The Citizens Insurance Corporation’s Board of Governors is on track to approve a 3.7% rate increase for 2021. However, CBS Miami reports that they have chosen to put the final decision on hold until late January, allowing staff members to consider the possibility of higher rate increases. Chairman Carlos Beruff voices his concern of Citizens becoming the “800-pound gorilla” in the state’s property-insurance market. “I believe that (an average 3.7 percent increase) is the worst-case scenario because that doesn’t solve our problems,” Beruff said. Though the board hopes to move Citizen’s rates in the same direction as private sector insurers, they face a few roadblocks. One of which is a cap that lawmakers put in place, preventing Citizens from raising rates more than 10% a year.
Citizens’ controversial discussion over raising rates stems from their projection that an exponential number of new customers will leave the private sector once rates increase. While Citizens was created as an insurer of “last resort,” board members recognize that as their number of insured members increases, they become more financially vulnerable if hit by a major hurricane. By implementing more competitive rates, the board believes they can combat these financial threats and protect the prosperity of Citizens. In addition to raising the rate increase beyond the proposed 3.7%, CBS Miami shares that the Citizens’ board has also considered another option – only charging new customers actuarially sound rates. Yet, this proposal was blocked by a 4-4 vote. Discussion regarding Citizens’ rates will continue through the end of the year, and a final decision will be made at the January 26 board meeting.
