law and regulation.

Contact Louis Law Group at (833) 657-4812 for experienced legal representation in Citizens Property Insurance and Florida property insurance matters.

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