WEST PALM BEACH, Fla. — Florida’s insurer of last resort, Citizens, is now heading for a rate hike later this year, estimated to be around 12.5% overall.
"No one wants to pay higher insurance rates, I don’t want to do that, but we are actuarially unsound,” Citizens CEO Tim Cerio told the Citizens Board of Governors on Wednesday morning in Tallahassee.
Citizens is now on the verge of 1.4 million policies, and has grown to being the biggest insurer in the state, as many homeowners have lost private policies and seen rates skyrocket.
"Unsound rates means there could be less surplus to pay claims and increased risk of assessment," Cerio said.
The rate hike is expected to take effect Dec. 16th for insurance that is not commercial, and policyholders will find out about it when renewals come up.
“A rate hike is really needed, and it should be higher than what they’re coming out with,” Robert Norberg of Arden Insurance in Lantana said.
Norberg said Citizens needs to come closer to the higher rates charged by private market insurers to lessen its statewide exposure.
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Currently, Citizens is trying to shed policies in an assumption program where private insurers are making offers to Citizens policyholders.
“Right now, about 50% of my assumption clients are choosing to stay with Citizens and not because they are close in premium, it's because the offers are way out of range than what they're used to,” Norberg said.
Citizens board members did express concerns about the assumptions, particularly if policyholders are unaware they can reject the switch if the offer is more than 20% of the Citizens rate.