Florida prepares to raise rates on last resort insurance

The Florida Office of Insurance Regulation (OIR) is accepting comments regarding a proposed rate increase for Citizens Property Insurance Corporation (CPIC) by 5:00 pm on August 15.

CPIC is the state’s “insurer of last resort” for homes that cannot obtain title insurance in the regular market. OIR hears CPIC’s recommendations for rate changes and then sets CPIC rates. CPIC proposed a 13.9% increase for multi-risk personal insurance in a public hearing on August 1. CPIC rates are required by its founding law to be non-competitive with approved rates on the voluntary market.

Private sector insurers are pushing to “depopulate” CPIC, which means transferring policyholders from the state-backed insurer to their private insurance offerings. Florida House Representative Anna Eskamani, a Democrat from the 42nd District, which covers parts of Orlando and Orange County, opposes the action. She was elected for the first time in 2018.

“I don’t think we should depopulate so aggressively if people don’t have an affordable alternative,” she said. Eskamani sponsored a resolution opening enrollment more widely to CPIC. “This would not only spread the risk, but ensure that Floridians who continue to face almost no affordable options for home insurance during our hurricane season are protected and have coverage.”

The bill had bipartisan support, according to Eskamani. “The parts of the state that suffered the worst damage from the hurricane are very conservative parts of Florida, so Fort Myers, Naples, and more recently in the big corner of Florida, and it’s opening the eyes of colleagues to how broken the system is. it is,” she said.

The election cycle and the Florida legislature only meeting part-time in the early parts of the year prevented action on the resolution for the time being, Eskamani explained.

Tasha Carter, Florida Insurance Consumer Advocate with the Department of Financial Services, he said that frivolous litigation is a big reason insurers have left the state. Eskamani said litigation is not the only reason and can be justified.

“Litigation is often blamed for rate increases, especially in Florida, but it’s more insurance,” she said. “They are both factors. But it’s important to note that litigation costs are not just a function of unscrupulous contractors or lawyers trying to use the system. It’s also the result of insurance companies delaying, denying and underpaying claims, and there’s just no way around that truth and that adds to the litigious environment.”

Eskamani predicted that the CPIC rate hike will likely continue unchallenged. “The pressure from the private sector on depopulation, historically speaking, has always been very strong in Florida,” she said.