Changes to Florida laws — including a provision making it harder for policyholders to sue insurance companies — are working as intended to help bring the state’s property-insurance market “back from the brink of collapse,” the head of Citizens Property Insurance Corp. said Wednesday.
Despite three catastrophic hurricanes hitting the state this year, Florida’s property-insurance market “continues to recover,” Citizens President and CEO Tim Cerio told the state-backed insurer’s board of directors Wednesday.
“The reforms passed by the legislature, it’s not an understatement to say they really brought the insurance market back from the brink of collapse. They are continuing to work, which is great news for all Floridians,” Cerio said.
Lawmakers in 2022 and 2023 passed a series of measures aimed at stabilizing the state’s insurance market as insurance companies fled the state and policyholders saw premiums skyrocket. Among the changes was a measure that made it more difficult for homeowners to sue insurers over claim disputes, an effort lawmakers said was necessary to curb litigation by bad actors.
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According to a report Cerio provided to the board of directors Wednesday, 15 insurance companies have made a total of 22 filings for rate decreases and 29 companies have made 42 filings for a zero percent increase this year. Most companies also paid less for reinsurance this year than they did in 2023.
“After years of consecutive underwriting losses, the insurers saw overall stability with many companies reporting a net profit in 2023,” Cerio’s report said.
Cerio also said efforts to “depopulate” Citizens by shifting polices to private insurers are exceeding expectations. The depopulation program is a key strategy as state leaders try to shrink Citizens, which in recent years became Florida’s largest property insurer because of financial problems in the private market.
“We think we are going to end the year at only 369,000 new policies, which is 30 percent below what we forecast. So, because the market is getting healthier, we are seeing less new business come in,” Cerio said. “We’re certainly moving in the right direction.”
The number of Floridians insured by Citizens fell below 1 million last month and is expected to drop to 907,000 by the end of the year, according to the state-backed insurer’s website.
Citizens, which was created as an insurer of last resort, reached as many as 1.412 million policies last year before seeing the number reduced because of earlier depopulation rounds. State leaders want to minimize the number of policies in Citizens, at least in part because of financial risks if the state gets hit by a major hurricane or multiple hurricanes. If Citizens wouldn’t have enough money to pay claims, policyholders throughout the state — including possibly non-Citizens policyholders — could have to pay what are known as “assessments” to cover the costs.
Cerio said Wednesday that the majority of policies being moved to private insurers were in Broward, Miami-Dade, Palm Beach, Hillsborough and Pinellas counties.
“These are areas that were typically avoided by takeout companies because of high litigation rates, so the companies continue to have an appetite because of the positive results they’re seeing from the reforms,” he added.
Depopulation “has been a tremendous focus for me and my team and for this board, for a good reason,” Cerio said.
“We should not be competing with the private market. And frankly, a smaller Citizens means less exposure, the chances that non-Citizens policyholders get hit with an assessment,” Cerio said, giving credit to Gov. Ron DeSantis and Chief Financial Officer Jimmy Patronis for the legislative changes. “I was not overstating things when I said the reforms championed by the governor and the CFO brought us back from the brink.”
Citizens thus far has paid more than $516 million to settle combined property claims after Hurricanes Debby, Helene and Milton, with Milton payments exceeding $435 million. Citizens also paid more than $52.6 million in expenses to policyholders impacted by the storms, according to Cerio’s report.
Some claims can be closed without payment for a variety of reasons. As an example, Citizens covers damages caused by wind — not storm surge. Also, Citizens policyholders who submitted claims but did not meet their deductible might not receive a payment, Cerio said.
“It’s critical to just point out that we are the state-created, not for profit, insurer of last resort. We have no financial incentive to not pay claims. Zero. In fact, I would argue that … we have every incentive to pay valid claims to our policyholders as promptly as possible,” he said.
