Why Florida’s insurer of last resort, Citizens Insurance, is the cheapest

Reporter: Gail Levy Writer: Matthew Seaver
Published: Updated:

If someone can’t find homeowners insurance or gets dropped, their last resort is Citizens Insurance. It’s the cheapest in the state, but its CEO hopes that changes soon.

The insurer of last resort has become the only resort for many Floridians.

“As the insurer of last resort, we should, frankly, be a little more expensive than the private market,” said Tim Cerio, CEO and president of Citizens Insurance.

Cerio said rates are 37 and a half percent below market value. “We’re cheaper than we should be because of the glide path.”

Around 2010, the Florida legislature said Citizens Insurance could not raise rates.

“I think it was actually frozen for a while,” said Cerio. That’s when the glide path came sailing in. “They put in a glide path that said in any year, Citizens cannot raise rates more than 10%. We became actuarially unsound.”

As the insurance market started to raise rates on the private side, Citizens was locked in with low prices. “We were severely limited. That glide path has changed. I think now we can charge up to 12%.”

Twelve percent still leaves them far below the market value.

“It’s a balancing act between becoming once again the true insurer of last resort, which was the clear message that was sent out by the legislature during this past special session,” Cerio said.

There’s still a glide path, so policyholders aren’t burdened all at once. For example, Citizens has nearly 1.2 million policyholders. Right now, they don’t have enough surplus money to cover all the claims if another Hurricane Ian came our way.

That’s why they’re trying to get down to around 450,000 policyholders. New legislation passed in December helps with that.

“So if you if a policyholder gets an offer from a takeout company, or a new policy coming in from an insurer, that is within 20% of the rate, that they are paying citizens, they can’t stay in Citizens,” said Cerio.

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